What Happens If Your Company Gives Late Notice of a Claim to Its Insurer? Hint: Insurers Should Not Make Policyholders Guess

James S. Carter

Carter, James S.One of the most common questions that in-house counsel may have for coverage counsel is, “What is the effect of providing late notice of an insurance claim?” The answer is that it depends on which state’s law applies to the insurance policy. A minority of states view notice as a condition precedent to coverage, and unexcused or unreasonably late notice voids coverage. The majority of states, however, have adopted the notice-prejudice rule, which is one of the most beneficial rules to policyholders. Rooted in equity and contract principles, it holds that untimely notice does not waive coverage unless the insurance carrier has been materially prejudiced by the delay. But a state’s adoption of the notice-prejudice rule is usually not the end of the story. As the notice-prejudice rule has gained prominence, insurers havlate_time_shutterstock_123570787 (2)e shifted strategy from arguing against the adoption of the notice-prejudice rule to urging courts to carve out exceptions to the rule in which the insurer is deemed to suffer prejudice as a matter of law. This strategy, if successful, could have the effect of eroding the protection that the notice-prejudice rule affords policyholders. At a minimum, it will foster uncertainty among policyholders as to whether the notice-prejudice rule will apply. Continue reading “What Happens If Your Company Gives Late Notice of a Claim to Its Insurer? Hint: Insurers Should Not Make Policyholders Guess”

Insurance Coverage for Government Seizures of Property

John E. Heintz and John A. Gibbons

John E. Heintz John A. GibbonsMany businesses and individuals are familiar with insurance that is available to pay for property that is taken by a private third party, be it a stranger, employee, competing business, or anconfiscate_locked_chain_shutterstock_113300764y other private actor. But what happens when a government entity or official “seizes” property? Businesses may not immediately think of insurance, but a number of forms of insurance may offer protection and reimbursement for the loss of the “seized” or taken property. Continue reading “Insurance Coverage for Government Seizures of Property”

Representations and Warranties Insurance

Justin F. Lavella

lavellaBolstered by the strong United States dollar and cheap energy costs, the current wave of corporate takeovers and mergers shows no sign of abating. In fact, according to last month’s bi-annual report on corporate dealmaking from Ernst & Young, 56 percent of responding companies stated that they intend to make acquisitions in the coming year, which was a significant increase from the 31 percent reported in April 2014. Ernst & Young also noted that the number of deals in the pipeline is up 19 percent from this time last year.

As this expanding inventory of corporate transactions moves toward completion, an increasing number are likely to involve the purchase of “representations and warranties” insurance. While R&W insurance has been available in the market for more than 15 years, it has seen rapid growth in only the last five or so years. Whereas mergers and merger_puzzle_shutterstock_259209257 (2)acquisitions lawyers once tried to negotiate around potential problems, lawyers for both sellers and buyers are now increasingly looking to shift the risk of unintentional and unknown breaches of the representations and warranties in a Purchase and Sale Agreement to an insurance company. Nevertheless, among the common types of available insurance products, R&W insurance may be the least understood. Continue reading “Representations and Warranties Insurance”

How to Make Sure the Indemnification and Additional Insured Provisions in Your Next Contract Deliver the Protection Your Company Expects

James S. Carter

Carter, James S.Many companies rely on indemnification and additional insured provisions in their contracts for protection against losses arising from a contractual relationship. Indemnification provisions insulate the company from certain losses by requiring the other party to assume and to indemnify it against those losses. Additional insured provisions add another layer of protection by requiring the other party to arrange for the company to become an insured under the other party’s insurance policies. Ideally, indemnification provisions and additional insured coverage should work together when losses occur to furnish the level of protection the company expected when it entered into the contract.

Unless company representatives read the insurance policy that provides the additional insured coverage, documents_compare_shutterstock_234757165however, they may have little idea how the additional insured coverage works. A recent decision by the Supreme Court of Texas arising out of the Deepwater Horizon oil spill incident illustrates how the interplay between additional insured coverage and wording in an underlying contract can operate to frustrate an additional insured’s expectations of coverage. Continue reading “How to Make Sure the Indemnification and Additional Insured Provisions in Your Next Contract Deliver the Protection Your Company Expects”

Pursuing Insurance Recovery in the Aftermath of Winter Storm Damage

Mary M. Gardner

frozen_pipe_shutterstock_126873920In the last month, businesses and individuals throughout the United States were impacted by winter storms battering the East Coast, Midwest, Mountain, and Southern United States. From a declared state of emergency in Georgia to week-long public service and government closures in Boston, these storms disrupted businesses across the country. In the aftermath, it is important that businesses understand the extent of their applicable insurance coverage and provide insurers with prompt and detailed notices of any losses. Continue reading “Pursuing Insurance Recovery in the Aftermath of Winter Storm Damage”

Upcoming Speaking Engagement Will Explore Coverage Issues Arising From Qui Tam Lawsuits

Jared Zola

Zola, JaredOn March 6, 2015, I will co-host a session with Manuel Mungia Jr. from Akin Gump at the ABA Insurance Coverage Litigation Committee Annual CLE Seminar in Tucson, AZ, titled “Exploring the Coverage Issues Emerging From the Recent Avalanche of Qui Tam Lawsuits.”

The U.S. Department of Justice reported a record-setting $5.69 billion in False Claims Act recoveries in fiscal year 2014—including more than $3 billion from 700+ qui tam actions and $435 million paid to whistleblowers. Qui tam lawsuits are easier than ever to bring and, given the potentially lucrative payday, plaintiffs are bringing them more frequently. Policyholders often turn to their PII, EPLI, and D&O policies for coverage. Continue reading “Upcoming Speaking Engagement Will Explore Coverage Issues Arising From Qui Tam Lawsuits”

Nuclear Power International Panel: Economics, Policy, and Regulation

Erin L. Webb

On December 9, 2014, I participated as one of the speakers on a panel at the Nuclear Power International conference in Orlando, Florida. The session focused on the unique regulations and procedures that workers and plant operators must follow in order to keep the public and the staff safe. We also discussed the market conditions affecting nuclear power, including the challenges the industry faces from competing power generating sources such as natural gas. Rick Higginbotham of GE Power & Water and Clayton T. Smith of Fluor served as co-chairs and led the discussion.

In my presentation I talked about industry-specific insurance issues concerning nuclear power plants, and explained the available options for liability and property damage insurance. I also provided important tips to keep in mind in the event of a property damage claim. Understanding how these policies work, and the importance of prompt notice as well as the often complicated and technical process of filing a detailed proof of loss with the insurer, can be key to maximizing a policy’s value. Finally, I discussed some emerging issues that may have significant impacts on future insurance products, such as the development of small modular reactors and the Nuclear Regulatory Commission’s recent action concerning continued storage of spent nuclear fuel. Changes in technology, as well as changes to the applicable regulatory scheme, can spur changes to the exposure and risk a plant faces, and should be addressed in the insurance policies purchased to mitigate those risks. Continue reading “Nuclear Power International Panel: Economics, Policy, and Regulation”