Insurance Policy Types

Can an intentional attack carried out through social media trigger liability coverage? A recent Pennsylvania case found potential coverage under a homeowner’s policy for a case of cyber bullying that ended in the suicide of the victim. The court found that the intentional actions of the insured’s son constituted an accident, and therefore an occurrence, because the claim in part alleged negligence and because the actions of the victim were not necessarily expected from the standpoint of the insured. This specific situation is, of course, unlikely to arise in the context of a businesses concerned about social media risks, but the underlying reasoning may be useful in assessing potential coverage for other intentional acts carried out over social media or other communications technology.
Continue Reading

In my previous blogs, I pointed out that security breaches are like death and taxes (i.e., unavoidable), and that insureds simply need a product that will pay for any losses from the inevitable security breaches. I also pointed out that insurance companies could help by certifying security products that were good enough to guarantee a payment under the companies’ policies if there were a breach. The recent Mondelez case points out why insureds often wonder whether carriers really intend to pay claims. There, the maker of Oreo cookies bought a policy which covered intrusions into the company’s computer code. After the advent of the Notpeya ransomware, the carrier refused claims valued in the millions based on the war exclusion.
Continue Reading

Biometric Privacy Lawsuits

In early 2019, the Illinois Supreme Court opened the floodgates for advancing private causes of action under the state’s 2008 Biometric Information Privacy Act (“BIPA”), 740 ILCS 14 et seq. In Rosenbach v. Six Flags, the Court found that no proof of actual injury or damage beyond technical infringement was necessary to state a claim under the BIPA. Now, Illinois courts are seeing a wave of BIPA class action lawsuits, even though the Six Flags case merely concluded that a biometric plaintiff had standing to sue and did not resolve the legal requirements necessary to prove a negligent or intentional violation of BIPA.
Continue Reading

The entire insurance industry is suddenly abuzz about the rarely discussed “war exclusion.” A standard provision in most policies that excludes claims caused by a hostile or warlike action in time of peace or war, usually by a military or a government/sovereign power, is all the rage. Why? The billions of dollars of damages caused by the NotPetya virus and insurers attempts to avoid paying them.
Continue Reading

Should you stress if the insurance company issuing the policy that is supposed to be protecting your business—whether in a certificate of insurance you received from a third party or within your own insurance portfolio—is “non-admitted”?  As discussed below, there is no need to sweat.

An “admitted” insurance company is one that has been approved by a state’s department of insurance.  This generally means that the insurance company must file policy forms, underwriting guidelines, and rates with the state for approval.  Admitted insurers also pay into state guaranty funds, which are designed to step in if the insurer becomes insolvent.  Non-admitted insurers, also called surplus lines insurance, are not subject to those same regulations.
Continue Reading

The European Union’s sweeping Global Data Protection Regulation (GDPR), which took effect on May 25, 2018, dramatically expanded the compliance obligations of companies collecting or using European Union citizens’ personal information. It also substantially increased regulatory exposure for companies due to its strict requirements and draconian penalties for non-compliance, including potential fines of greater than 20 million Euros or 4% of a company’s annual worldwide revenue. GDPR Art. 83, § 5. See Perkins Coie’s GDPR Resources for an overview of the regulation, and Will Your Cyber Policy Provide Coverage for GDPR Violations? for a discussion of insurance coverage issues arising from the regulation. Yet the new regulatory landscape facing companies that collect, use, or manage consumers’ personal information has expanded far beyond the GDPR, and many United States jurisdictions have enacted or are in the process of enacting regulations governing the collection, storage, and use of consumer information. As a result, any company that handles consumer personal information must have a thorough understanding of these regulations and must make sure that its insurance program aligns with its regulatory exposure in order to effectively manage the risks arising out of burgeoning cybersecurity and privacy regulations.
Continue Reading

Companies engaged with digital assets, particularly those companies without a track record, are finding it to be a struggle to procure broad directors & officers (“D&O”) liability coverage.  Specifically, insurance underwriters are spooked by the regulatory uncertainty surrounding digital assets, particularly Initial Coin Offerings (“ICOs”), which have emerged as an alternative to traditional equity offerings, e.g., the sale of stock in a venture.  The reality, however, is that many companies engaged with “coins” or “tokens” or other digital assets also raise capital through traditional securities offerings, and they need protection for those activities.  But many underwriters are not willing to sell coverage for those traditional activities, merely because the company also is engaged in the digital asset space. 
Continue Reading

Many businesses rely upon social media to raise awareness and enhance visibility of a new product or new line of business.  Social media platforms such as Facebook are often used to generate buzz around an opening or a launch before it takes place.  Anticipatory use of social media, however, can complicate insurance coverage if the right policies are not already in place.  The Idaho Supreme Court recently upheld the denial of coverage to a business that had published a preview of a new logo prior to opening.  Scout, LLC v. Truck Ins. Exch., 434 P.3d 197 (2019).  The court held that a Facebook post by the insured pub showing a close facsimile of the anticipated logo constituted a “prior publication,” triggering an exclusion under the pub’s subsequently purchased commercial general liability policy.  Although some other courts have reached different conclusions in relatively similar circumstances, the case stands as a cautionary tale for new businesses.
Continue Reading

Title III of the Americans with Disabilities Act (ADA) provides that

No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.

42 U.S.C. Section 12182(a). What about a website? Is that a “place of public accommodation”? The answer to that question could make a big difference in determining whether your business faces legal risks and whether you can protect against those risks with insurance. A recent decision out of the Ninth Circuit highlights the split in United States jurisdictions about whether a website is subject to the prohibitions against discrimination found in the ADA. 
Continue Reading

Despite the increase in data breaches and cyberattacks involving large corporations, efforts to hold directors and officers personally liable for these events have largely been unsuccessful. However, recent developments in two high-profile data breach cases suggest that the relative safety directors and officers have previously experienced from cybersecurity-related suits may be coming to an end. On January 4, 2019, the Superior Court of California approved a $29 million settlement in consolidated derivative litigation brought against directors and officers of Yahoo, Inc. arising out of two data breaches compromising sensitive information of over one billion Yahoo users. See In re Yahoo! Inc. Shareholder Litig., Case No. 17-CV-307054, (Cal. Supp. Ct Jan. 4, 2019). This settlement, which includes a court-approved plaintiff’s counsel’s fee of $8.6 million, represents the first significant recovery in a data-breach related derivative lawsuit targeting directors and officers for breach of fiduciary duty.
Continue Reading