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Posts Tagged ‘general liability’

Working Without a Net

Posted on: September 14th, 2018

By: Seth Kirby

For the legal professional, careful and appropriate selection of insurance is an essential component of practice management.  When faced with potential liability for an alleged mistake, attorneys should want the safety and security of relying upon their insurance carrier to help mitigate the potential liabilities that accompany their practice.  Unfortunately, many attorneys do not see the gaps in their insurance coverage until they are faced with a claim arising from their business activities.  A recent unpublished decision by the 4th Circuit Court of Appeals is illustrative of this dilemma.  In Hartford Casualty Insurance Co. v. Ted A. Greve & Associates PA, case number 17-2407, in the U.S. Court of Appeals for the Fourth Circuit, the Court affirmed a general liability carrier’s denial of coverage to a personal injury law firm that was sued for alleged violations of North Carolina’s Driver’s Privacy Protection Act.  Apparently the firm had been obtaining crash reports from the state’s Division of Motor Vehicles and then using the information contained in those reports to solicit business from the involved drivers.  When faced with a class action lawsuit arising from these activities, the firm’s general liability carrier denied coverage on the basis that the claims were excluded as they arose out of a violation of a state statute.  The Court approved the denial, rejecting the firm’s contention that the claim could be viewed as a common law invasion of privacy.

This decision has very little significance outside of the unique facts of the case.  Indeed, it is conceivable that the firm at issue in the case may have other types of coverage that fill this gap.  Nevertheless, it serves as an important reminder that firms should carefully review all aspects of their operations and consider whether their particular areas of exposure are covered.  Does the firm engage in novel or unique advertising to solicit business?  Does the firm use litigation financing to assist in pursuing claims?  Does the firm have potential contractual exposure because it is acting as a title agent?  These are just a few of the questions that lawyers must consider when evaluating their risk profile and in determining the nature and extent of insurance products that they should purchase.  Frankly, this task is too difficult, and the consequences are too severe, to attempt without professional assistance.  A meaningful relationship with a qualified insurance broker that specializes in professional liability placement is an invaluable resource for law firms.  The broker can often spot risks that the firm is blind to, and they are certainly more familiar with the insurance products that may provide valuable protection to the firm.

It is impossible to accurately predict what the future holds, but careful examination, and regular reexamination, of a law firm’s business model can go a long way toward identifying the dangers that lie ahead.  Absent such careful planning, lawyers are literally working without a net and potentially setting themselves up for drastic financial consequences in the event of an alleged error.

If you have any questions or would like more information, please contact Seth Kirby at [email protected].

Cyberrisks to Contractors and Securing Proper Coverage

Posted on: June 29th, 2018

By: Barry Brownstein

Increasingly sophisticated hackers have targeted personal and business data held by companies like Target Corp., Sony Corp., Equifax Inc. and Yahoo Inc. during the past decade. The construction industry is just as susceptible to these risks as any other industry.  As construction projects increase in size and there is more sharing of data related to buildings and projects, and as more of that sharing becomes electronic, cyberrisks increase as well.

Contractors and their business partners hold personal information about their clients and employees, and they are increasingly using more electronic means to exchange data and survey construction projects. A significant threat for companies in the construction industry comes from the open and increasingly connected network between those in charge of a project and their various subcontractors and business partners, who need swift and seamless access to plans and other sensitive data to do their part of the work.

Many companies in the construction industry assume that since they have policies that cover losses stemming from physical and property damage, any infiltration into their systems that result in the loss of access to sensitive information is covered by such insurance.  However, most commercial general liability policies carve out cyberthreats from coverage.  While contractors can still make claims under more traditional policies and may find that some of their losses are covered, relying solely on these protections may be dangerous and result in uncovered losses.

Specialized cyberinsurance can fill in the gaps left by commercial general liability policies that do not account for losses caused by damage to virtual information systems, and ensure that any damages, injuries or delay caused by downstream contractors or business partners are covered as well. Once policies are in place, contractors need to revisit them regularly to account for changes in the cyberthreat landscape as they relate to the construction industry.

If you have any questions or would like more information, please contact Barry Brownstein at [email protected].

Independent Contractor vs Employee Status in the Gig Economy

Posted on: May 31st, 2018

By: Daniel Walsh

As recently noted by FMG’s Connor Bateman, Courts across the country are now reexamining coverage issues stemming from auto insurance policies held by drivers working with Transportation Network Companies (“TNCs”) such as Lyft and Uber.

In Dynamex Operations W. v. Superior Court, 2018 Cal. LEXIS 3152, the California Supreme Court set forth a refined and more inclusive standard on the classification of employees vs. independent contractors in the “gig economy” commonly associated with Lyft and Uber but also extending to various delivery services.   An underappreciated side effect of this decision is the effect upon coverage issues that have been litigated for years throughout California courts.  With a robust gig economy in California, the Courts have seen a high number of general liability cases that have turned upon the Trial Court’s interpretation of employee vs independent contractor status.  This, in turn, has created a high volume of declaratory relief lawsuits centered upon liability coverage for the actions of a gig economy participant, as most insurance policies grant coverage to an employee but deny it to an independent contractor.  With the Court clarifying that distinction in Dynamex, California insurance coverage opinions regarding personal injury liability in the gig economy will now require a new focus and analysis.

If you have any questions or would like more information please contact Daniel Walsh at [email protected].