Insurance Update

January 24, 2023 | Robert Tugander | Greg E. Mann | Insurance Coverage

It was a busy end to the year, as courts handed down several key insurance decisions before ringing in 2023.

The Ohio Supreme Court considered the contours of “direct physical loss or damage” in two separate decisions – one for pandemic-related business interruption losses, the other for losses from a ransomware attack.  In both cases, the court found that the insured did not suffer “direct physical loss or damage.”

The North Carolina Supreme Court addressed issues of first impression for that court, ruling that long-tail loss must be allocated pro rata based on each insurer’s time on the risk.  The court also adopted an exposure trigger, finding that bodily injury occurs during the period of a claimant’s exposure and not when the claimant later becomes sick.  Our colleagues, Michael Kotula and Bob Maloney, who represented an insurer in the case, were instrumental in the court’s adoption of pro rata allocation.

Courts were also busy providing some practical guidance for brokers and insurers.  The New Jersey Supreme Court ruled that a broker has a duty to inform about availability of coverage, but its liability is limited.  And the Fourth Circuit, applying the South Carolina Supreme Court’s  Harleysville decision, chastised two insurers for their deficient reservation of rights letters.

The Eleventh Circuit took on an interesting issue.  Does “suicide-by-cop” trigger the “suicide” exclusion in a life insurance policy?

And we end with what might be the final chapter in a treasure hunter’s quest for insurance coverage.

Rob Tugander and Greg Mann

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