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What Every Business Tort Lawyer Needs To Know

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Insurance coverage issues for business litigators.

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What Every Business Tort Lawyer Needs To Know

  1. 1. V E R O N I C A B A T E S M I C H A E L H U D D L E S T O N H E A T H E R K U B I A K E R N E S T M A R T I N A M Y E L I Z A B E T H S T E W A R T , M O D E R A T O R T E X A S B A R C L E 3 R D A N N U A L B U S I N E S S T O R T S I N S T I T U T E O C T O B E R 1 4 , 2 0 1 1 What Every Business Tort Lawyer Needs to Know about Insurance Coverage
  2. 2. • Commercial General Liability • Directors and Officers Liability • Fiduciary Liability • Errors & Omissions Liability • Employment Practices Liability • Intellectual Property Liability • Cyber Liability Types of Policies
  3. 3. Commercial General Liability Examples  Bodily Injury  Property Damage  Advertising Injury  Personal Injury  Business disparagement  Defamation  Malicious prosecution  Copyright infringement  Misappropriation of style of doing business  Invasion of privacy  Misappropriation of advertising ideas  Wrongful eviction  False arrest/imprisonment What’s Covered?
  4. 4. Errors & Omissions Examples  Wrongful Acts (in connection the insured’s profession)  Any professional negligence claim  Bankers  Accountants  Real estate agents  Lawyers  Architects  Engineers  Definition of “professional services” What’s Covered?
  5. 5. Directors & Officers Liability Examples  Wrongful Acts—acts, errors or omissions  Breach of duty  Misleading statements  Errors & omissions  Mismanagement What’s Covered?
  6. 6. Fiduciary Liability Examples  Wrongful Acts  Breach of fiduciary duty under ERISA  Other breaches of fiduciary duty  [Sometimes] negligence in administration of benefit plan What’s Covered?
  7. 7. Which Policy Applies • Policy Period • Claims-made v. Occurrence • Primary v. Excess • Named Insured v. Additional Insured
  8. 8. Claims-Made Policies • Prior acts and retro dates o Policy may require wrongful act within specific time • Definition of claim o Claim requires demand for money o Must be in policy period
  9. 9. Claims-Made Policies • Incident notice o Can invoke coverage before claim is made o Can freeze coverage in a policy period different from actual claim • No coverage for previously reported incidents o Form of known or loss in progress provision • Was tail coverage purchased? • Claims made and reported?
  10. 10. Notice to the Insurer • Notify all potential insurers • Check policy for when and where • “As soon as practicable” or promptly • During policy period or within X days • Prejudice • Cooperation
  11. 11. Practical Considerations • As plaintiff, seek a copy of any reservation of rights letters • Take inventory • Get parent, subsidiary and associated primary and excess polices • Make sure you have complete policies • Use certificates to run down the actual policies • Read the policies carefully • Involve the broker
  12. 12. Practical Considerations • Pay attention: different forms and endorsements can change the coverage o Get coverage from the inception with current carrier o Renewal additions can be eliminated o Check form approval with the TDI • Err on the side of giving notice • Never assume someone is or will provide notice and do it correctly for you
  13. 13. Insurer’s Response • Unqualified defense • Reservation of rights • Denial • Untimely or lack of response
  14. 14. Duty to Defend • Triggered by allegations • Allegations taken as true • Extrinsic evidence not considered? • Doubts resolved in favor of insured • Broader than duty to indemnify
  15. 15. Under certain circumstances, an insurer may not insist on its right to control the defense—what are those circumstances? What is a reasonable rate and who decides? Independent Counsel
  16. 16. Declaratory Judgment Actions • Jurisdiction/Venue • Parties • Prohibitions
  17. 17. • Stowers o Duty not to settle. Pride Transp. v. Continental Cas. Co., 2011 WL 1197306 (N.D.Tex., Mar 31, 2011) • Settlement o Gandy/Atofina • Entity Changes—Conversions and Mergers and Acquisitions o VRV o Ford Bacon o Keller Foundations o Nautilus Trends in Texas
  18. 18. • Gilbert and blended tort/contract claims versus Lamar Homes • Nokia o Using the “legal obligation to pay as damages” to expand coverage o Potentially covered—partial or incomplete pleadings • D & O o Stanford fallout o Disgorgement/ill-gotten gains Trends in Texas
  19. 19. • How to deal with a difficult insurer • Resolution strategies • Ideas for maximizing coverage Practical Advice
  20. 20. Questions?
  21. 21. THANKS!

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