C L A I M D E N I E D April 2004 A publication of the Lowenstein Sandler Insurance Law Practice Group Current State of Insurance Coverage Landscape By: Robert D. Chesler, Esq. and Lynda A. Bennett, Esq. s the first quarter of 2004 mary of the interesting new cover- claims are true, environmental A comes to a close, we thought age disputes that are on the horizon insurance will again move to center it would be worthwhile to lead off for 2004. stage. this year’s first issue of Claim Denied Last year represented a hybrid of In 2003, we also saw a sharp up-tick with an overview of the hottest the “bread and butter” environ- of coverage disputes involving insurance issues of 2003 and a sum- mental/ product liability claims that asbestos. As many of the asbestos have fueled insurance disputes for manufacturers have fallen into bank- Inside the past twenty years and a new ruptcy, many new companies, such as crop of D&O, bankruptcy, technol- lumber dealers, plumbing supply NO DUTY TO DEFEND ogy, and broker liability claims. We wholesalers, electricians, and a host AOL IN DEFECTIVE continue to see a steady stream of of other family-owned businesses, are SOFTWARE SUIT traditional environmental claims falling prey to asbestos claims. Sadly, — involving groundwater contamina- many asbestos insurance battles must BANKRUPTCY COURT tion and/or off-site soil contamina- now be fought in bankruptcy court, REJECTS RESCISSION tion allegedly emanating from our as defendants cannot reach cost- ATTEMPT AND MAINTAINS client’s facilities. Despite the well- sharing agreements quickly enough DIRECTORS AND OFFICERS developed state of New Jersey envi- with their insurers to stave off insol- ACCESS TO D&O POLICY ronmental insurance law, a surpris- vency. — ing number of medium-sized and PROTECTING YOUR Moreover, new waves of mass tort smaller companies have yet to RIGHTS WHEN YOUR product liability continue to appear. receive the benefits of their policies. INSURER BECOMES Like asbestos, silica claims and claims If reports of thousands of new INSOLVENT involving CCA, a wood preservative, NJDEP natural resource damage present a myriad of insurance issues This document is published by Lowenstein Sandler PC to keep clients informed about current issues. It is intended to provide general information only. A L D
including allocation, missing policies, insurance policies dealt with bricks, tion” took place in the context of the the right to obtain coverage under not bytes. These policies frequently spin-off transaction. Second, the other people’s insurance, whether apply to physical damage, leading California Supreme Court has held insurer liability should be determined insurers to deny coverage for claims that a successor corporation does not on a joint and several or pro rata of lost data. Insurers have also dras- necessarily inherit the predecessor’s tically cut back on advertising injury insurance rights if there was an asset insurance, reducing or eliminating instead of a stock transaction. Many companies that had coverage for intellectual property Analysis of insurance will play a larg- regarded the D&O policy and websites. Many, if not most, tech er role in the calculations of corpo- as a safety net found that it and e-commerce companies do not rate lawyers. was full of holes. have the insurance coverage that As the above coverage battles press they need. basis, whether individual claims pre- on, and new ones develop, the sent one or multiple occurrences, As the above examples illustrate, the Insurance Practice Group of and countless others. T wenty years business of insurance has become Lowenstein Sandler remains poised ago, insurance lawyers believed that increasingly complex. The general to serve as your insurance advocate. it would only take a year or two to liability policy has become ‘unbun- T o remain abreast of all of the latest resolve all of the coverage issues. dled’, and a company may now need developments in insurance, be sure Instead, issues continue to multiply to purchase several kinds of insur- to visit our Insurance Outpost at and gain in complexity. ance, such as employment, environ- www.insurance-lowenstein.com, mental and technology. Most of the where we regularly post highlights of In terms of new liabilities, claims aris- new policies are claims-made, bring- leading insurance decisions, articles ing from Directors and Officers liabil- ing notice issues to the fore. Many concerning key issues and trends in ity coverage led the way for 2003. insurers are writing more restrictive insurance, and a calendar of all of our Insurers reacted to massive corporate policy provisions. The insurance up-coming insurance events and scandals by disclaiming insurance broker’s job has become harder, and seminars. Of course, you may also coverage and frequently seeking to we have seen a resulting increase in contact Robert Chesler rescind the policies. Many compa- broker liability claims. (rchesler@lowenstein.com) or nies that had regarded the D&O pol- Lynda Bennett (lbennett@lowen- icy as a safety net found that it was As we begin 2004, two new interest- stein.com) directly if you have an full of holes. This in turn resulted in ing groups of claims are emerging as immediate insurance need. a new emphasis on underwriting to “hot” insurance coverage disputes. make certain that companies had the NO DUTY TO DEFEND First, corporate restructuring deals best possible provisions on key issues AOL IN DEFECTIVE involving spin-off transactions have such as severability, the insured v. SOFTWARE SUIT given rise to big ticket D&O cover- insured exclusion, and the insurer’s age disputes. In several instances, By David Malekan, Esq. defense obligation. policyholders have been denied enti- ty coverage for lawsuits involving A divided panel of the United States Intellectual property, Internet and corporate spin-offs because the insur- Court of Appeals for the Fourth technology-based claims also rose to er claims that no “securities transac- Circuit has held that America the forefront in 2003. Traditional
Recommend
More recommend
