As business interruption claims dominated headlines and case law on cyber insurance coverage continued to rapidly evolve in 2021, and a key insurance arbitration ruling headed to the Supreme Court, Law360 turned to Partner Peter Halprin to discuss what happened last year and what to expect in the year ahead.
On the topic of COVID-19 business interruption rulings, Halprin said, “Hospitality is an unwilling leader in virus coverage cases as businesses including restaurants, hotels, concert venues and other amusements take a hit from insurers that refuse to pay for ‘direct physical loss of or damage to’ property.”
As courts continue to rule on coronavirus-related lawsuits in a range of industries, Law360 noted that policyholders have obtained significant wins at the state court level. “Given insurance is a creature of state law, the fact that state courts applying their own laws have found coverage is telling,” Halprin commented. “There’s a lot to keep monitoring in the new year, and the appellate decisions will hopefully give some more clarity.”
For now, Halprin advised clients to be mindful of the suit limitation provision in their policies. “Insurance companies may have artificially reduced the amount of time they can file a suit to one or two years, and March may be the two-year mark for many clients based on when their property was affected by the coronavirus,” he said.
In the area of cyber insurance coverage, the issue of coverage for violations of Illinois’ Biometric Information Privacy Act (BIPA) was a hot topic in 2021. In a landmark decision, the Illinois Supreme Court ruled that West Bend Mutual Insurance Co. must defend tanning salon Krishna Schaumburg Tan Inc. against a customer’s suit alleging that the business disclosed her fingerprint data to a third-party vendor in violation of BIPA. In contrast, a North Carolina federal court found in Massachusetts Bay Insurance Co. v. Impact Fulfillment Services that an exclusion precluded coverage for alleged BIPA violations. “The fact that BIPA is an Illinois statute means that West Bend, decided by the Illinois high court, is likely to be far more influential,” said Halprin. “We have that as kind of a guiding light in Illinois, but with the possibility of appeal out there, there’s a lot of uncertainty outside of places like Illinois.”
Law360 also turned to Halprin about international arbitration cases to watch in 2022, including CLMS Management Services LP et al. v. Amwins Brokerage of Georgia LLC et al. Halprin said the CLMS case presents the Supreme Court with an opportunity to finally resolve whether state anti-insurance arbitration statutes will be enforceable in all circumstances, and noted the Washington statute at issue in the case is similar to those in a number of other states, and so a ruling in either direction will have nationwide implications. “The case, regardless of whether the Supreme Court agrees to hear it, is a reminder to brokers and risk managers to review the dispute resolution mechanisms in their policies,” he commented. “While no one wants to think about what will happen when things go wrong, policyholders run the risk of ending up in an undesirable forum if they are subject to an unfavorable dispute resolution clause.”
Read Halprin’s full Law360 interviews examining COVID-19 business interruption claims, cyber insurance coverage cases, and more (subscription required):