Erin L. Webb
More information has come to light about the data breach affecting Target, and it highlights the importance of “additional insured” coverage, as well as the need for companies to recognize that sophisticated cyberattacks can affect any company, not just those in the computer or technology industries. Blogger Brian Krebs reports that the theft of credentials from a heating and cooling (HVAC) company may be linked to the Target breach.
How could it happen? No details have yet been publicly confirmed, but it is possible that the HVAC company had access to Target’s network so that it could remotely monitor heating and cooling efficiency at multiple Target locations. If Target’s electronic systems were linked – if one was accessible via another – a path for a hacker from HVAC information to credit card processing may have been possible. Continue reading “Target Data Breach Part 2: The Additional Insured”
On February 11, 2014, John Heintz and I spoke on a panel at the @Hospitality_Law 2014 Conference discussing maximizing coverage for large property and business interruption claims. We presented a hypothetical scenario in which Acme Hospitality is a full service Real Estate company that owns several hotels, including one in Galveston, Texas that a hurricane devastated to the point of total loss and a second in Houston, Texas that the same hurricane impacted with minimal physical damage and significant financial losses. One interesting fact presented was that a sports stadium located nearby the Houston hotel suffered major roof damage and is expected to be closed for six months. The Houston hotel typically sells out for every home game played at the sports stadium and other live events. We explored the question of whether the Houston hotel is entitled to coverage for lost business income resulting from the stadium’s closure. Continue reading “Hospitality Law Conference 2014: Importance of Business Income From Dependent Properties Coverage”
Erin L. Webb
While cyber risks are sometimes thought of as “online” or Internet risks, a massive information theft recently occurred at Target’s brick-and-mortar stores when customers swiped cards and entered PINs while making in-store purchases. On December 19, 2013, Target disclosed that it was the victim of a serious data breach from at least November 27 to December 15 of 2013. More than 40 million debit and credit card numbers were stolen. Hackers stole customer names, card numbers, card expiration dates, the embedded codes on the magnetic strips on the backs of cards, and in some cases PINs for debit cards used at Target.
The card information has reportedly already begun to flood the black market, selling for between $20 and $100 per card. Target has stated that it will offer free credit monitoring services to affected customers. Continue reading “Target Data Breach Highlights Importance of Insuring Cyber Risks”
Erin L. Webb
A federal court of appeals and the Nuclear Regulatory Commission (NRC) recently made advances toward a national disposal site for spent nuclear fuel. My recent Law360 column analyzes the potential impact of an eventual spent nuclear fuel disposal site on insurance coverage for nuclear plant owners. Shipping spent nuclear fuel offsite for disposal presents very different risks from those associated with storing the spent fuel onsite, which is the situation at many nuclear power plants today.
The D.C. Circuit recently held that the U.S. government may not collect any more fees from nuclear plant owners under the Nuclear Waste Policy Act until it finalizes a disposal solution for spent fuel. Nat’l Ass’n of Regulatory Util. Comm’rs v. U.S. Dep’t of Energy, Nos. 11-1066, 11-1068, 2013 WL 6064021 (D.C. Cir. Nov. 19, 2013). Additionally, the NRC directed its staff last month to “complete and issue the Safety Evaluation Report” on the U.S. Department of Energy’s (DOE) application for consideration of the Yucca Mountain site as a disposal facility. In the Matter of U.S. Dep’t of Energy (High-Level Waste Repository), No. 63-001, __ N.R.C.___, slip op. at 23 (Nov. 18, 2013). Continue reading “Disposal Site for Spent Nuclear Fuel Could Change the Insurance Picture for Nuclear Plant Owners”
Insurance-related issues are a critical aspect of any merger or acquisition and should be addressed early in the deal process. The insurance-related issues that may arise in deal contexts are too many to address here, but companies entering a potential deal should keep the following considerations in mind.
Evaluate liabilities, exposures, and insurance program. Evaluating a target company’s insurance program frequently sheds light on the company’s overall operations and quality of the company being purchased. A target company that presents a poor insurance risk relative to its loss history may also be a poor business risk. Accordingly, a party to a potential deal will be well-served to evaluate the target company’s operations to determine current liabilities and exposure to loss, and thoroughly examine the target company’s insurance portfolio to determine if existing insurance is likely to cover the liabilities. The analysis may also inform decisions regarding the need for future insurance purchases to fill any gaps in coverage for potential loss exposures. To conduct these evaluations and examinations, the company and its insurance coverage counsel should obtain the target company’s current and historical insurance policies, any coverage charts that may exist, pleadings from any litigation in which the target is involved, and loss history reports. Also, if possible, interviewing the target company’s internal legal and risk management teams and outside insurance coverage counsel frequently provides an efficient means to obtaining key information and answering questions. Continue reading “Insurance Implications for M&A Deals”
In a September 24, 2013 ruling, the New Jersey Supreme Court addressed whether liability insurers covering a long-tail environmental contamination loss may seek contribution from the New Jersey Property-Liability Insurance Guaranty Association (“NJPLIGA”) for the Carter-Wallace shares of insolvent insurers. Perhaps most important to insureds, the court rejected the position that the insured bears the burden of the insolvent insurer’s Carter-Wallace allocated payment obligation to the extent NJPLIGA was not required to pay. Instead, the payment burden rests solely with solvent insurers on the risk.
Farmers Mutual Fire Insurance Co. v. New Jersey Property-Liability Insurance Guaranty Assoc. involved two insurers (Farmers Mutual and Newark Insurance Co.) that insured properties that suffered soil and groundwater contamination caused by underground storage tank leaks. Farmers Mutual paid all of the remediation costs and, after Newark was deemed insolvent in 2007, sued NJPLIGA for contribution seeking to recover Newark’s Carter-Wallace share of the remediation costs. Continue reading “N.J. Supremes: Insureds Are Not Obligated to Pay an Insolvent Insurer’s Carter-Wallace Allocated Payment Obligation Before Accessing NJPLIGA’s Statutory Benefits”
James S. Carter
Is your company about to embark on an advertising campaign? Insurers offer a wide variety of specialized insurance coverage for advertising risks. The marketing materials associated with such coverage often suggest that the coverage is broad. Advertising policies, however, often contain non-standard and untested language that might contain subtle nuances that could give rise to coverage disputes.
In one recent case, a coverage dispute turned on the placement of a mere comma in a seemingly broadly written provision granting coverage for advertising-related claims. See ACE European Group, Ltd. v. Abercrombie & Fitch, 2013 U.S. Dist. LEXIS 131269, Case No. 2:12-CV-1214, Case No. 2:11-CV-1114 (S.D. Ohio Sept. 13, 2013). Abercrombie & Fitch sought coverage under a “Safeonline Advertisers and Internet Liability Policy” for several consumer class actions alleging that Abercrombie had misled consumers about a nationwide gift card promotion. Continue reading “Advertising Insurance Policies: Advertiser Beware”