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Posts Tagged ‘insurance’

Insureds May Look For Alternative Means To Recoup Business Losses

Posted on: August 13th, 2020

By: Matthew Jones

During a time of uncertainty and civil unrest, it is important to identify where insurance coverage may come from and provide relief. It seems that most businesses look to “business interruption” coverage, which may cover loss of income and rental value due to a direct physical loss or property damage caused by a covered peril. However, other insurance coverage may be applicable. For example, in California, some policies may provide coverage for vandalism, malicious mischief, riot and civil commotion, civil authority, and glass. Although commercial policies typically provide coverage for all or most of these perils, not all do so. 

However, the analysis and response thereto does not stop there. If a claim arises, the insured must comply with various conditions in order to trigger coverage. These conditions include, but are not limited to, the insured preserving the property, securing the property against further loss, reporting the claim immediately, and tracking expenses incurred. If one or all of these conditions are not met, there may not be coverage. 

At a time where businesses are looking for relief from all directions, it is important to understand ahead of time the type of insurance provided, what is covered, and conditions that must be met prior to affording coverage.

If you have questions or would like more information, please contact Matthew Jones at [email protected].

Insurance Requirements and First Amendment Rights of Freedom of Speech and Assembly

Posted on: July 6th, 2020

By: Jessi Samford and Bill Linkous

There is no doubt that the world as we know it has changed dramatically this year, and the protests and marches amidst the global pandemic have been in the forefront of recent news. While some protests have focused on broader awareness campaigns of injustice and inequality, others are geared toward current events that stir up longstanding tensions in the United States. There have even been a few protests about the pandemic itself. 

In recent history, some states have imposed insurance requirements on groups planning rallies or protests at certain locations, which presents an important constitutional question which should be considered carefully now, more than ever, in our country’s divisive climate. Can a government make and enforce a rule requiring that insurance be provided to cover risk of injury to protest participants or bystanders that that does not violate the First Amendment of the U.S. Constitution? 

Iowa, for example, faced criticism three years ago for having a one-size-fits-all rule that any organizer of such an event at the state’s capitol had to obtain a liability policy of at least $1 million. The blanket rule on its face made no exception based on the size or length of the event, but it was not always enforced. One organizer regularly provided proof of insurance while others who could not afford the premiums proceeded anyway at the capitol as planned and without interference.

Special event insurance is not a new concept to the insurance industry, as many carriers are in the market to underwrite risks for short-term gatherings of all kinds—from an outdoor car show, farmers market, or festival to an indoor convention or even wedding festivities. The insurance would likely be based off commercial general liability (CGL) policy forms, which mainly address risks against bodily injury or property damage claims by others. In the context of protests on public property, it would likely be the venue organizers who would be required to supply the policy and proof thereof to obtain a permit for the special event, assembly, or protest.

What is unique about this concept in the context of a protest is that it would be held in a public space and a governmental entity would need to be cognizant of the First Amendment implications of requiring the protest organizer(s) to pay insurance premiums to exercise First Amendment rights to free speech and peaceable assembly.

The requirement to obtain a permit and pay a fee, such as for insurance, before authority is given for public speaking, parades, or assemblies in traditional public forums is generally considered by courts to be a prior restraint on speech. Forsyth County v. Nationalist Movement, 505 U.S. 123, 129 (1992). The term “prior restraint” is used to describe administrative and judicial orders forbidding certain communications when issued in advance of the time that such communications are to occur, including injunctions and restraining orders. Alexander v. United States, 509 U.S. 544, 550 (1993).  Although there is a “heavy presumption” against the validity of a prior restraint, the Supreme Court has recognized that in order to regulate competing uses of public forums, government may impose a permit requirement on those wishing to hold a march, parade, or rally.  Cox v. New Hampshire, 312 U.S. 569, 574-576 (1941). Such a scheme, however, must meet certain constitutional requirements. It may not delegate overly broad licensing discretion to a government official. Freedman v. Maryland, 380 U.S. 51, 56 (1965). Moreover, a permitting scheme controlling the time, place, and manner of speech must not be based on the content of the message, must be narrowly tailored to serve a significant governmental interest, and must leave open ample alternatives for communication.  United States v. Grace, 461 U.S. 171, 177 (1983).

A local government wishing to impose a permit and insurance requirement for public gatherings in a public forum should follow the guidelines laid down by the U.S. Supreme Court. First, neither the imposition of an insurance requirement nor the amount of insurance required can be based in any way on the content of any anticipated message. For instance, the amount of insurance required cannot be tied to the expected backlash that the message will cause among citizens. Second, the permit/insurance requirement cannot give overly broad discretion to the official who is designated to issue the permit. Only objective criteria should be used.  Perhaps the insurance requirement would kick in once a threshold number of participants in the gathering is reached or when the gathering is expected to last for a threshold period of time, and the level of insurance required could increase incrementally as the number of participants (or the length of the gathering) increases. Third, the insurance/permit regulation should require that the permit be automatically issued within a short period of time once the application is filed if the permit is not denied by the government official. Finally, there should be a quick and efficient method for appeal of the insurance requirement and permit issuance decision, because a system of prior restraint avoids constitutional infirmity only if it takes place under procedural safeguards designed to obviate the dangers of a censorship system. Southeastern Promotions, Ltd. v. Conrad, 420 U.S. 546, 559 (1975).

As local governments consider the impact that public assemblies can have on counties and cities today, and the costs that may arise due to such assemblies, we can expect more local governments to explore the potential for a special event insurance requirement for such events. As they consider such requirements, it will be important for them to consider how they go about doing so to comply with constitutional mandates.

If you have questions or would like more information, please contact Jessi Samford at [email protected] or Bill Linkous at [email protected].

Insurer seeks declaration that COVID-19 claims for closure-related losses are not covered

Posted on: April 27th, 2020

By Barry Miller

Travelers Insurance Company wants a federal court to declare it has no duty to pay business income loss to a California law firm which claims that COVID-19 closures have caused it to lose revenue.

The ABA Journal reports that Travelers is seeking a declaratory judgment in the Central District of California. The lawsuit addresses claims from the Geragos & Geragos firm in Los Angeles, which says it has lost revenue from its law practice and rent from a tenant because of the closure of its own office, and California courts.

Travelers alleges that attorney Mark Geragos told a claims representative that the COVID-19 virus causes physical damages because other countries affected by the virus have fumigated public spaces. He also stated that scientists have detected the virus in aerosols and on lingering surfaces for some time.

Travelers seeks a declaration the claim does not fall within the policy’s grants of coverage for either “Business Income and Extra Expense” or “Civil Authority.”  Travelers alleges that Geragos’ claims do not trigger the policy’s Business Income and Extra Expense that requires that a loss was “caused by direct physical loss of or damage to property at the described premises.” Likewise, Travelers contends that the Civil Authority coverage requires that any government closure order result from “direct physical loss of or damage to property at locations, other than described premises, that are within 100 miles of the described premises.”

Even if COVID-19 claims triggered either coverage, Travelers says that the Virus and Bacteria Exclusion would apply. It also relies on exclusions for damage caused by Ordinance or Law, Pollution, and acts of a group, organization, or governmental body as bases for the declaratory relief.

FMG has been reporting on lawsuits filed by restaurants, retail outlets, and other businesses making claims for business interruption coverage due to COVID-19 closures. The Travelers action appears to be the first one filed by an insurer.

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

California Department of Insurance Orders All California Health Insurers to Submit Filing and to Ensure Services to Insureds Displaced by COVID-19

Posted on: March 20th, 2020

By: Kristin Ingulsrud

California Insurance Code section 10112.95(a) provides that insureds displaced by a declared state of emergency shall have access to medically necessary health care services.  In light of Governor Gavin Newsom’s state of emergency proclamation and the continued escalation of the COVID-19 outbreak, California’s Department of Insurance (DOI) issued its “COVID-19 State of Emergency Notification Filing Requirements” on March 18.

Given that the COVID-19 outbreak has the immediate potential to inhibit insureds’ ability to access medical care, all health insurers operating in California must submit a notification describing the insurer’s communication with potentially impacted insureds and summarizing how the insurer will ensure that the health care needs of its insureds are met.

Under the DOI’s order the required notification must address numerous items, including removing barriers to access prescription drugs by home delivery, waiving refill limitations, and other similar measures.

Insurers must also have a plan to maximize the use of telehealth where appropriate.  Insurers must provide a toll-free telephone number to facilitate communication with insureds regarding care options.

Moreover, insurers must also demonstrate their contingency plan to continue operations should its staff be subject to shelter-in-place orders.

The order also requires insurers to detail how they are complying with the Department’s March 5 order concerning waiving co-pays for COVID-19 screening and testing.

The required notification must be filed by close of business Friday, March 20.

The complete order can be found on the Insurance Department’s website at http://www.insurance.ca.gov/0250-insurers/0300-insurers/0200-bulletins/bulletin-notices-commiss-opinion/upload/CDI-Emergency-Notification-Filing-Requirements-COVID-19-3-18-2020.pdf.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

California Department of Insurance Issues COVID-19 Bulletins Addressing (i) 60-Day Grace Period for Premiums; Expiration of Drivers Licenses; (ii) Alternative Payment Methods; and (iii) Accounting for Extraordinary Circumstances in Evaluating Claims Handling

Posted on: March 20th, 2020

By: Zach Moura

California Insurance Commissioner Ricardo Lara issued three notices to insurers on March 18, 2020 related to the novel coronavirus disease (COVID-19), all aimed at ameliorating the pandemic’s impact on the both insurers and insureds.

The first notice is addressed to all insurance companies and other licensees. The Commissioner recognizes that the COVID-19 outbreak is creating extraordinary circumstances that impact the ability of insurers to conduct insurance-related business. The Department of Insurance (DOI) intends to take those extraordinary circumstances, and resulting business disruptions, into account when evaluating insurer compliance with legal and commercial obligations during the COVID-19 outbreak. The Commissioner also encourages all companies to take steps to maintain their ability to process and pay insurance claims, and to provide other requisite consumer services, in “a reasonable and timely manner.”

The Commissioner’s second notice addresses a request that “all admitted and nonadmitted insurance companies that provide any insurance coverage in California including, life, health, auto, property, casualty, and other types of insurance” provide their insureds with at least a 60-day grace period to pay insurance premiums. The Commissioner wants to avoid cancellation of policies for “nonpayment of premium during this challenging time due to circumstances beyond the control of the insured.”

The Commissioner also requests that agents, brokers, and any other licensees who accept premium payments on behalf of insurers take steps to ensure that customers have the ability to make prompt insurance payments, including through arranging for online payment to eliminate in-person payment methods, to protect the safety of both workers and customers.

Commissioner Lara’s third COVID-19 notice follows on the California Department of Motor Vehicles’ request to California law enforcement that it exercise discretion in the enforcement of driver’s license and vehicle registration expirations for 60 days beginning March 16, 2020. The Commissioner encourages insurers to refrain from using the expiration of policyholders’ driver’s licenses or vehicle registrations during those same 60 days for any of the following reasons:

  • To affect a driver’s ability to secure and maintain auto insurance coverage;
  • To affect a driver’s eligibility for a Good Driver discount;
  • To determine eligibility for a California Low Cost Automobile policy;
  • To impact the rates charged to any driver.

The notice will be reevaluated at the end of the 60-day period, or May 15, 2020.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce educational content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**