How to Use the Attack on Dyn to Improve Your Companies’ Cyberinsurance

James S. Carter

Carter, James S.October was National Cyber Security Awareness month. The goal was to raise awareness about the importance of cybersecurity. That message was underscored on October 21, 2016, when attackers staged a massive cyberattack against Dyn, a company that provides services that help Internet users connect to Dyn’s customers’ websites. The attack on Dyn had the effect of disrupting access to major websites, such as Twitter, Netflix, and The New York Times, as well as perhaps lesser known but no less critical websites that many companies rely on for hosted services that they use to operate their businesses. Continue reading “How to Use the Attack on Dyn to Improve Your Companies’ Cyberinsurance”

Buying Rep & Warranty Insurance? Be Sure to Watch Your Language!

Lisa M. Campisi

campisiNumerous commentators have written as to how Representations and Warranty Insurance (“Rep & Warranty Insurance”) can be a valuable tool in getting deals closed. Indeed, numerous difficult deals that may have otherwise died, or at least gone sideways, have been able to close thanks to the prudent use of Rep & Warranty Insurance.

As noted at a recent Blank Rome CLE presentation to several hundred in-house and outside counsel, like any other insurance policy the quality of a Rep & Warranty Insurance policy will depend on essentially one thing: the policy language. Accordingly, this post does not focus on whether or how to obtain such insurance, but on some of the key terms to analyze and seek to negotiate or enhance if you do. Continue reading “Buying Rep & Warranty Insurance? Be Sure to Watch Your Language!”

Insurance Liability, Risks, and Options in Augmented Reality: Catch ‘Em All

Kevin R. Doherty, Kevin J. Bruno and James S. Carter

Kevin R. Doherty Kevin J. Bruno Carter, James S.The rising Pokémon Go sensation has dramatically increased the popularity of augmented reality games, but it has also brought with it increased risks and liabilities for both game users and developers alike. For those who don’t know, Pokémon Go is a mobile app that, although released just last month, has already been downloaded over 75 million times, generated more than $75 million in revenue, and boasts daily usage statistics that have exceeded Snapchat, Twitter, Instagram, and Facebook. It’s a location-based augmented reality game that allows users to partake in virtual scavenger hunts. Using the user’s GPS and mobile camera, players are encouraged to explore their surroundings, seek out animated characters in real world places, and “catch ‘em all.” The characters are overlaid on the player’s screen and displayed as if they exist in reality. Unfortunately, distracted players on the hunt can end up wandering (or driving) into places they shouldn’t be, and becoming injured or injuring others as a result.

The number of Pokémon Go calamities increases daily, with incidents ranging from the mundane to the absurd and dangerous. In the few short weeks since its debut, users have experienced or caused numerous personal injuries, property damage, and car accidents. Some users have become stuck in trees and locked in cemeteries, while more serious incidents involve users straying onto train tracks, falling off cliffs, or entering restricted nuclear power facilities—all while on the hunt for Pokémon characters. Still others in pursuit of Pokémon have trespassed on private property, and some users have even been robbed after being targeted and led to specific locations using the app. Continue reading “Insurance Liability, Risks, and Options in Augmented Reality: Catch ‘Em All”

Ensure You Are Covered as Food Companies Face Recall Risks

Justin F. Lavella

lavella

A wide number of companies have been in the news in recent months as a result of food contamination or food recall events. However, such problems are not isolated to companies with poor safety records or lackadaisical quality controls. In fact, a report issued by Swiss Re, the international reinsurer, has found that the number of United States food recalls—and the costs associated with those recalls—have nearly doubled since 2002. And this is a trend that is likely to continue as the food industry becomes increasingly integrated, the regulatory requirements become increasingly complex, and infectious diseases become increasingly drug resistant. Accordingly, all companies involved in either the food or health supplement industry must plan not for “if,” but “when” a recall is necessary.

To this end, insurance should be a key component of every company’s risk management strategy, and there are a number of specific insurance products on the market to assist. For example, a number of insurers have started marketing policies to “food and beverage” companies that purport to provide coverage for “accidental contamination” and/or “recall.” Unfortunately, these products have only recently been tested in the courts, and policyholders have been generally disappointed to learn that these policies do not provide the breadth of coverage expected. Continue reading “Ensure You Are Covered as Food Companies Face Recall Risks”

Wage-and-Hour Policies May Be a Useful Asset to Fill Potential Coverage Gaps

Jared Zola and Frank M. Kaplan

Zola, Jared Kaplan, Frank M.As a wise person once said, “It’s déjà vu all over again.” Anyone who thought wage-and-hour lawsuits would be a short-lived lawsuit du jour of the plaintiffs’ bar have been proven wrong. Claimants filed more than 8,900 FLSA cases in federal court last year, a 30 percent increase from 2011. In light of the continued trend and recent legislation that has the potential to expand liability to individuals acting on an employer’s behalf, employers should take a hard look at the insurance assets available to protect against these potential liabilities.

California’s new statute, the Fair Day’s Pay Act, has the potential to implicate a “person acting on behalf of an employer” to liability for the company’s allegedly improper wage-and-hour practices. Labor Code § 558.1 (eff. Jan. 1, 2016). New York amended its existing Business Corporation Law § 630, effective January 19, 2016, to extend potential liability for unpaid wages to the top 10 shareholders of privately held corporations incorporated in New York and foreign corporations. While employers and individuals are armed with a wide array of defenses, the potential risks warrant a close look at what insurance assets a company has available to offset any potential liabilities in this continuously growing area. Continue reading “Wage-and-Hour Policies May Be a Useful Asset to Fill Potential Coverage Gaps”

The Insured v. Insured Exclusion and Section 1123: the Primacy of Bankruptcy Law and the Importance of Planning Ahead

Justin F. Lavella and Kyle P. Brinkman

lavellaBrinkman, Kyle P.The Insured v. Insured (“IVI”) exclusion is a frequent and important issue for directors & officers (“D&O”) liability coverage, particularly where the bankruptcy of an insured entity may blur the lines of who is an insured and who is acting on behalf of an insured. Nevertheless, because the exclusion generally bars coverage for a claim made against an insured individual that is “brought or maintained by or on behalf of” the insured entity, whether the IVI exclusion applies is often the single most important coverage issue for the many claims often asserted against a debtor’s former directors and officers in bankruptcy.

Although the applicability of the IVI exclusion to bankruptcy-related claims has been litigated several times and often decided in favor of insurers, none of those cases has addressed the critical question of the primacy of Bankruptcy Code Section 1123, and how this provision may prevent application of the exclusion in such circumstances. Therefore, as insurers become more emboldened by their prior victories, debtors, their former directors and officers, as well as their bankruptcy and coverage counsel should be careful to consider Section 1123 both when drafting the debtor’s plan of reorganization and in any subsequent insurance coverage litigation. Continue reading “The Insured v. Insured Exclusion and Section 1123: the Primacy of Bankruptcy Law and the Importance of Planning Ahead”

What’s All This I Hear About Captives?

Ann Blair Laupheimer

Laupheimer, Ann BlairIn our experience, a lawyer specializing in insurance coverage—even a whole group of insurance coverage lawyers—can practice for decades hearing the word “captive” thrown about by brokers or risk managers in large companies without being asked to address legal issues relating to a captive and without understanding what the heck a captive is or how it works. The National Association of Insurance Commissioners (“NAIC”) and the Center for Insurance Policy Research define a captive as “an insurance company created and wholly owned by one or more non-insurance companies to insure the risks of its owner (or owners).”[1] So at its core, a “pure” captive is a quasi-insurance company set up and funded by a business to serve as a form of self-insurance. Continue reading “What’s All This I Hear About Captives?”