Friday, October 26, 2018

Insurers, what insurance coverage and bad faith issues would you like staff trainings on?

I'm in the process of developing presentations for insurance adjusters and in-house attorneys on coverage and bad faith issues.  Let me hear from you -- what topics would you like to receive trainings on?  Anything from basic education for new adjusters on how to respond to 93A demand letters to obscure coverage issues.

Respond in the comments or send me an email. 

Monday, October 22, 2018

U.S. District Court holds that regular wages paid to employees after a loss do not come within extra expense coverage, but extra wages and benefits do

On July 9, 2015, water infiltrated the electrical system of Interstate Gourmet Coffee Roasters, Inc., knocking out all power.  The business was suspended for thirteen days.  During that time Interstate's employees "redirected their efforts" to restore regular business operations.  Hourly employees were paid their regular rate and overtime pay.  Salaried employees were given additional vacation time to make up for the weekends they worked.

Interstate submitted a claim to Phoenix Insurance Company, it's insurer.  The coverage under the policy included "the actual Extra Expense you incur during the 'period of restoration.'" The policy defined extra expense as "reasonable and necessary expenses . . . that you incur during the 'period of restoration' and that you would not have incurred if there had been no direct physical loss of or damage to property." 

Interstate sought reimbursement from Phoenix for employee compensation incurred ruing the suspension period.  Phoenix reimbursed Interstate for the overtime paid to hourly employees, but denied the rest of the claim.

In Interstate Gourmet Coffee Roasters, Inc. v. Travelers Indemnity Company, 2018 WL 3733937 (D. Mass.), the United States District Court for the District of Massachusetts held that the extra expense coverage does not provide coverage for payment of wages to employees whose normal schedules are disrupted or inconvenienced, except for hourly employees who work additional hours because of the loss and extra vacation time offered to salaried employees.   

Tuesday, October 16, 2018

US District Court holds professional liabilty insurer has duty to defend action relating to breakup of law firm

Massachusetts Lawyers Weekly quoted me in an article about a recent U.S. District Court case on coverage under a lawyer's professional liability policy for a claim arising from the breakup of a law firm.  The departing attorneys sued the firm, alleging in part that the firm refused to release client file materials and property to their new firm. 

In Governo v. Allied World Ins. Co., __ F. Supp. 3rd __, 2018 WL 4685566 (D. Mass.), the court held that the firm's professional liability insurance had a duty to defend.  The allegation of refusal to release client material came within coverage for Legal Services Wrongful Acts, which the court held implicates the specialized professional obligations and ethical standards of attorneys. 

More specifically, the policy provided coverage for claims “arising out of” a Legal Services Wrongful Act.  The court noted that  there might not have been coverage if the policy language had provided coverage for claims occurring “by reason of” such an act. And that, ladies and gentlemen, is why insurance coverage law is a specialty in the practice of law.