Hunton Insurance Recovery Blog: Updates, Analysis and Breaking News for Commercial Policyholders
This Client Alert is a monthly update on insurance recovery developments as posted on the Hunton Insurance Recovery Blog. If you would like to receive email alerts when new posts are published, please visit our blog and enter your email address in the subscribe field.
The top three most read articles for the month were:
- COVID-19 Event-Driven Litigation Continues to Sail
In March, we reported on the initial filing of several securities class action suits arising from the coronavirus pandemic (COVID-19). For example, at the start of the pandemic, shareholders of Norwegian Cruise Lines Holdings, Ltd. filed a class action alleging that the company and certain officers violated the Securities and Exchange Act of 1934. The lawsuit alleged that the cruise line made false and misleading statements about COVID-19 in order to persuade consumers to purchase cruises. This allegedly caused the share prices to be cut in half.
- While OFAC Cautions Cyber Insurers About Facilitating Ransomware Payments, Policyholders Should Ensure They’re Covered
Is it illegal for an insurer to pay the ransom demanded in a cyber extortion or ransomware attack on its insured? According to the US Department of the Treasury’s Office of Foreign Assets Control’s (“OFAC”) October 1, 2020 advisory (“OFAC Advisory”), in certain situations, it may be.
- Federal Judge Refuses to Limit Coverage and Moves Forward with Policyholder’s Claims Against Insurer and Broker
On November 10, 2020, a New York federal judge dismissed an insurer’s counterclaims seeking to cap its exposure under a $15 million sublimit and an order estopping the policyholder from pursuing any additional amounts.
Other interesting articles posted this month were:
- Engineering Coverage for Social Engineering Schemes in Light of New Jersey Federal Court Opinion Finding No Errors and Omissions Coverage for Email Scam
It’s a cautionary tale of cyber fraud. A title agent in a real estate transaction receives an email ostensibly from the mortgage lender providing instructions for transferring the loan proceeds into a settlement bank account. After transferring the funds ($520,000), it becomes apparent that the transfer instructions came from an email address that was one letter off from the mortgage lender’s actual email address – it was a scam. But it’s too late, the scammer has already withdrawn the funds from the settlement account and cannot be traced.
- Insurer Ordered to Clean Up Robot Vacuum Cleaner’s IP-Related Suit
On November 19, 2020, a Delaware judge ruled in Indian Harbor Ins. Co. v. SharkNinja Operating LLC, et al., that insurer Indian Harbor must defend SharkNinja against underlying patent infringement and false advertising claims despite a patent infringement exclusion.
- Recall and Recoup: Georgia Court Denies Insurer’s Early Motion to Escape Contribution Claim Arising from $51 Million Product Recall Coverage Dispute
A federal judge has denied an insurance company’s motion to dismiss the claims of another insurer seeking reimbursement and contribution for the $15 million it paid to settle underlying claims arising from a product recall.
- Texas Court Treats 124 Separate Food Poisoning Cases as Single “Occurrence”
In this month’s Recall Roundup on the Hunton Andrews Kurth Retail Law Resource blog, Hunton insurance attorneys Syed S. Ahmad and Geoffrey B. Fehling weighed in on a recent food contamination insurance coverage dispute, Travelers Casualty Insurance Co. of America v. Mediterranean Grill & Kabob, Inc. (W.D. Tex. Nov. 4, 2020), which dealt with single versus multiple “occurrences” under an insurance policy, a common issue in recall and contamination-related claims.
- Georgia Court of Appeals Upholds Denial of Coverage Because Insurance Broker Lacked Agency to Accept Premium Payment
In American Reliable Insurance Company v. Lancaster, the Georgia Court of Appeals reversed the denial of a property insurer’s summary judgment motion concerning the insurer’s denial of a fire loss claim. The basis of the denial was that the policyholders had failed to pay the policy premium. The policyholders, Charlie and Wanda Lancaster, claimed that they had paid their policy premiums for several years to their insurance agent, Macie Yawn. In October 2014, American Reliable mailed a renewal notice to the Lancasters notifying them that premium payments had to be made directly to the insurer. After it did not receive payment from the Lancasters, American Reliable sent them a cancellation notice in December 2014, again notifying them that payments be made directly to the insurer. The Lancasters denied having received either notice from American Reliable, but the record included a receipt for certificate of mailing.
- Mitigating FCRA Risk Through Insurance
As reported in a recent Hunton Andrews Kurth client alert, Mitigating FCRA Risks in the COVID-19 World (Oct. 23, 2020), consumer litigation claims related to the Fair Credit Reporting Act (FCRA) doubled in the years leading up to the COVID-19 pandemic. After a slight decrease in FCRA filings due to court closures and other COVID-19 restrictions, claims will likely resume their previous upward trajectory. In fact, the Consumer Financial Protection Bureau (CFPB) has already seen an uptick in consumer complaints, many of which mention COVID-19 specific keywords.