Skip to content
Category: Insurance
-
“Although many commentators have noted the potential exposure for cyber claims in the form of shareholder actions under D&O coverage, little attention has been given to the risks of cyber exposure under Side C [D&O corporate liability] coverage,” write Laura A. Foggan and Thomas Kinney of Crowell & Moring LLP. “D&O policies contain many exclusions and coverage limitations that should protect against undue, unintended expansion of such policies to encompass cyber risks. However, as this case illustrates, courts may not always agree that those coverage limitations fully address cyber breach exposures.”
-
“Because insurers are facing a difficult time evading coverage for opioid claims, they are raising all sorts of non-contractual defenses to avoid coverage, including a ‘social insurance’ argument they have raised in the past.
“If past public health crises are prologue, these arguments will run something like this: Holding insurers responsible to pay for the costs of public services, including health care, will transform private party liability insurance into social insurance to underwrite public health epidemics caused by all manner of ills. According to insurers, this will, at a minimum, increase the cost of liability insurance, and financially harm liability insurers, who have not priced this risk into their premiums. Moreover, holding insurers liable to pay will shift costs away from those best equipped to address the social problem; the companies that supply the opioid products.
“These arguments are inconsistent with insurance law, which permits parties to freely contract to cover risks, and which place the burden on insurers to pay for insured risk, even if they made an error in underwriting. Courts interpret insurance contracts according to their language and construe them against insurers if they are ambiguous, and in favor of an insureds’ reasonable expectations of coverage.
“Moreover, to the extent courts are inclined to look past contract language when construing insurance policies, the social arguments cut in favor of coverage, not against it, because liability insurance is designed to perform risk management, and deterrence and compensation functions of insurance are important to the social functioning and ordering of society. … These social purposes are especially easy to grasp in the context of pharmaceutical companies that develop and bring to market countless products, including opioid pain medicine, that can relieve human pain and suffering. These companies bought and paid for liability insurance to manage the risks inherent in their business. They are entitled to enforce the promises made to them by those insurance companies that accepted their risks and their premiums.”
-
Companies can face large financial exposure for GDPR “fines or penalties.” Are they covered under currently worded cyber policies? The answer is, maybe not if your policy, e.g., covers regulatory proceedings addressing only failures to protect private information, as opposed to GDPR proceedings that may address broader noncompliant data collection and use practices. Additionally, coverage for GDPR fines or penalties may be more restricted under the laws of many European countries than the laws of certain states in the United States. Your insurer may agree to choice of law language in your policy that will increase the chances of coverage.
On behalf of all of us at HB — Congratulations to Linda on her move to Blank Rome!
Now Vice Chair of the firm’s Insurance Recovery Practice Group, Linda is one of the nation’s most prominent insurance recovery attorneys, representing corporate policyholders in high-stakes litigation for more than 25 years. Using strategic, creative approaches in her trial and appellate practice, Linda assists her clients in the recovery of hundreds of millions of dollars in insurance assets. She is a strategic adviser to senior executives and in-house counsel on mitigating risk and maximizing insurance recoveries.
Linda has been a valued contributor to HB programs and, before that, to Mealey’s Conferences and Mealey’s Litigation Reports.