Five Things To Do Now to Protect Your Business Interruption Insurance Claim

Businesses are hurting due to COVID-19 slow-downs and closures. Here is my top-five list of things to do to protect your right to collect on your business interruption (a/k/a business income) insurance:

5. Don’t Believe the Propaganda. The insurance industry is trying to stop business owners from making claims by repeating the mantra “no insurance available for COVID-19 claims.” That’s just not true. While some businesses have “virus” or “communicable disease” exclusions, we are finding that many of our clients’ policies don’t have that exclusion. (One analysis is that 80% of policies don’t.) And even with that exclusion, hope is not necessarily lost. There are many, many different kinds of business income policies out there—the specific wording of your policy (even very minor differences) will matter. When an insurer tells you that virus contamination isn’t “property damage” remember that most policies are written on an “all-risk” basis, meaning that it is up to the insurer to clearly exclude something as a “cause of loss.” Courts in Oregon, Washington, and elsewhere have found that contamination from smoke, chemical odors, and e coli counts as “physical loss or damage.” Also, most policies contain “civil authority” coverage that overrides any requirement that your property be damaged—meaning that if you lose business due to a “stay-home” or “shelter-in-place” government order, like the one just announced in Oregon, or the Washington restaurant order, you may have coverage. Continue Reading

Insurance Recovery for COVID-19 Losses

The economic fallout from COVID-19 has been swift and severe. Moratoriums, quarantines, and bans will continue to upend daily life and with this impose severe economic consequences on regional, national, and international commerce. While the federal government struggles to prop up the overall economy, many businesses are looking to what, if any, specific relief might be had. This search inevitably leads to insurance. Unfortunately, the question of whether commercial lines insurance might cover COVID-19 related losses results in a lawyerly answer: it depends. More specifically it depends on the (1) the type of insurance purchased, (2) the wording of individual policies, and (3) the particular circumstances surrounding each business’s loss. Continue Reading

Northwest Data Breach Laws Are Changing—Is Your Cyber Insurance Keeping Up?

Legal requirements for managing consumer data and handling data breaches are changing, so now is a good time to check your cyber insurance to make sure that it is keeping up.

New Oregon Law + Proposed Washington Law + California CCPA = Increasing Business Risk. Oregon’s amended data breach notification law, effective January 1, 2020, creates breach notification requirements applicable to third-party vendors—the first state law to do so. The Oregon Consumer Information Protection Act (CIPA) now requires that vendors notify the Oregon Attorney General of a substantial breach of security not later than 45 days after discovering the breach. The Bill also requires vendors to notify the “covered entity” (the owner of the data) not later than 10 days after discovering that a breach has occurred (the owner then has 45 days to report the breach to the Attorney General). Key other amendments to the law include the following: Continue Reading

Oregon Court: Common Commercial Property Insurance Suit-Limitation Clause is Ambiguous

Oregon federal Magistrate Judge Stacie Beckerman gave policyholders an early Christmas present on December 20, 2019, holding that the most commonly-used suit limitation clause in commercial property insurance is ambiguous, and that therefore the policyholder had two years from the discovery of hidden water damage to file suit against the insurer. This ruling provides additional clarity to the interpretation of a widely-used coverage form, in the context of one of the most common property-loss scenarios in the Pacific Northwest: hidden decay over many years due to water infiltration.

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Washington Supreme Court: Consumer Protection Act Applies Broadly, Federal Courts Wrong

In Peoples v. USAA, decided on November 27, 2019, the Washington Supreme Court held that insurance companies can be liable under Washington’s Consumer Protection Act (RCW Ch. 19.86) if they violate Washington claims-handling regulations and wrongfully deny benefits, even if the underlying claim is for personal injuries. In this case the plaintiffs alleged that USAA’s computer algorithms wrongfully denied coverage for medical provider costs, which are generally covered under auto policies as “personal injury protection” or “PIP,” without any individualized assessment of the costs. Washington’s CPA prohibits “unfair or deceptive practices in trade or commerce” and allows anyone who is “injured in [their] business or property” to sue for damages (including treble damages) and injunctive relief, plus attorney fees. The insurer argued that even if their denials were wrong, they did not injure these plaintiffs’ “business or property,” as the underlying claims were for personal injuries. Announcing a new rule (and disagreeing with several previous federal-court decisions), the Washington Supreme Court held that “the deprivation of contracted-for insurance benefits is an injury to ‘business or property’ regardless of the type of benefits secured by the policy.” Continue Reading

Insurance and Cannabis – Requirements, Exclusions, Positive News

Cannabis businesses don’t have many options when it comes to insurance, because major insurance players are staying out of the market until cannabis is reclassified under federal law. However, cannabis licensees are required to carry insurance by state law (discussed below), and often by landlords, lenders, customers or suppliers. Recent vaping-related bodily injuries have also highlighted both the need for products-liability coverage and the fact that most cannabis-liability policies contain significant exclusions – and below we provide a few ways to deal with these exclusions.  Finally, we discuss some hope on the horizon in the form of increasing standardization of forms and federal crop insurance.

State Laws. These state-law requirements are not trivial: a licensee that fails to carry the proper coverage could lose its license. Continue Reading

Understanding Insurance Terms in Construction Contracts

Miller Nash attorneys Seth Row and Shanelle Honda were published in the Fall 2019 issue of the NAMC-OR Newsletter. The link to the full story is available below.

Construction contracts at all tiers usually include terms requiring certain types of insurance, and often contain related provisions about indemnity. This “boilerplate” can be important if a job goes south, so here’s a short explanation of some of the key terms and how they relate to one another.

Click here to read the full article (page 5).

Policyholders Must Be “Made Whole” Before Insurers Recover Payments From Third Parties

The Washington Supreme Court recently issued a decision strongly reiterating the “made whole” doctrine under Washington law, which provides that an insurer cannot exercise its right of reimbursement from a third party who injured its insured, until the insured itself has been made whole by recovery of damages or losses it has incurred. In Daniels v. State Farm Mut. Auto Ins. Co., State Farm paid for damage to its insured’s vehicle in full, less a $500 deductible. State Farm then recovered 70% of the damage from GEICO, which had insured one of the parties whose negligence had caused the loss. (Another party was determined to be 30% at fault; all parties stipulated that Daniels—State Farm’s insured—had no fault). State Farm then reimbursed its insured 70% of the $500 deductible. Continue Reading

Insurance Policy Interpretation in Oregon—Lessons From New Cases

Insurance policies are famously obscure, full of non-sequiturs and jargon. Coverage disputes often feature disagreements about the meaning of policy wording. As a result, courts have developed a process for interpreting policies. In Oregon, the interpretation process (the Hoffman analysis, named for an important case) isn’t the same as for an ordinary contract. It focuses first on the plain meaning of a disputed term, then the immediate context of the disputed term, then the context of the term in the policy as a whole. Overlaid on that are the concepts of the “ordinary purchaser of insurance” among others. If a phrase is deemed ambiguous even after that analysis, the policyholder’s interpretation will prevail. Continue Reading

Insurer Invokes “Act of War” Exclusion in Cyber Policy, Risking Growth for Coverage

The cyber-insurance world is discussing the ins-and-outs of litigation going on between food manufacturing giant Mondelez International and Zurich over coverage for the ten billion dollar NotPetya cyber attack that crippled several multi-national companies. Zurich has apparently invoked what is colloquially known as the “act of war” exclusion to deny coverage to Mondelez under a property policy with cyber elements. Continue Reading