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Texas Supreme Court Finds Coverage for Deepwater Horizon Defense Costs: Three Takeaways from Anadarko Petroleum v. Houston Casualty

Nearly nine years on, the Deepwater Horizon disaster continues to make law for policyholders and insurers—this time in a ruling from the Texas Supreme Court granting Anadarko Petroleum Corporation up to $150 million in coverage for defense expenses relating to underlying bodily injury and property damage claims arising out of the April 2010 blowout and oil spill. Anadarko’s London market underwriters relied on a “Joint Venture Provision” in their “energy package” insurance policy to argue that coverage for defense costs was limited to 25% of the policy’s $150 million limit, based on Anadarko’s 25% ownership interest in the joint venture operating the Deepwater Horizon rig. While the Joint Venture Provision includes three distinct clauses, which were all disputed in the ensuing coverage litigation, the provision that ultimately proved key to coverage contained the following language: [A]s regards any liability of [Anadarko] which is insured under this Section III and which… Continue Reading

Top Ten Insurance Tips For Year-End Transactions

The end is near.  2018 is fast coming to a close, and it is that time of year when corporate lawyers are counting—not the number of shopping days left until Christmas, but the number weeks, days and hours left before the end of the fiscal year.  Admittedly, in the scramble to close deals, insurance requirements and indemnity provisions may not be at the top of the list of critical deal points for clients and counsel.  But, in the larger scheme of things, law libraries and LEXIS are littered with the sad stories of parties, who paid too little attention to such details.  Money is the mother’s milk of litigation, and ensuring the availability of adequate insurance and indemnity coverage cannot be overemphasized. For those working on corporate transactions, here are some practical reminders and best practices for drafting indemnity provisions and insurance requirements.  As always, individual circumstances may vary.  What… Continue Reading

Insuring Instability: Is There Coverage for the Cost of the Trade War?

A new round of U.S. tariffs on $200 billion in Chinese imports became effective on September 24, 2018.  The 10 percent tax on Chinese consumer products is only the latest escalation in an ever-widening trade war between the United States and its global trading partners. While it appears that, subject to Congressional approval, trade disputes between the U.S., Mexico and Canada may have been resolved, economists and policymakers continue to debate the impact of the wider trade war on the domestic and global economy. In the near term, some imported products (including inputs for a range of items not directly subject to any tariff) will cost more. Some domestic manufacturers of products that are subject to foreign retaliatory tariffs may have less demand in export markets. In short, the more expensive it is to trade between affected nations, the less international trade is likely to happen. And if trade is… Continue Reading

Kidnap Ransom Insurance: Unlocking Coverage for Ransomware Attacks

By one account, “the cost of global ransomware attacks will exceed $11.5 billion annually by 2019, up from $5 billion last year and $325 million in 2015” – a 35X increase in just four years.  Relative to other cyber crime, ransomware is an equal opportunity enterprise—striking individuals as well as businesses of all kinds. Risk managers, in-house counsel and other executives may be tempted to assume that there is no traditional coverage for cyber ransom, or that only a stand-alone network security/privacy liability policy (often with deductibles or self-insured retentions exceeding the ransom) is likely to cover such loss. There is an often overlooked alternative. Kidnap, ransom & extortion (“K&R”) coverage, placed by many companies in connection with traditional D&O or crime policies, may provide a much-needed source of recovery for policyholders and an efficient alternative to dedicated network security/privacy liability insurance. Ransomware Trends in 2018 Ransomware has been a cyber… Continue Reading

On Shaky Ground: How Can Policyholders Prepare for the Predicted Increase of Earthquakes in 2018?

This year has already been a busy one for seismic activity. In the first weeks of 2018 alone, there have been reports of a 7.9 magnitude quake off the shores of Kodiak, Alaska, a 6.2 magnitude temblor in Japan, and a series of tremors in California. And, few will forget the catastrophic earthquakes that struck Mexico City and the Iraq-Iran border last year. With this recent domestic and international seismic activity and predictions of more to come, some corporate policyholders will ask the question: what insurance coverage is available to protect against property damage and business interruption loss from earthquakes? While insurance terms and conditions may vary by region and from one policyholder to another, generally speaking, “all-risk” commercial property policies insure all non-excluded direct physical loss or damage to covered property. As a general proposition, many such policies may include exclusions for loss or damage resulting from “earth movement.”… Continue Reading

Three Things Employers Should Know When Seeking EPLI Coverage For Sexual Harassment Claims

At a time when tolerance seems to be an increasingly precious commodity, society can celebrate an awakening intolerance for sexual harassment. For all of the scandal and salacious detail dominating the media in recent months, there is the hope that victims of depravity can find empowerment and healing, if not justice, too. Countless public figures—once insulated from accountability by wealth, power and status—have been forced to reckon with the reality of their crimes and consequences. But high-profile resignations and public apologies imply a finality and resolution for wrongdoers that is much slower in coming for those wounded by workplace impropriety. And for every victim, there are countless others—including families, friends, institutions and communities—who are swept up in the aftermath of sexual assault. Among those exposed to significant risk surrounding what can only be called a revolution in public attitudes and societal standards governing sexual harassment are employers, supervisors and others,… Continue Reading

Hurricane Harvey and Insurance Coverage: Protecting Your Statutory Rights Before September 1st

As Hurricane Harvey continues to sweep the Texas coastline and destroy property in its path, insureds should take action before September 1st to protect their statutory rights and avoid the changes made under House Bill 1774, also referred to as the “Hail Bill,” which take effect September 1, 2017. The Hail Bill adds “Chapter 542A – Certain Consumer Actions Related to Claims for Property Damage” to the Texas Insurance Code. This Chapter applies to actions on first-party claims for damage or loss of covered real property caused “wholly or partially” by “forces of nature”—including damage caused by floods, hurricanes, and rainstorms. In relevant part, Chapter 542A does two important things. First, Chapter 542A limits the interest policyholders may recover from a late-paying insurer under Section 542.060 of the Insurance Code for so-called “forces of nature” claims from 18 percent to approximately 10 percent under current market rates. Second, Chapter 542A… Continue Reading

Texas Supreme Court Provides Guidance On The Recoverability Of Judgments Entered Against An Insured By Third-Party Plaintiffs

In a much anticipated decision, the Texas Supreme Court has given direction to policyholders and third-party plaintiffs on the circumstances under which a judgment entered against the policyholder will be recoverable from the judgment debtor’s insurer.  The case is important to insureds defending against third-party claims because it offers instruction on how to transfer liability appropriately to an insurer for an adverse judgment.  The decision is equally important to plaintiffs seeking to maximize recovery of judgments against parties, whose greatest asset may be a liability policy. In Great American Insurance Company v. Hamel, 2017 WL 2623067 (Tex. June 16, 2017), homeowners obtained a judgment against a builder for defective workmanship in a bench trial held after the homeowners agreed with the builder not to pursue the builder’s owner or the owner’s personal assets in satisfaction of a judgment entered against the builder.  After trial, the builder assigned all claims against… Continue Reading

Texas’ New Hailstorm Law: Five Things That Every Corporate Policyholder Should Know About Chapter 542A of The Texas Insurance Code

On Saturday, May 27th, Governor Greg Abbott signed into law what has become known as the Texas “Hailstorm Bill.” Since a variant of this legislation was first introduced in 2015, reforming Texas’ “Prompt Payment of Claims” statute (Chapter 542 of the Texas Insurance Code) and its “Bad Faith” insurance law (Chapter 541 of the Texas Insurance Code) have been the focus of heated debate and intense lobbying by insurers and consumer and business interests alike. Proponents of the bill argued, under the banner of “tort reform,” that reducing statutory penalties against insurers was necessary to curb abusive “hailstorm” claims, which, by some reports, insurers have spent $340 million fighting since 2012. Haynes and Boone, LLP insurance partner, Ernest Martin, organized opposition from Texas businesses and provided testimony to legislative committee members warning that weakening statutory penalties will remove crucial incentives for insurers to pay first-party claims for property damage, business interruption and… Continue Reading

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