Many businesses have multiple types of insurance, including: Business Liability or Commercial General Liability (CGL), Professional Liability or Errors & Omissions (E&O), Directors & Officer’s Liability (D&O), Cyber Liability, Builder’s Risk, and Intellectual Property Insurance. Within these types of polices there are many different types of losses that are covered; as well as many that are not. Polices cover direct losses, such as damage to the insured’s property (first party insurance), or third-party claims for damages made against the insured (third party insurance).
Correctly handling a potential insurance claim from the beginning can determine how it will be handled by the insurance company. Late notice can result in a denial. Improper notice can result in a lawsuit. Even once a claim is accepted, issues concerning how a third-party claim is defended in court may continue.
ASG Law has experience representing both insurance companies and policy holders in a broad range of insurance disputes. Common areas include:
Physical loss to business property is usually covered under a Commercial Property or Builder’s Risk policy. Common issues include whether the loss is excluded by the policy, and when the damage occurred.
Bodily injury to a third party or damage to their property, caused by the business, is generally covered under CGL policies. Common issues include whether the third-party claim is excluded, when the damage occurred, notice of the claim, the right to control the legal defense of a lawsuit, and the obligation/right of the insurance company to settle the claim.
Personal and advertising injury generally includes injury arising out of conduct such as slander or libel, copyright or trade dress infringement, the use of another’s advertising idea in the insured’s advertisement, false imprisonment, malicious prosecution, wrongful eviction, and invasion of the right of privacy. These injuries are generally covered under CGL polices. Common issues are the same as with third-party property and bodily injury claims.
Employment Practices Liability Insurance covers an employer for certain claims by employees, including alleged discrimination, wrongful termination, sexual harassment and retaliation. EPLI generally does not cover claims under the Fair Labor Standards Act and state wage and hour laws for issues such as unpaid overtime or minimum wage violations. Common issues include balancing the insurance company’s right to settle claims with the employer’s desire to resolve complaints in a way that is consistent with business objectives.
D&O insurance covers corporate directors and officers for claims and lawsuits arising out of a claim that they breached their corporate duties. Such policies normally cover both the corporation (if it is indemnifying the directors and officers and paying their defense costs), and the directors and officers themselves if the corporation is not indemnifying. Common issues include whether claims arise out of a director or officer’s duties on behalf of the corporation, and whether the claim is excluded. D&O insurance generally does not cover claims brought by a corporation against its own directors and officers. Such claims are often brought by shareholders, but can also be brought by customers, creditors, regulators and others.
Many insurance policies give the insurance company the right and the duty to hire lawyers on behalf of the insured, to control the defense, and to settle third party claims within the policy limits. However, such rights are not absolute.
For example, an insurer may “reserves its rights” with respect to covering a claim. Such a reservation means that the insurer will proceed with providing a defense to the insured, but may later determine that the claim is not covered depending on evidence that comes to light or how the case is resolved. In such an instance, the insured may have the right to control the defense regardless of the policy language. The insurer also has obligations to try to settle a case within policy limits if there is a risk that a judgment may ultimately exceed those limits.