Top 5 Tips for Insureds Following Winter Storm Losses

John A. Gibbons, Jared Zola and Erin L. Webb

This week, winter snowstorms swept through the East Coast of the United States and several surrounding areas, leaving snowfall of up to two to three feet in a 36-hour period. In the bustle to get the snow cleared and get back to work, companies and individuals should be sure to maximize all available insurance coverage.

Winter storm losses can be serious and expensive.  At least one source estimates that the cost of the recent East Coast storm could range from $585 to $850 million. While not all costs will be covered by insurance, insurance policies can protect against a variety of losses relating to winter storms. For example, damaged buildings and property may be covered under a first-party property policy, as can business interruption losses that are caused by property damage. Snow and ice can also potentially expose a company to third party claims for bodily injury or property damage relating to conditions on their property, which may be covered by liability insurance.

The following five tips will help insureds maximize their coverage for winter storm losses and get back on their feet quickly.  Continue reading “Top 5 Tips for Insureds Following Winter Storm Losses”

Don’t Let Insurers Use Attorney-Client Privilege to Shield Claims Handling Documents

James R. Murray, Jared Zola and Omid Safa

Murray, James R. Zola, Jared Safa, OmidUpon receiving an insurance claim from its policyholder, an insurer is obligated to promptly and reasonably investigate, adjust, and determine whether to pay a claim. Those are fundamental aspects of an insurer’s business that arise with respect to every claim. Reports by insurance investigators or adjusters, prepared during the processing of a claim, are discoverable as made in the regular course of the insurer’s business.

Insurers frequently allege that attorneys working for the insurers perform or assist with the claim investigation or adjustment and then assert privilege in an effort to avoid producing such reports during litigation. Policyholders should be wary of any such assertion and consider case law from across the country compelling insurers to produce claims handling documents (and related testimony) generated by or in connection with insurer coverage counsel. Many courts hold that the decision to have lawyers undertake or be involved in basic claims handling functions does not imbue this business task with privilege, and protection from discovery. Thus, communications among these attorney claims handlers, independent claims personnel, and insurers about the results of their claim handling activities should not be cloaked in privilege. Continue reading “Don’t Let Insurers Use Attorney-Client Privilege to Shield Claims Handling Documents”

The Sharing Economy: Are You Covered If Something Goes Wrong?

Charrise L. Alexander

Charrise L. AlexanderCompanies like Airbnb and Uber are considered pioneers in this new era of the “sharing economy.” This innovative way of doing business, allowing individuals to commercialize what ordinarily is for personal use, has created an entirely new marketplace in many cities around the world. However, as with most emerging markets there are new and unexpected risks. Airbnb,  Uber, and other new companies who operate in these emerging markets are challenged to respond to change and manage these unforeseen risks quickly. Airbnb is currently receiving pressure from numerous states to be more proactive in managing and curing potential risks.home_car_sharing_shutterstock_175014590

Of late, Airbnb has been in the headlines due to a devastating death at a rental in Texas.[1] Many questions are being asked. One of the biggest is, “Who is responsible for keeping renters safe?” And whoever that is, do they have adequate insurance coverage? Continue reading “The Sharing Economy: Are You Covered If Something Goes Wrong?”

Contingent Business Interruption (CBI) Insurance: When Winter Storms Impact Your Suppliers or Customers

Robyn L. Michaelson

Michaelson, Robyn L.The National Oceanographic and Atmospheric Administration recently released its early forecast for this winter, predicting below-normal temperatures in the southern states and more snow and ice in the Southeast.[1] As we learned in winters past, the South can quickly grind to a halt after just a few inches of snow. If you or a business you rely on operates in the Northeast, you likely have your insurance squared away in case of storms. But you may not have considered similar problems with a southern supplier.

Contingent business interruption (CBI) insurance reimburses lost profits and added expenses resulting from interruption of a supplier’s or customer’s business. This insurance protects the policyholder against lost sales or higher production cost based on an inability to purchase from or sell to that third party. A CBI policy may target one supplier or customer, or broadly cover all of the insured’s customers and suppliers. CBI coverage is usually triggered by physical damage to the covered customer’s or supplier’s property.[2] Continue reading “Contingent Business Interruption (CBI) Insurance: When Winter Storms Impact Your Suppliers or Customers”

Does Your Company’s Cyber Risk Insurance Cover Cyber-Related Bodily Injury and Property Damage?

James S. Carter

Carter, James S.A recent article in the Wall Street Journal highlights a widespread cybersecurity threat that it reports has generally gone unrecognized: the vulnerability to cyberattacks of the underlying control systems that power and cool data-center networks.[1] These same types of systems, which include generators, thermostats, and air conditioners, are also found in commercial buildings and factories.[2]

The article reports that a cyberattack involving controloverheated_shutterstock_162410045 systems has the potential to take down an entire operation.[3] It could also endanger human life.[4] While these risks are not new, the article notes that security personnel at many companies do not realize that such systems may be connected to the computer system or the internet, and thus exposed to a cyberattack.[5] In fact, the article reports, such systems often lack basic security protocols, such as user names or passwords.[6] Continue reading “Does Your Company’s Cyber Risk Insurance Cover Cyber-Related Bodily Injury and Property Damage?”

What Real Estate Developers Need to Know About Insurance Coverage

Charrise L. Alexander

Charrise L. AlexanderAs the economy across the United States continues its slow improvement, many cities across the nation are experiencing a boom in real estate development. From residential to public transit to public works, developers are bidding on and undertaking large projects. Before beginning any new project, it is important that a developer understands the extent of its insurance coverage and ensures that it has adequate insurance to address the particularly unique circumstances involved with real estate development.

While most developers have a commercial general liability policy, such liability policies, even though broad in scope, maconstruction_shutterstock_223248622y not fully protect a developer against all of the risks it may face during development. For example, commercial general liability policies respond to claims involving bodily injury and property damage to third parties, but often do not provide coverage for damage to the developer’s own property. Continue reading “What Real Estate Developers Need to Know About Insurance Coverage”

What’s the Insured Value of an Allowed Bankruptcy Claim? Pay-as-Allowed, Pay-as-Paid, and a Novel Variation

John E. Heintz and Kyle P. Brinkman

John E. HeintzBrinkman, Kyle P.Bankruptcy of the insured does not relieve an insurer of its obligations under its insurance policy, including to pay covered liability claims held by creditors of the bankruptcy estate. Generally, for a creditor to obtain a distribution from the estate, the creditor must file a timely “proof of claim” in the bankruptcy proceeding, and the claim must be “allowed” by the bankruptcy court. Because a debtor’s assets are typically insufficient to compensate all creditors for the full allowed value of their claims, creditors usually are paid only a fraction of the dollar value allowed. Disputes have, as a result, sometimes arisen between debtor insureds or their successors on the one hand, and their insurers on the other, over whether the insurer is obligated to pay the allowed value of an insured claim (“pay-as-allowed”), or instead only the fractional amount the creditor actually would receive from the estate if there were no insurance coverage (“pay-as-paid”). Continue reading “What’s the Insured Value of an Allowed Bankruptcy Claim? Pay-as-Allowed, Pay-as-Paid, and a Novel Variation”