Hunton Insurance Recovery Blog

In the year ahead, supply chains for corporate America will likely be vulnerable to disruptions arising from multiple risks—from natural disasters to geopolitical strife—heightening companies’ dependence on insurance to manage their risks. Bloomberg Law’s recent article, “Climate, Labor Disruptions Leave Companies Reliant on Insurers” features commentary from counsel Jorge Aviles on how insurance can help shield businesses from financial losses following a supply chain-related loss. “Any business with operations that rely on a supply chain should be looking into insurance coverage to manage risks.” That safety net “gives the company the confidence that it won’t be out of pocket,” Aviles says. “It gives the employees and managers and directors of the company confidence as well, and it gives your lenders and investors confidence that the company won’t be on the hook for these massive losses.” “Companies relying on such coverage should keep in mind the tiers of suppliers,” Aviles said. “A policy might offer coverage for a direct supplier, for example, but not an indirect supplier that’s disrupted.”

It is common knowledge in the insurance industry that an insurer’s duty to defend is broad.  Recently, a U.S. District Court reminded us just how broad that duty is when it held that a complaint with only two scarce factual allegations triggered an insurer’s duty to defend.