Businesses Operating out of Homes: Insurance Coverage Challenges and Opportunities
With the vastly increased popularity of work-from-home arrangements following the COVID-19 pandemic, more businesses than ever have elected to forego the expense of a dedicated office. Many such businesses still require a legal address, and the business owner’s residence can be a convenient solution. In addition to the basic Commercial General Liability (“CGL”) policy that all business owner’s should maintain, a Homeowner’s policy and an Errors and Omissions (“E&O”) policy should be considered for additional protection.
“Slander of Title” Coverage under E&O Policy Unearthed by Ninth Circuit
“Slander of Title” is a commonly added cause of action in lawsuits addressing disputes over real property. Historically, such claims have had a limited intersection with insurance coverage. The principle exception is where the targeted defendant procured a Title Insurance policy providing directly applicable coverage. A recent decision by the Ninth Circuit analyzing potential coverage under an Errors & Omissions (“E&O”) Management Liability policy, however, has finally acknowledged the potential for coverage under more general policies. The decision’s rationale allows policyholders to reap policy benefits from both a Commercial General Liability (CGL”) policy as well as a Title Insurance policy if both are implicated by the fact dispute.
Pursuit and Defense of Patent Infringement at Insurer’s Expense
Patent infringement litigation fees constantly escalate. According to a 2023 American Intellectual Property Law Association (“AIPLA”) survey, the median cost of litigating a patent lawsuit through trial ranges from $600k when the amount in controversy is less than $1M to $3.625M when the amount is over $25M. Patent holders have secured significant settlements and judgments premised on reasonable royalty awards. These recoveries have led patent litigation entities such as Burford to finance this litigation. Cross-licensing of patents also factors into resolutions of these lawsuits. Companies that do not have a significant patent portfolio cannot exchange licensing rights with competitors to resolve infringement disputes. Therefore, the inability to afford costly patent litigation may cause the abandonment of key market advantages that are central to the company’s strategy.
Potential Liability from Use of ChatGPT’s Responses
ChatGPT has made frequent appearances in headlines lately for its ability to quickly draft lucid responses that feel much less “artificial” than the content normally associated with artificial intelligence programs. The answers it provides are so good that many have begun wondering how they might take advantage of the tool for promoting themselves or their businesses. As is so often the case for insurance lawyers, this is the part where we have to advise caution and consider the potential liability that might stem from proposed activity.
Finding Appropriate Media Policy Coverage
Businesses beyond obvious multimedia categories, such as advertisers, producers, publishers, or others like them, may need to acquire media liability coverage to protect against the rising use of and threats associated with integrating social media and online business operations. Social media is becoming a key aspect of business operations for advertising and making virtual connections to consumers and partners which calls for more attention for the need to secure coverage of media risks.
Recovery of Pre-Tender Defense Fees When Notice Is Late
Many intellectual property lawyers routinely litigate copyright lawsuits and immediately provide notice to a Commercial General Liability (“CGL”) insurer. Thereby, they secure defense fees for “Personal and Advertising Injury – offense (g)” “infringement of copyright, trade dress or slogan in your ‘advertisement,’” which broadly defines the term “advertisement.” But what if the covered claim is inchoate such as fact allegations that evidence trade dress claims not labeled as such?
What Insurers Do Not Want You to Know About the Policies They Sell
Insurance policies are difficult to read at the best of times. This is a calculated move by the insurance providers in the hopes that policyholders will not avail themselves of all the protections contained therein. On occasion, however, the insurers’ tactics can be turned upon them. The twisting, complicated language can sometimes open the door for policyholders to argue for coverage in areas the insurer may not have intended to provide it. Careful lawyering and receptive judges have codified several of these expanded coverage areas over the years, and a few such examples are presented below.
When Does Appointed Counsel Not Discharge an Insurer’s Duty to Defend?
Insurers often fall short of properly discharging their duty to defend by not providing the counsel demanded by the law and the terms of the policy. In some instances, insurers will deny coverage but still provide a “courtesy defense.” In other cases, the insurer may agree that a claim triggers the duty to defend but only provide attorneys who are ultimately loyal to the insurance company, despite the conflicts of interest created by that loyalty. In either situation, the insurer is attempting to take advantage of the policyholder’s ignorance and failing to hold up its end of the agreement.
The Coverage Attorney’s Role as Expert Witness in Proving Damages Against an Insurer
Historically, insurance coverage counsel have had a limited role as testifying experts. Typically, testimony of defense counsel who incurred the defense fees whose recovery is sought suffices to prove their reasonableness. But when insurers challenge their analysis, testimony from experts inform that determination. A pair of recent Texas decisions demonstrate when expert witnesses can aid in resolving damage recovery disputes. An earlier decision applying California law and several assessing New York law also explore the limitations on use of expert testimony in addressing defense fee recovery issues. Indeed, one New York court specifically identified jurisdictional differences, one of the primary complaints of America Can! plaintiffs, as the reason for entirely discounting expert reports.
Securing Policy Benefits Beyond Insurer Shell Games
What’s the best approach to choosing an insurer based on policy language or service? As policy holder insurance coverage counsel, I am occasionally asked to assist policy holders in procuring coverage. In that capacity, I have analyzed a number of risks under CGL/Umbrella/Excess, D&O, E&O, Media, Cyber Media, Technology, IP, EPLI, Fiduciary, Crime, and a host of other forms of insurance coverage. My primary focus is policy language. That is what a court must interpret. Nonetheless, insurers that allow policyholder to retain independent counsel, where the law allows it, at rates they validate, and extend authority to resolve litigation within policy limits receive my recommendation.
Insurance Coverage for and IT Consultant’s Role in Media/Cyber Policy Application
As many entities shift a number of employees to remote desktop work, policyholders face the challenge of procuring appropriate coverage for risks arising from their growing online business operations. Traditional policies leave gaps in coverage for cyber-related claims as their policy language rarely include the necessary protections for injury cause through online operations. Make sure you have the appropriate coverage for your online business by securing Cyber/Media polices into your insurance portfolio.
Why NFT Valuation Represents an Insurable Asset
Insurers may well find themselves embroiled in policyholder quests to secure defense fee reimbursement arising out of lawsuits contesting rights to NFTs and infringing uses of asserting NFT rights.
Reach for the Stick: Why Dynamite is Less Dangerous Than "Claims Made & Reported" Policies
Dynamite is inherently risky and should be treated with kid gloves. Nitroglycerin, an element, within the dynamite is susceptible to shock and so must be handled with extreme caution and care. Compared to dynamite, “Claims-Made-and-Reported” policies include a number of traps for the unwary policyholder that if not mindful can result in major losses.
Conservative 5th Circuit Broadly Construes "Publication" in Policy to Cover Hack
Despite generally analogous insurance policies being available across the country, the location of a lawsuit and the predispositions of particular courts can often be determining factors in coverage lawsuits, particularly where a case comes down to conventions of policy interpretation.
Insurance Coverage Under E&O/D&O Policies for Fraud
In RSUI Indemnity Co. v. Murdock, a D&O policy was found to require the defense of a federal securities action. The court affirmed the trial court’s determination that a Profit/Fraud Exclusion did not apply, because there was no adjudication of the underlying action, which was a requirement for the exclusion.
Expanding Opportunities for Coverage of M&A Transactions in Representation and Warranty Insurance
The prevalence of RWI may lead corporations and their coverage counsel to ask whether it makes sense for them. How big must a deal be to make such a policy worthwhile? What opportunities exist—where can a policy be found, and what limits are available? Are there any pitfalls?
Narrow, Narrower and Narrowest: The Insurer's Playbook to Avoid Coverage
A recurring theme in Commercial General Liability (“CGL”) policy forms is that there has been an ongoing narrowing of “personal injury”/ “advertising injury” coverage provisions.
Navigating Issues of Dual Representation Where Both Appointed Counsel and Independent Counsel Jointly Defend a Covered Lawsuit
In many cases, a defendant in a lawsuit may want to select their own lawyer, even if they believe that their liability insurance obligates the insurer to appoint one. If the defendant chooses to do so: “both the counsel provided by the insurer and independent counsel selected by the insured shall be allowed to participate in all aspects of the litigation. Counsel shall cooperate fully in the exchange of information that is consistent with each counsel’s ethical and legal obligation to the insured.”
Assuring Pre-Tender Fees Are Recoverable by Providing Proper Notice to Insurers
A Failure to Provide Notice Even Where it Does Not Preclude the Right to Any Defense May Limit a Client to Recovery Of Only Post-Notice Attorneys’ Fees.
Avoiding Malpractice by Providing Prompt Notice of Intellectual Property Claims to Insurers
“Intellectual property attorneys may have a duty to apprize their clients of the need to notify their clients’ insurers of claims as part of their retention in order to fully represent their clients’ interests in a lawsuit for which they are counsel of record.”