SDV Insights

Earlier this month, SDV reported on a recent Second Circuit case where the court broadly interpreted the "direct loss" requirement to find coverage for a cyber fraud, email spoofing scam. Now, the Sixth Circuit Court of Appeals has issued a similar opinion in American Tooling Center, Inc. v. Travelers Casualty & Surety Company, finding coverage for a company that lost $834,000 to a similar scam. These recent decisions may indicate a trend in favor of policyholders on the "direct loss" issue.

In June, the New York Court of Appeals examined the application of a New York Choice of Law provision in a contract - a determinative issue for the case. In Ontario, Inc. v. Samsung C&T Corp., the issue was whether the plaintiff's claims were subject to Ontario, Canada's 2-year statute of limitations or New York's 6-year statute of limitations for breach of contract where the contract contained a broad New York Choice of Law provision.

On Friday, July 6, 2018, the United States Court of Appeals for the Second Circuit held that a fraudulent email that caused a company to transfer $4.8 Million to the fraudster was a "direct loss" and was, therefore, covered by the company's computer fraud insurance.

Self-insured retentions ("SIRs") and deductibles are often confused with one another. In a recent decision, Henry v. Thyssenkrupp Elevator (Canada) Limited, the Ontario Superior Court of Justice found that an SIR is similar and functionally related to a deductible. Although the policy in question was subject to an SIR, the Court treated it like a deductible. This case may prove helpful to Canadian policyholders seeking additional insured coverage.

Additional insured coverage for bodily injury to a downstream party's employees is one of the foremost considerations in any traditional risk transfer scheme. Upstream and downstream parties alike generally intend for the downstream party's insurance to respond to these claims--before the upstream party's insurance and in lieu of a contractual indemnity claim.

As previously addressed in "Whose Contract Is It Anyway: Addressing the Contractual Privity Problem," additional insured coverage under Insurance Services Office, Inc. (ISO), standard blanket additional insured endorsements is often conditioned, in part, on the existence of a written contract requiring additional insured coverage.

In a major win for policyholders, the California Supreme Court recently held that a negligent hiring, supervision, or retention claim arising out of an employee's intentional misconduct constitutes an "occurrence," giving rise to coverage under a general liability policy.

The Supreme Court of Texas recently clarified that under certain circumstances, an insured can recover policy benefits as damages for bad faith even absent a finding that the insurer was in breach of contract. In USAA Texas Lloyds Company v. Menchaca, the court explored decades' worth of Texas precedent and distilled it into five simple rules that govern claims of this nature.

Five minutes after I parked my car, a tree fell on it. On Tuesday, May 15th I pulled into my driveway, in my small Connecticut neighborhood, under a grey sky. As soon as I walked in the house, the lights flickered. And then suddenly there was a loud "Crack!" and "Crash!" and the sound of breaking glass. I looked out the window and trees were bent 90 degrees, then snapping, and then flying up instead of falling down.

It has become quite common for large-scale construction projects to be insured under consolidated insurance ("wrap-up") programs, where the owner, general contractor, and a majority of subcontractors are covered under the same primary and excess liability policies. However, when a wrap-up is acquired, not all parties involved in the construction project are enrolled.