Hunton Insurance Recovery Blog

A New Jersey trial court recently denied an insurer’s motion to dismiss a COVID-19 business interruption suit brought by a group of optometry practices finding unsettled questions under New Jersey law about whether loss of a property’s functional use can constitute “direct physical loss” under a property policy. Optical Services USA/JC1 v. Franklin Mutual Ins. Co., No. BER-L-3681-20 (N.J. Super. Ct. Bergen Cty. Aug. 13, 2020) (transcript). Based on this finding, the court determined that the optometrists were entitled to issue-oriented discovery and to amend their complaint accordingly.

The Seventh Circuit affirmed a ruling from the Northern District of Illinois that a subcontractor’s insurer must defend the general contractor in a negligence suit brought by an employee of the subcontractor for injuries suffered on the job.

To follow up on our post yesterday, an English court ruled in the test case regarding coverage of business-interruption losses during the COVID-19 pandemic. We will follow up with a post addressing the particulars of the 160-page decision.

The Hunton Andrews Kurth Insurance Coverage Practice Group is pleased to announce that insurance coverage associate Latosha M. Ellis has been honored by Virginia Lawyers Media, the publisher of Virginia Lawyers Weekly, in its 2020 class of “Up & Coming Lawyers.”

On Tuesday, the English High Court will issue its much-anticipated ruling in “test cases” for coverage of business-interruption losses during the COVID-19 pandemic under sample policy wordings. Irrespective of the outcome, the London court’s ruling promises to be a significant development for the insurance markets in the UK, as billions of pounds in potential insurance claims are at stake and––beyond this––policyholders and/or insurance companies can be expected to argue that one or another of the findings supports their position(s) for interpreting similar policy language in future COVID-19 business-interruption coverage cases.

The FCA Test Case

In the first action of its kind since the agency was established in 2013, the British markets regulator, the Financial Conduct Authority (FCA), engineered the test case process earlier this year to seek legal clarity over insurance companies’ obligations to cover business-interruption claims in the context of the ongoing COVID-19 pandemic. Brought before the English High Court (a trial level court in the UK), the FCA test case involves around 370,000 policyholders and eight insurance companies. The case was heard by Judge Christopher Butcher, who sits in the Commercial Court, and Judge Julian Flaux from the Court of Appeal.  Experienced English counsel prepared and presented arguments to the tribunal for expedited consideration and resolution. The FCA hired a solicitor firm, which instructed well-regarded barristers from Devereux Chambers and Fountain Court Chambers; the insurers engaged their own solicitors and barristers.

Walmart announced this week that it is testing a pilot program in North Carolina for the delivery of groceries and household items using automated drones, joining other retailers looking to beef up their drone delivery business.  In a related development, last week the Federal Aviation Administration (FAA) designated Amazon Prime Air as an “air carrier,” a key step in the process of Amazon’s quest to expand into the delivery-by-drone arena.  Amazon joins Wing, the Alphabet Inc. subsidiary, and UPS as companies that have obtained FAA approval to operate unmanned aircraft systems (i.e., drones) under the federal regulations.  Given the rapid rise of commercial drone use, businesses have understandably grown concerned that their drone technologies will expose them to a new set of risks, including damage to the drone itself, as well as third-party claims following property or physical injury caused by a company-operated or company-owned drone (and other third-party claims like invasion of privacy).  In light of these risks, it is key that businesses using drones obtain the insurance coverage necessary to protect themselves against such risks, and that they explore all coverage options should a drone-related loss arise in order to maximize their chances of insurance recovery.

As has been widely reported, insurance companies have been inundated with claims arising from the novel coronavirus and are locked into contentious coverage battles regarding the scope of coverage afforded for such claims under various policy forms. Courts have begun issuing decisions both for and against policyholders attempting recovery for COVID-19-related losses, and the legal battles resolving those questions will likely take months or even years to play out.

Trading on New Zealand’s stock exchange was disrupted last week, following four straight days of repeated cyberattacks that resulted in outages affecting debt, equities, and derivatives markets.  The DDoS attack, which is said to have originated offshore, is allegedly part of a global extortion scheme that has also targeted companies like PayPal and Venmo.  With this type of cyberattack becoming only more common and sophisticated, it is vital for policyholders to focus on the host of available insurance coverage options to protect against and maximize their insurance recovery following losses from a cyberattack.

As expanded upon here in our firm’s Three Key Things in Health Care update, health care providers should not let a recent opinion piece in the Wall Street Journal dissuade them from aggressively pursuing recovery for business interruption losses related to COVID. In short, the authors of that editorial ignore the language and structure of many insurance policies, which either provide for coverage of COVID-related losses by their express terms or expressly contemplate state-mandated coverage expansions favoring the insured as binding on the insurer ...

A Massachusetts intermediate appellate court recently found no coverage for a general contractor listed as an additional insured under a subcontractor’s general liability insurance policy. The general contractor sought coverage for a negligence action brought by an employee of the subcontractor regarding workplace injuries.