Common Interest Doctrine Prevails in Disclosure Dispute

Communications between an insurance carrier and its reinsurers may or may not be protected by privilege and may or may not be further protected by the common interest doctrine. The analysis is fact-specific, but important where reinsurance communications are sought in litigation. In a recent case, a New York federal court upheld an insurer’s withholding of reinsurance communications based on both work-product privilege and the common interest doctrine.

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New York’s Highest Court Rules Direct Physical Loss or Damage Requires Material Alteration or Complete and Persistent Dispossession

The New York Court of Appeals (New York’s highest court for those expecting it to be the supreme court) has finally weighed in on the COVID-19 question of what direct physical loss or damage means in a property policy providing business interruption coverage. Not surprisingly, New York joins the vast majority of state and federal courts and affirmed the order below dismissing the complaint.

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Court Appoints Umpire in Coverage Dispute

Many arbitration clauses, especially those that reference arbitration rules, provide for a party to go to the court where there is an impasse in appointing the arbitrator or umpire. In a case decided earlier in 2023, an insurance coverage dispute subject to arbitration landed in court to resolve a dispute over selection of the umpire.

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Ninth Circuit Court of Appeals Certifies COVID-19 Question to the California Supreme Court

While insurers have been successful in dismissing most COVID-19 property damage claims, especially in federal court, many of the coverage issues that arise in federal court actions are resolved based on state law. When a federal court finds that resolution of a dispute is governed by state law and that there is no controlling state law precedent, the court may certify the state law question to that state’s supreme court for resolution.

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COVID-19 and Insurance Premiums

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The COVID-19 pandemic has brought about myriad issues including whether there is insurance coverage for losses allegedly caused by the virus and its collateral effects. In the United States, insurance companies have been largely successful in avoiding coverage in the majority of disputes over whether commercial property policies provide coverage under business income and extra expense provisions for COVID-19 losses. That is because most commercial property policies require direct physical loss or damage to property for coverage to apply.

To avoid the issue of alleging and proving direct physical loss, one insured took a different tactic. It argued that it was being overcharged its insurance premium because its exposure to loss was much lower due to COVID-19. An interesting and novel approach.

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What Does the First COVID-19 Appellate Decision Mean?

It was bound to happen sooner or later. Finally, an appellate court has weighed in on a COVID-19 property damage coverage dispute. This first appellate decision goes into the insurer win column. So what does it mean for future cases?

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Forum Shopping and COVID-19 Coverage Cases

When bringing a lawsuit there is often strategy to the venue chosen. This is especially true in insurance coverage cases where the outcome can vary by jurisdiction. Another consideration is whether the disputed contract, like an insurance contract, has a forum selection clause, which dictates the venue for the dispute. In a recent case, a court addressed both these issues in deciding a motion to dismiss. The case is a COVID-19 business interruption coverage dispute.

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Reinsurance Trials Set Back by Pandemic

One year into the pandemic I thought it might be a good time to reflect on how the shutdowns have affected reinsurance trials. What, you say? A reinsurance trial? Aren’t they all arbitrated? Well, yes, most are, but not every reinsurance contract has an arbitration clause and, moreover, not every case brought against a reinsurer is a breach of contract case.

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Brokers and Insurers Prevail in COVID-19 Coverage Action

There is no question that the COVID-19 restrictions imposed by local and state governments have had an unintentional but devastating effect on businesses both large, medium and especially small. Restaurants, movie theaters, live entertainment, sports. gyms, salons and many other businesses have closed because of the lack of business. While many of these businesses purchased insurance with coverages for business income and extra expense, the lack of direct physical loss of or damage to property has meant that these policies, for the most part, do not cover the loss of business caused by the government shut-down orders.

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Broad Policy Endorsement Dooms Motion to Dismiss in COVID-19 Case

COVID-19 business interruption rulings periodically have interesting quirks worth discussing. While the majority of cases are being dismissed at the pleading stage, some are not for various reasons. In a recent Ohio state court case, the motion to dismiss on the pleadings was denied in major part because of an endorsement expanding coverage in a business property policy for a restaurant.

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