The Federal Motor Carrier Act of 1980 placed a number of requirements on interstate truckers at the same time it led to widespread deregulation of the industry. One of these requirements involved proof of financial responsibility. To ensure the safety of the public against damage caused by motor carriers who may not have the liquidity to pay resulting claims, the law requires that motor carriers be able to demonstrate the ability to pay any claims up to a statutory minimum.
While the world steps through the global pandemic, we know our clients are facing the same questions, concerns, and decisions that we are grappling with. The collective safety of our employees, families, clients, and your business interests weigh heavily on everyone’s mind. Disaster planning can only take you so far when experiencing anything of this magnitude.
How does insurance play into the events unfolding? Insurance policies address coverage in general terms. The specific circumstances around each loss or situation will determine whether or not coverage applies. However, in general terms, we’d like to share an overview of the potential claims issues in various lines of coverage and how those policies might respond.
As more and more states legalize marijuana use for recreational and medicinal purposes, employers face a significant conundrum. Employers have to decide how to treat positive marijuana tests within their business. For those employers in safety-sensitive fields, ensuring that employees can pass drug tests is necessary for continued operations and limiting liability.
Cyber incidents and cyber practices are testing the boundaries of the law in numerous unique ways. The length of most litigation and the relative newness of cyber technology means that many of the claims and legal principles governing those claims are still working their way through the court system. The high cost of litigation sends many of those claims to settlement talks without a firm decision to guide future cases.
In the event of a cybersecurity breach, any company with a cyber insurance policy should contact their carrier as soon as possible. One of the first steps the cyber insurance carrier will take is to hire a forensics company to investigate the breach. Digital forensics is one of the more expensive aspects of most cyber claims, with costs typically ranging from $20,000 to $50,000.
There are recognized patterns of higher risk. For example, Hurricanes and earthquakes do catastrophic damage to a specific geographic area. These natural disasters pose unique risks to insurance companies as a result of that history. If an insurance company insures at lot of this type of risk, it can face massive losses and have its financial stability threatened. For this reason, insurance companies try to avoid insuring too many homes or businesses (for this example) in an at risk area for hurricane or earthquake damage. While this helps keep insurance companies financially sound, it can make coverage harder to obtain for those who need it most.
The problem of Social Engineering techniques called Phishing, Whaling, Spear Phishing, Pharming, or Impersonation Fraud has become significant and widespread in recent years. The insurance industry has made efforts to keep these risks in mind for cyber liability policies. Sometimes there is language added that will protect a company, but sometimes communication is added to a basic policy that would not protect a business against these specific risks.
The opioid epidemic, besides its unfathomable human costs, has had large economic costs for businesses and governments who must manage workers compensation costs. Opioid prescriptions in the wake of workplace injuries have been linked to higher workers compensation payouts and longer layoffs before injured employees return to work. Facing the bill for these costs, government, citizens, and private entities have filed a veritable avalanche of lawsuits against pharmaceutical companies for their manufacture and marketing of opioid based painkillers.
In claims handling and litigation, a little creativity with definitions can help advance a case forward. Occasionally, though, that creativity gets pushed a little too far. Fireman’s Fund recently won a declaratory judgment ruling they did not owe coverage to a luxury apartment building. The case hinged on the interpretation of a relatively simple word in the insurance policy - “vehicle.”
Insurance lawsuits often turn on the definitions of words. This confusion results in extensive litigation over words that seem to have commonly understood meanings – words like loss or occurrence for example. With millions of dollars on the line, the exact definition of a single term within a policy can make or break a business. This highlights the need for companies to understand to the best of their ability what their insurance coverage provides and what it does, keeping a particular eye on what exclusions may apply.