Multiple insurance policies may ultimately be triggered as a result of the global COVID-19 pandemic. Companies should keep detailed records now to assist with any future insurance claims. The attached is a preliminary documentation checklist which will aid companies in maximizing their insurance once claims are filed.
The general intent of business interruption (BI) insurance is to cover unexpected losses to the business from the inability to use property necessary to run the business. The current form BI policies have a mechanism for making a claim for loss of revenue and/or increased costs to the business. They typically also have Civil Authority coverage to replace lost revenue when the government closes a business’s property, but carriers generally consider this a limited remedy for a short time period (such as a month). The real disagreement from carriers regarding coronavirus (COVID-19) claims is that there must be physical property damage, and even if there is property damage, the virus exclusion prevents claims for losses from COVID-19. Moreover, carriers argue that if these coverage issues are defeated in court or removed by legislation, the carriers do not have sufficient reserves to cover the anticipated BI-related claims caused by COVID-19. For example, the American Property Casualty Insurance Association has recently claimed that being forced by legislative intervention to cover small business BI losses related to COVID-19 would cost insurers $383 billion a month.
According to ZDNet, hackers successfully breached eleven major cryptocurrency exchanges in 2019 and stole more than $283 million worth of cryptocurrency (view reference here). We should expect this number to increase in 2020 as governments and cybersecurity experts warn that hackers will seek to take advantage of the coronavirus crisis to infiltrate corporations and as a vast number of employees move to teleworking. Specifically, cryptocurrency owners who maintain “hot wallets” should be particularly vigilant in protecting their assets because hot wallets are more vulnerable to theft and may not be covered by current insurance policies. Lloyd’s of London, however, recently announced the development of a new policy that will provide coverage for hot wallets. This blog has previously discussed the insurance industry’s attempts to develop new policies and endorsements to cover risks related to the cryptocurrency industry. See relevant past articles: Prepare for the Future With Cryptocurrency Insurance and The New Money: Cryptocurrencies and the Role of Insurance. Continue Reading Cryptocurrency Insurance for “Hot Wallets”
Numerous businesses facing class action lawsuits brought under the Illinois Biometric Information Privacy Act (BIPA), 740 ILCS 14 et seq., have sought insurance coverage under general liability policies only to receive blanket denials. It appears some relief may be on the way as the first Illinois Appellate Court to consider the issue affirmed the decision of the trial court and found in favor of coverage. West Bend Mut. Ins. Co. v. Krishna Schaumburg Tan, Inc., 2020 IL App (1st) 191834 (March 20, 2020). Continue Reading First Illinois Appellate Decision Finds Coverage for BIPA Class Action Under General Liability Policy
The cannabis industry has many component parts, from growers to retailers (dispensaries), and everything in between. And each component part of this burgeoning industry has its own set of risks and exposures, for which it will need insurance protection. Continue Reading Fast Times at Ridgemont…Oh Forget It. The Cannabis Industry Is New; and So Are the Insurance Issues, Sort of.
Most customers of companies using the internet to reach their suppliers of goods and services agree that digital access provides enormous convenience and often reduced cost. But along with that, it also seems to provide an unending stream of lawsuits and regulations over storage and use of data and hacking into data bases. The latest addition to this stream of lawsuits is SS&C Tech. Holdings v. AIG Specialty Insurance Co., 2019 U.S. Dist. Lexis 194196 (S.D.N.Y. Nov. 5, 2019). Continue Reading Update On Coverage For Privacy Lawsuits—Although Traditional Policies May Provide Some Coverage, Comprehensive Coverage Requires Cyber Insurance
As the coronavirus (COVID-19) outbreak continues to evolve, more businesses are feeling the impact. Earlier this week, Apple announced that it does not expect to meet its quarterly revenue forecast due to interruption of its Chinese manufacturing operations and decreased demand from Chinese consumers. In a previous post, we outlined how business interruption insurance coverage may help offset financial losses in a health emergency like the coronavirus outbreak.
Business interruption coverage is usually purchased as part of a commercial property policy. As we explained, business interruption coverage typically applies when a policyholder suffers “direct physical loss of or damage to” covered property, and insurers may dispute whether a disease outbreak like coronavirus constitutes “physical loss” or “damage.” Likewise, contingent business interruption coverage, which insures losses due to suspension of operations by a supplier, typically applies if the supplier suffers “physical loss” or “damage” that would be covered if sustained at the policyholder’s property. And civil or military authority coverage, which insures losses when a government order restricts access to insured property, usually applies if that order is the “direct result” of physical loss or damage of the same type insured by the policy. Continue Reading Coronavirus Coverage: Policy Language that May Cover (or Exclude) Your Business Interruption Losses Caused by the Outbreak
The start of 2020 has brought uncertainty for tech businesses as individuals in the global health and business communities grapple with trying to understand and contain the deadly new coronavirus. Originating in Wuhan City, Hubei Province, China, the coronavirus has infected more than 28,000 people, killing at least 560. On January 31, 2020, the World Health Organization declared the 2019-nCoV virus (the formal medical designation of this new strand of coronavirus) a public health emergency. The Centers for Disease Control and Prevention, which is also closely monitoring the outbreak, reports that “[t]he potential public health threat posed by 2019-nCoV virus is high, both globally and to the United States.” Continue Reading Coronavirus Coverage: How to Offset Your Business Losses in a Global Health Emergency
Companies that wish to have higher limits of insurance than their primary (or umbrella) insurance companies are willing to provide usually can purchase excess insurance policies. Excess policies respond to losses above the limits of the primary layer of coverage. A company may purchase multiple layers of excess coverage from different insurance companies, creating a tower of coverage, with the primary layer at the bottom, and one or more excess layers at the top.
Many excess insurance policies are written as “follow-form” coverage. That is, rather than containing a full set of terms and conditions themselves, the excess policies “follow form” to, or incorporate by reference, the terms and conditions of a policy in a lower layer. Follow-form excess policies therefore tend to be shorter than policies that need to set out all of their own terms. The general idea behind follow-form excess coverage is to provide a seamless tower of coverage to the policyholder to respond to large losses.Despite their brevity, the mechanics of follow-form excess policies do not always work as smoothly as intended. This post sets out a number of traps for the unwary that sometimes are hidden within excess insurance policies. As described below, most of these can be avoided if policyholders and their advisors are vigilant when purchasing excess policies, and stay away from those with language that could lead to unintended results. Continue Reading Avoiding Traps for the Unwary in Excess Insurance Policies
Insurance coverage lawyers and commentators have drawn considerable attention to state and federal data protection statutes in recent years. E.g., Freya K. Bowen, “Beyond GDPR: Insurance Coverage for Emerging Cybersecurity and Privacy Regulatory Exposure,” Perkins Coie Tech Risk Report (April 10, 2019), available here. Statutes governing the collection and use of biometric data have received much less attention, even though several states have passed such statutes and other states presently have some version under consideration. As previously noted in this blog, Jim Davis, “Biometrics Liability on the Rise: Are you Covered?” Perkins Coie Tech Risk Report (May 8, 2019), available here, these statutes apply to data as diverse as fingerscans DNA swabs, and even, potentially, facial recognition scans. Companies may be subject to regulatory actions or private litigation for violations, and, naturally, may seek insurance coverage for the resulting exposure. Some of these insurance claims will be subject to the same issues arising with claims relating to other data protection or privacy statutes, while other claims will raise specific insurance concerns unique to biometric data. Although these statutes are quite new, several recent cases help give policyholders a good indication of where the key risks may lie. Policyholders with exposure to these statutes should ensure that the appropriate insurance coverage is in place. Continue Reading Employee Biometric Data: Are You Covered for Collecting or Using It?