Insured Success

Reed Smith LLP
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Insured Success provides cutting-edge commentary on a range of insurance coverage issues affecting commercial policyholders. Reed Smith insurance recovery lawyers and guest speakers from around the world discuss emerging trends, legal developments and insurance best practices and provide timely insights to assist your organization.

  1. 1D AGO

    The Third Parties (Rights against Insurers) Act 2010: 2025 case law – more light in the tunnel?

    Mark Pring and Claudia Gwinn examine the Third Parties (Rights against Insurers) Act 2010, focusing on 2025 decisions relating to notification of conditions precedent (Makin v QBE; Archer v R ’N’ F Catering) and disclosure requirements (AmTrust v Endurance). They highlight practical points regarding, in particular, ensuring compliance with policy terms and using “extended disclosure” applications to address “information asymmetry.”

    14 min

  2. AUG 13

    Key insurance concepts and issues for data center construction projects

    In this episode focusing on data centers, real estate partner John Simonis and insurance recovery partner Chris Mosley join Paul Sovik-Siemens, senior VP and managing director for project risk at Lockton, to explore critical insurance considerations, challenges, and best practices for data center development and construction projects. The panel discusses the nuances of builder’s risk and liability insurance, the importance of wrap-up policies, and strategies for structuring insurance programs to protect large-scale data center investments. ----more---- Transcript: Intro: Hello and welcome to Insured Success, a podcast brought to you by Reed Smith's insurance recovery lawyers from around the globe. In this podcast series, we explore trends, issues, and topics of interest affecting commercial policyholders. If you have any questions about the topics discussed in this podcast, please contact our speakers at insuredsuccess@reedsmith.com. We'll be happy to assist.  John: Hello, everyone, and welcome to Insured Success, a segment of our Reed Smith Data Center series. Today, we will be discussing insurance-related considerations and best practices for data center construction projects. My name is John Simonis. I'm a real estate attorney and co-chair of Reed Smith's Global Data Center subgroup. I specialized in data center transactions development for many years, including a negotiation of numerous design and construction contracts. Today, I'm joined by my partner, Chris Mosley, and by Paul Sovic-Siemens, who is a senior vice president and manager of project risk at Lockton Companies. Lockton is one of the top insurance brokerage firms for substantial construction projects in the U.S. Both Chris and Paul have extensive experience structuring and negotiating insurance programs for data center and other substantial construction projects. Chris, can you share a bit more overview on your background?  Chris: Thanks, John. So I'm Chris Mosley. I'm a partner in Reed Smith Insurance Recovery Group. I have been representing businesses in insurance-related matters for more than 30 years. I have a particular specialty in representing owners and contractors in construction-related matters, and that work includes the assistance in negotiating insurance policies and the appropriate insurance provisions in general contracts and subcontracts on the front end, as well as handling claims that may arise after the fact, which most people see when we sue insurance companies. But the bottom line is that for the entirety of my career as well as my team, we've been helping businesses that are involved in the construction of large-scale projects from the beginning through the end of the project and then through claims that may occur thereafter as well.  Paul: My name is Paul Sovik-Siemens. I run our project risk department in the west for Lockton. My career has spanned over 20 years in construction-related insurance. I spent the first several years on the carrier side, most recently joined Lockton, and in the last five years, I've worked in our group that focuses primarily on setting up construction-related insurance for projects. A lot of our projects recently have been focused on data center clients, and so we've had a lot of experience lately structuring deals and negotiating with the contractors and figuring out the best way to cover these data center assets.  John: Thanks for the background, gentlemen. So data center construction projects are large, complex, expensive projects, often costing hundreds of millions of dollars or even billions of dollars. And the insurance costs can be several million dollars as well. So from an insurance coverage standpoint, they're obviously very complex. But maybe we can start with a little bit of an overview on the coverages that would typically be negotiated in an insurance program from a data center project. Chris, maybe you can start by giving a little overview on the differences between the builder's risk aspects of the project versus the liability insurance.  Chris: Sure. So when insuring a project like a data center, there's really, as a general overview, two basic types of coverage. What we call in the insurance trade first-party coverage or third-party coverage, first-party coverage being things like builder's risk, third-party coverage being things like liability insurance. But what are those policies and what do they do? Well, the simplest way to understand it is to think about having two data centers next to one another. Say, John, you own one data center and Paul owns the other. And there's a tower on John's property, call it a cell tower or whatever the case may be, and it falls. If that tower falls on your own data center, say John's data center, then John's going to call his first-party property carrier and say, this tower fell upon my building. There was a significant amount of damage to my building. I need you, the insurance company, under your first-party policy to pay for that. And first-party policies can look like builder's risk during the course of construction or a commercial property policy after construction is complete. Now let's take the other situation where the tower on John's property falls onto Paul's data center and damages that data center. Now, Paul has sustained a significant amount of loss because of the damage to the data center and perhaps some other damages that flow from that, and Paul sues John. One thing to understand about a liability policy, and this is true with any liability policy, it is a lawsuit policy. So anytime you hear liability policy, it's a lawsuit policy designed to protect you against lawsuits filed by third parties. So when Paul sues John, John contacts John's liability carrier and says, I've been sued because my tower fell on Paul's data center. Please protect me and provide me the two benefits under the liability policy is, which are paying for my defense, that is giving me a lawyer and paying for it, and then paying for any judgment or settlement that may occur thereafter. Those are the two basic types of policies that are intended to cover a project like a data center, both before and after the project completes.  John: So with that background, Paul, maybe we can jump to the liability insurance and in particular, maybe one part of the liability insurance that I have often found to be misunderstood, the completed operations coverage.  Paul: Happy to hit on that. So if we were talking about liability related to a construction project or construction operations, think of it in two different buckets. The first bucket are the premises or operations of that construction site. An example of a scenario where that would be triggered is if I'm walking by Chris's job site and Chris drops a hammer and it hits me, that's a liability during their premises and operations. So I would turn around and sue Chris and his job site. As Chris mentioned, it's a legal policy to where we're going to recover damage through the premises operations. The second bucket of a construction policy is called the Products Completed Operations and Construction Defect Coverage. Now, that coverage starts after the project has been put to its intended use, is finished, certificate of occupancy. Any of those triggers can set it into the post-construction completed operations phase. Now, what does that give you? That gives you construction defect claims for problems that arise sometime between post-completion and generally the statute of repose. So an example like that would be that you build your building, you've got no problems, it's operating no problem the first two years, and then all of a sudden, year three, you're figuring out that there seems to be some water penetrating and perhaps creating some damage. Water damage is a huge component and a driving loss in the construction defect phase. And this general liability policy is there to cover resulting damage from that construction defect water loss.  Chris: And John, the only thing I would add, I think Paul described it perfectly. As an oversimplification, your premises and ongoing operations occurs until you get to the CO point, and thereafter, you're in the completed operations coverage, which hits the construction defect coverage Paul was talking about.  John: And I guess similarly, your builder's risk policy, which would be your property coverage during construction. At some point transitions to your traditional property insurance on an operating facility, correct?  Paul: That's correct. And that policy operates differently than the liability policy. As Chris mentioned, it's a first-party policy just during the course of construction. And when you're talking about building a construction project and when you want to get that coverage in place and the builder's risk, you really got to focus on the construction schedule. You want to start it when there's something there to insure, meaning if you've gone out and you've done some grading or you've brought materials on site. Anything that can sustain property damage, you'll want to have your builder's risk policy in place at that point. Fast forward towards the end of the project, builders risk carriers are not interested in covering your operations. So as you approach the completed phase of your construction project, you've got to make sure that you're coordinating with your permanent property carrier to transition that policy off so that there is no lapse in coverage on the builder’s risk.  John: Paul, you touched on one thing I think is worth some emphasis, and that is that supplies, materials, equipment that's delivered on site and stored before it is incorporated into the improvement itself. I think that's becoming a bigger issue. Recently did a podcast on tariffs in data center construction. And one of the things that was emphasized during that discussion was that to avoid tariff uncertainty and tariff increases, a lot of developers are focu

    44 min

  3. JUL 1

    Insurance coverage for data centers: Navigating emerging challenges in a slowly adapting marketplace

    Reed Smith insurance attorneys Amy Koss, Stephen Raptis and Anthony Crawford survey the unique risk landscape facing data center owners and operators. Because no off-the-shelf “data center policy” yet exists, the trio explores how traditional coverages – property, cyber, technology E&O, and general liability – can be layered to safeguard both the bricks-and-mortar infrastructure and the critical information coursing through it. If you build, host, or rely on data centers, this episode is your blueprint for intelligent risk transfer. This is latest episode in our Data Center series. ----more---- Transcript:  Hello: Hello and welcome to Insured Success, a podcast brought to you by Reed Smith's Insurance Recovery Lawyers from around the globe. In this podcast series, we explore trends, issues, and topics of interest affecting commercial policyholders. If you have any questions about the topics discussed in this podcast, please contact our speakers at insuredsuccess@reedsmith.com. We'll be happy to assist.  Amy: Welcome to Insured Success and our Data Center series. My name is Amy Koss. I'm an Insurance Recovery associate attorney in Reed Smith's Philadelphia office, and I'm joined today by Steve Raptis, an Insurance Recovery partner in our D.C. Office, and Anthony Crawford, an Insurance Recovery partner in our New York office. As part of the Insurance Recovery Group, we represent policyholders in complex insurance disputes and counsel corporate policyholders on coverage issues. In today's episode, we're going to discuss the unique risks that data center owners and operators should consider when purchasing their insurance coverage. Data centers have been popping up all over the place, and they're really being integrated into our way of life. For example, very recently, OpenAI launched its Stargate project, and as part of that project, OpenAI intends to invest over $500 billion in building and supporting AI infrastructure over the next four years. And these infrastructure efforts are only going to continue to increase as technological advancements like AI and the Internet of Things become enmeshed with the way that we live our lives and the way that we do business. And much like anything else, with big investment comes big risk. So we're going to talk today about what owners and operators of data centers should consider as they look to ensure their risks, especially those risks that are unique to data centers. Stephen, Anthony, how are we doing today?  Stephen: Hi, Amy. Doing well. Thank you.  Amy: Great. So as I mentioned, data centers carry a unique set of risks. What should data center owners look for when shopping for insurance and reviewing different policy options?  Stephen: It's a great question, Amy, and I know from personal experience where I live in northern Virginia, data centers are everywhere, and every large piece of unused property seems to be in the process of being transformed into a data center. So it is just including what we hear in newspaper reports and trade press about this being an expanding industry. There's no doubt about it. Everywhere you look, there are more and more data centers coming up and AI is only going to increase that demand over time. And we know that the insurance industry is usually pretty good about coming up with specialized products once an industry hits a certain critical mass, they will start to produce specialized insurance products for that industry. And one might think that the data center industry is large enough now that it would have its own specialized insurance products. But in fact, we have not seen that. And we've talked to a number of insurance brokers to see if they might be aware of specialized products that are out in the marketplace. And they told us that they're not, at least not yet. So where that leaves data center owners and operators is that they need to take traditional off-the-shelf, for the most part, insurance policies and make those fit into their risk management portfolio in terms of how do we protect our assets, how do we protect our business. There aren't data center-specific policies. So they need to go out the marketplace and buy their traditional policies, but try to get those crafted as well as they can to their particular situation. And the good thing is that a lot of these policies that have traditionally been out there, including cyber policies, errors and omissions policies, those kind of policies are not written on a standard form, and so they tend to be more negotiable, whereas your property, general liability policies, those are written on standard industry forms and may be a little bit harder to negotiate, but even those can be changed in the endorsements.  Amy: Thanks, Steve. So, in terms of some of the risks that these data centers are facing that are particular to data centers, what do some of those include?  Stephen: The first kind of risk that may be the most prevalent risk is with respect to property, and that's the data center's physical operations. How does it protect its actual physical workings at a particular data center? And then there is sort of the more technical insurance, which would include errors and omissions coverage and cyber coverage, which is intended to protect largely against liability. But there is some first party coverage in the cyber as well that we'll talk about. And then finally, there's general liability coverage that covers property damage and bodily injury that might occur as a result of the data center's operations.  Amy: So in terms of protecting the actual physical assets of the data center, what kinds of coverage are we talking about? What can data center owners and operators look for?  Anthony: That's an excellent question. And, you know, the simple answer is starting out, the data center owners are going to look at their property policies. So, you know, these property insurance policies generally cover both the physical structure of the building as well as the assets inside of the building, which, you know, this is going to be something that is going to be significant and important to policyholders. Now, these policies traditionally cover loss due to physical damage from events such as, you know, it can be either sort of natural events such as earthquakes, some type of flooding, or it could be other man-made events such as fires. You know, also thinking about things such as water in truth. These property policies, as I said before, also look at sort of the assets inside, which is going to play into it hugely when we're talking about data centers, because you're talking about a lot of computer and electronic components that are going to be there. Data centers and the physical structure of the data center itself. We also, there is a component of property insurance that includes coverage for business interruption losses. And basically, this is where some type of physical loss has occurred at a business property, and there is an associated loss of business income because of that damage. So traditionally, you see where a fire burns down a factory or damages a factory, they're not able to produce the widgets that they do. They're able to get coverage for the lost income because they're not able to sell their widgets. They'll be looking at something similar here with data centers. Now, there are some unique components in terms of looking at property coverage for data centers because traditionally, these things, these policies cover sort of tangible assets. Well, one of the biggest components of a data center is that they have a lot of soft data that they're storing on the physical computer components within the structure. That data in and of itself, it may or may not be covered under the traditional policy. So policyholders may need to look to other policies or looking to look to get some type of endorsements added to their property policies in order to make sure that there are no gaps in the coverage because, you know, arguably one of the most important aspects of the data center is the data itself. There are some other considerations that we should look at, policyholders should look at when looking to insure their data centers. And that's concerns about a traditional extra coverage that's usually not sort of thought about or discussed heavily and negotiated in the underwriting process, and that's service interruption coverage. By their very nature, it's pretty clear that having uninterrupted access to electricity is pretty important to data centers. So policyholders need to look specifically at this coverage that's traditionally found in property policies and sort of work with the insurance company and the brokers to tailor that coverage so that it provides meaningful coverage for service interruption losses at the data center. And, you know, there can be different components of that. So, for example, some may provide coverage when there is a damage to the power supply or it may provide only coverage if there's sort of a power surge. But, you know, at the end of the day. This is something that policyholders will have to heavily scrutinize to make sure that they are not going to lose out on coverage if, for instance, there is some type of interruption with the service provided by the utility companies. Another thing that property holders need to take in consideration are sort of risk mitigation requirements that may be found in policies, specifically when talking about making sure that there's fire suppression systems and how that language is worded in the policies. Because traditionally, these policies require or may specify that there need to be sprinkler systems in place. But if you think about the nature of this risk with data centers. Having traditional water sprinkler systems in place may not necessarily be the best solution for data centers in that these fire suppression efforts may cause further damage using water. So policyholders should look to negotiate w

    27 min

  4. APR 2

    Where there’s fire, there’s smoke: The evolving LA wildfire claims landscape

    While the devastating Los Angeles wildfires earlier this year were extinguished, the risks associated with those fires – and wildfires more broadly – continue to affect policyholders. In this episode, Nick Insua, Matt Weaver and Kya Coletta discuss important topics related to wildfires, including recent insurance updates, smoke damage remediation, the threat of mudslides, the California FAIR Plan and the process of rebuilding after a loss. ----more---- Transcript: Intro: Hello, and welcome to Insured Success, a podcast brought to you by Reed Smith's Insurance Recovery lawyers from around the globe. In this podcast series, we explore trends, issues, and topics of interest affecting commercial policyholders. If you have any questions about the topics discussed in this podcast, please contact our speakers at insuredsuccess@reedsmith.com. We'll be happy to assist.  Nick: Welcome everyone to the Reed Smith podcast Insured Success. My name is Nick Insua. I’m a partner in the New York and New Jersey offices of Reed Smith and I’m in our insurance recovery group. I primarily work on first party property and business interruption insurance claims although my practice is varied on liability coverage disputes as well. I'm joined for today's podcast by my partner, Matt Weaver. Matt is a partner in our Miami and Dallas offices, and a significant part of his practice involves dealing with the aftermath of natural disasters. And finally, we are joined by Kya Coletta. Kya is an associate in our Los Angeles office, and she primarily focuses her practice on representing corporate policyholders in insurance coverage disputes and does have a particular focus currently on losses relating to aviation clubs. And today we're going to be talking about some of the current legal and different coverage developments related to the terrible wildfires that struck the Los Angeles and greater Los Angeles area early in this year of 2025. We did want to acknowledge the devastating losses that many families and the communities there are facing due to these recent wildfires. Our hearts continue to go out to everyone affected. And we hope to provide some useful insights today and resources to assist those affected in recovering. Our firm, along with many, not only in the West Coast, but around the country, work very closely with an organization called United Policyholders. They're a nonprofit organization that provides invaluable information and support for policyholders navigating insurance claims and recovery efforts. Homeowners should visit their website for guidance on filing claims, negotiating with insurers, and accessing disaster recovery resources. United Policyholders is based in California and has a lot of experience dealing with natural disasters and their aftermath from an insurance perspective, and in particular on wildfire claims. Our podcast today is going to hit on a few key topics. The key areas of focus will be smoke damage remediation, mudslides, the fair plan, rebuilding after a loss, and some recent insurance policy updates. The reason why these topics matter is because there is and we've seen an increased risk of wildfires. Not only these in California, but others in California. We've now seen some subsequently in southwest of the United States. This is a risk that's growing in frequency and severity. Insurance policies, terms and conditions are evolving, and there's a lot of change in policy terms and how those might apply to losses. And we've also seen some recent court rulings from California, and there will be others, undoubtedly, that all policyholders and lawyers working with them should be aware of. So with that, we're going to step into some substantive segments of our podcast. Our first segment is going to be key initiatives by Insurance Commissioner Ricardo Lara since our last podcast. And the first topic in that segment is going to be provisional approval of State Farm's rate increase request. And I'm going to ask Kya if you would chime in on what's behind the 22% emergency rate increase approval?  Kya: Thanks, Nick. As of last week, the Insurance Journal reported that insurance companies have so far paid out more than $12 billion for losses from the Los Angeles area wildfires. This figure nearly doubles the $6.9 billion in claims reportedly paid out last month. State Farm General, the company's California-only subsidiary, has cited increasing payouts and rising reinsurance expenses as justification for the rate hike to pay out future policyholder claims. This request by State Farm would raise rates by 22% for homeowners and 15% for renters. The commissioner's approval is provisional, meaning State Farm must not only pause policy cancellations in the interim, but also present supporting data during an April 8th public hearing before full approval is granted. If State Farm is unable to substantiate the validity of these rates at the hearing next month, the commissioner has stated that State Farm will have to issue full refunds with interest to the impacted policyholders. This emergency rate increase approval reflects broader concerns about the financial stability of insurance companies in California's high-risk wildfire zones and seems to be an attempt to keep State Farm from withdrawing from the state. We should know more after the April 8th hearing, which is held before an administrative law judge and Commissioner Lara, so stay tuned.  Nick: Great, thank you. And there's also a directive for comprehensive investigations of smoke damage claims. Can you tell us a little bit about that new directive?  Kya: Sure. Many policyholders were fortunate that their homes remained standing during the L.A. wildfires. However, many of these homes are uninhabitable due to unclean air, unsafe drinking water, and lingering harmful substances. Despite this, insurers have pushed back on smoke damage claims, arguing that smoke damage does not constitute, quote, physical loss or damage to, unquote, property. Earlier this month in response, on March 7, 2025, Commissioner Lara issued Bulletin 2025-7, which provides guidance on the handling of smoke damage claims for properties affected by the LA wildfires. It clarified the Department's position on insurance coverage for smoke damage and outlined the expectations for insurance companies in processing these claims in three major ways. First, the Bulletin advised that it expects insurers to handle smoke damage claims in compliance with applicable laws, regulations, and best practices. This includes adherence to California Insurance Code Section 790.03(h), which requires insurers to adopt and implement reasonable standards for the prompt investigation of processing claims, as well as adherence to Section 2695.7(d) of the Fair Claims Settlement Practices Regulations, which essentially mandates insurers to conduct and diligently pursue a thorough, fair, and objective investigation of claims. It is also unreasonable under this section for insurers to require policyholders to incur substantial costs to investigate their own claims. If professional testing is warranted, insurers are expected to contract and pay for these services. Second, the department encourages insurers to consider the distribution of low-cost, commercially available at-home test kits for things like asbestos and other smoke-damaged contaminants as a reasonable first step in responding to and investigating certain smoke-damaged claims. Then, depending on the results of these at-home test kits, further investigation and processing may be warranted. And third, the bulletin addresses the implications of recent court cases on smoke damage claims to stress that whether a particular claim is covered depends on the specific policy language and unique facts of each claim. My colleague Matt will go into these wildfire cases more in depth later, but to close the loop on the commissioner's directive, the cases noted are the California Supreme Court's decision in Another Planet, a COVID-19 case that sets the standard for direct physical loss, and the California Court of Appeals decision in Gharibian v. Wawanesa General Insurance Company, which notably involved ash and soot damage rather than smoke damage. Importantly, the Bulletin 2025-7 emphasized that the Gharibian decision should not be interpreted and applied as a blanket rejection for coverage of smoke damage. Rather, where a particular claim is covered depends on the specific policy language and the unique facts of each claim. This directive can be seen to ensure that claims are not dismissed based on superficial inspections, and insurers must now provide detailed documentation and consider the full extent of smoke damage before denying coverage. Any policyholders with questions or concerns about their smoke damage claims are encouraged to contact their insurance company or the department directly.  Nick: Thank you. And our fourth point is approval of the $1 billion assessment to support the fair plan. And my question is, how is California supporting high-risk policyholders?  Kya: Sure. So the California fair plan was established to meet the needs of California homeowners who were unable to find insurance in the traditional marketplace. It is a syndicated fire insurance pool comprised of insurers licensed to conduct property and casualty business in California. Last month, the Fair Plan Association reported that it had paid more than $914 million to policyholders to cover claims related to the Palisades and Eaton fires. The Fair Plan's accounting subcommittee and governing committee each recommended an assessment of $1 billion to enable the Fair Plan to access additional available layers of reinsurance and maintain operators. To address this, the Commissioner approved the $1 billion assessment on member insurance companies to stabilize the program. This step by the Commissioner is meant to ensure that homeowners in fire-prone areas can still access insuranc

    35 min

  5. MAR 6

    Cryptocurrency: New risks – does the cover fit?

    In this podcast, Peter Hardy, Eleanor Ruiz and Claudia Gwinn provide an introduction to cryptocurrency insurance, including key issues such as crypto-related risk coverage (i.e., theft, hacking, fraud and operational mistakes), considerations in respect of valuation wording and notification requirements to the insurer in the event of loss. ----more---- Transcript: Intro: Hello, and welcome to Insured Success, a podcast brought to you by Reed Smith's insurance recovery lawyers from around the globe. In this podcast series, we explore trends, issues, and topics of interest affecting commercial policyholders. If you have any questions about the topics discussed in this podcast, please contact our speakers at insuredsuccess@reedsmith.com. We'll be happy to assist.  Claudia: Welcome back to Insured Success. My name is Claudia Gwinn and I'm a junior lawyer in Reed Smith's insurance recovery group and I'll be in conversation today with my colleagues in the London team, partner Peter Hardy and counsel Ellie Ruiz. Today we're going to be discussing the cryptocurrency insurance market and in particular the types of crypto policies available and the risks they seek to cover, insured considerations as to the policy wording and them respective disclosures. And finally, making a claim under a crypto policy. So to start off, what does the cryptocurrency insurance market look like currently? What kind of policies are available? And what are the risks currently attaching to cryptocurrency and digital assets? Ellie: Hi, Claudia. So when we're talking about cryptocurrency insurance, there's probably two broad categories. There's coverage for assets that's available to consumers, For example, your individual, your corporate investor, and then there's insurance for the key stakeholders within the crypto industry, and that would include crypto custodians or exchanges. There's then various types of assets that crypto insurance might cover. There's a type of custodial insurance that might protect against sort of general loss as a result of hacking, theft, loss of funds. There's also the option to look under crime insurance policies. That's more directly relating to theft, potentially crime-related events, individual insider involvement. And then you can also look for some types of specific policies targeting risks that are directly related to being in this cryptocurrency environment. For example, a specific type of policy that addresses theft of an element of the software or hacking in particular based on the, relevant industry rather than a broader concept of crime or of general custodial insurance. The risks that we're looking at, those risks that are inherent when you're holding crypto assets, some of them are very new. It's a relatively new area and they're quite specific risks to this area that have to be considered. Those might include that this is an area where there's a lack of regulatory oversight. There's definitely market volatility that everyone is aware of that really affects the value of the cryptocurrency that might be being held. And there are also a whole different host of security concerns around encryption, how assets are held, and particularly on cryptocurrency platforms, that makes these systems vulnerable to a different type of attack than you might think about assets held in a bank account, particularly the collapse of FTX in November 2022. That made, I think, crypto asset holders and the public generally more aware of those risks and that there's a real need to protect these digital assets in as many ways as possible. And one of those ways is to look at taking out insurance. And it'll come as little surprise, I think, that one area that we've seen particular activity is that these crypto exchanges are a tempting target for hackers. There's the high value nature of the assets that are involved. And as I mentioned before, new potentially untested security. There might be new vulnerabilities that haven't yet been provided against. And that's all in the balance between an insured and their insurer trying to get ahead of any of those risks and make sure that an insured in this space is protected. Peter, is there anything else you thought you wanted to add there? Peter: Thank you, Ellie. Just a couple of additional comments for me, perhaps. I think, as you've indicated, this is very much a new and still developing sector of the market. We've seen a lot of new wordings coming into the market. We've even seen new insurance capacity provided by insurers dedicated to this particular market sector. So we're all learning about how the market is developing and we're learning about how these policies might respond. I mean, the cryptocurrency cover that one might buy, I think, is increasingly likely to be found in bespoke, standalone, dedicated crypto policies. But it might also be found in more general business and liability covers, often perhaps by way of endorsing. So I think that the fact that the insurance options are continuing to evolve and the range of new wordings that are potentially available present both opportunity and challenge for insurers. It's very important for an insurer to fully understand what cover it's actually bought. I think often there is a temptation to think that because there is cover in the market it's cover you must have but what you really need to understand is what you have for and whether that is what you think you are looking for now that this loss has arisen because it might be the case that you bought perfectly appropriate cover but the loss that's arisen is excluded for one or other reason by the particular policy you brought It's taking time to understand, I think in particular in discussions with your brokers. What isn't available and what you bought is essential if you're going to be able to assess the nature of your insurance protection in the event that the loss arises. And it's also important to note, I think, that because this is a new market sector, these wordings, these policies are largely untested in terms of their claim systems. As Ellie mentioned, cryptocurrencies are particularly susceptible to fraudulent activity and market manipulation, in particular to schemes such as pump and dump schemes where the value of an asset is artificially inflated through misleading and false statements, only to find that the asset is then dumped at the inflated price. So I think the wildly fluctuating value of cryptocurrencies can create problems for the policyholder going forward. There's no doubt about that. Claudia: So given this crypto asset price volatility, are there any particular considerations that the insured should keep in mind as to valuation provisions under the policy? Peter: It's a good observation, Claudia. I think the fact that the value of the crypto asset, the value of crypto assets frequently fluctuating makes it important for there to be an accurate valuation methodology in the policy. And it might be provided in one or other ways. But it will hopefully be a valuation methodology that recognises the balance sheet value of the lost asset to the policyholder. There are several options. The market value option, which will base the coverage on the value of the asset at the time of the loss. There's the historic cost approach, where coverage will be based on the price of the assets when they were acquired, which might be some time prior. And there's the average value which will base coverage on the overall average value in the market over a specified period of, say, three or so years. But it is important to recognise that even when evaluation is fixed by reference to the date of loss, it may significantly be different to the value attributed to the lost asset on the balance sheet in current time. And this could have a real impact on insurers' rights and subrogation and recovery and on their perception of the value in those rights. Claudia: Thank you, Peter. And speaking more generally, what kind of information or disclosures is a crypto asset business likely to have to provide to their insurers? Ellie: I think I can take this one. This is something we're always talking to insured clients about because it's a way of getting ahead of any future problems down the line before you've got any claims. When the policy is being placed under the Insurance Act 2015, we always start with there's a very important duty of fair presentation that requires that the insured provides the insurer with a full and accurate disclosure of all material information to the risk which it knows or ought to know before entering into an insurance contract. In the context of cryptocurrency, that can be an extensive burden particularly when you're talking about an area. In which perhaps insurers are less au fait. You as the insured client might have a much better detailed understanding of the information you're handing across. The information can vary, the nature of the duty can vary, but some of the minimum areas that we've experienced and things we'd expect that an insurer of a crypto asset policy might be requiring include an explanation of the type of crypto assets that are being held. So that's whether it's the different type of coin, Ethereum, Bitcoin, Litecoin, what's being held, what's being traded, because different assets in this area have got different risk profiles. There's a question of the value of holdings, as Peter's just covered, that fluctuates, but the value at the time, the profile of that value as it's changed over time. And then from a security perspective, there's an issue around storage methods. Some elements of holding cryptocurrency involve some physical storage. Then there's also some online storage. There's offline storage. There are various different types of wallets in which information is kept. And all of that is information that your insurers will want to be right across because it directly impacts their assessment of the security measures. All the details

    23 min

  6. JAN 29

    What catastrophe loss victims need to know: Understanding insurance claims after a natural disaster (part 2)

    The 2025 Los Angeles wildfires have left many businesses and individuals in Southern California facing significant challenges. In part 2 of a podcast focused on insurance claims following a natural disaster, we hope to assist victims as they navigate the insurance claims process. In this podcast, John Ellison, Chris Kuleba, Max Louik and Esther Kim discuss claim submissions, the post-loss insurance policy conditions that policyholders need to comply with and the coverages that are available for losses resulting from a natural disaster under a first-party property policy. ----more---- Transcript: Intro: Hello, and welcome to Insured Success, a podcast brought to you by Reed Smith's insurance recovery lawyers from around the globe. In this podcast series, we explore trends, issues, and topics of interest affecting commercial policyholders. If you have any questions about the topics discussed in this podcast, please contact our speakers at insuredsuccess@reedsmith.com. We'll be happy to assist.  John: Greetings and welcome back to the latest episode of Insured Success. Today's topic is part two of our podcast on dealing with natural disaster claims. We're focusing on three topics related to natural disaster claims for business owners and also individuals. Part one, we'll talk about claim submission. Part two will be the post-loss insurance policy conditions that policyholders need to comply with. And part three is the various coverages that are available for losses resulting from a natural disaster under a first-party property policy. My name is John Ellison. I'm a senior partner in Reed Smith's Insurance Recovery Group in both our Philadelphia and New York offices. And I am joined by my colleagues, Max Louik, a partner in our Pittsburgh office, Chris Kuleba, a partner in our Miami office, and Esther Kim, a senior associate in our Philadelphia office. Natural disasters are covered by first-party property policies, including wildfires, hurricanes, and windstorms. And this topic is particularly timely given the tragic events that have been ongoing in LA for the last several weeks. Moody's, among other estimators, have proposed that the insured losses from the 2025 LA wildfire claims will likely be in excess of $20 to $30 billion dollars. Other prognosticators have estimates that are even higher. An LA Times article earlier this week stated that the wildfires have damaged or destroyed about $350 million in public infrastructure. And as of another estimate earlier this week, over 16,000 structures have been destroyed in both the Palisades and Eaton fires. For individuals and businesses affected by these events, United Policyholders, a nonprofit organization based in San Francisco, has a page dedicated to the wildfires with information and resources on submitting insurance claims and disaster recovery that has a whole lot of useful information. And in addition to that, the California Department of Insurance, which has been particularly active in the post-wildfire time, has the latest announcements and updates regarding what the insurance department is doing on behalf of policyholders with respect to their insurance policies and claims resulting from the wildfires. So with that introduction, let's talk about what you take as your first steps in dealing with a natural disaster loss. And I'm going to pass it over to Esther to pick it up from here.  Esther: Thanks, John. So when your property has been damaged by a natural disaster, you should first review all of your insurance policies to determine which policy provides coverage for that specific property and cause of loss. Most individuals and businesses will generally have one policy that responds. For a business, the commercial property and business interruption policy will likely cover losses caused by natural disasters and lot fires. In California, after a property loss, an insurance company must provide free of charge a complete and current copy of an insurance policy within 30 days of a policyholder requesting it. So that's helpful if you need a copy of your policy. Also make sure to request an electronic copy of the policy if you're experiencing a complete property loss and would prefer the policy to be sent to your email. Once you have reviewed your policy, then you will need to submit a notice of claim to the insurance company. So I will now turn it over to Max to discuss best practices for submitting a claim.  Max: Thanks, Esther. I think, you know, when it comes to submitting a claim, the bottom line is one of the most critical things you can do is submit a claim in writing to the insurance company and to do so as soon as possible, especially when you're facing a natural disaster like the kind we have seen unfold in Los Angeles, where there'll be lots of claimants making those claims, it's important to get your claim in writing and get it in early. Now, typically your policy will specify how to submit a claim. It may say who to send it to, their email addresses, their mailing addresses, that type of information. For best practice, if there's both a mailing address and an email address, we suggest that you notify the carrier through both means, if you can. You should also consider involving your broker. They should be familiar with how to submit claims to the particular carrier that issued your policy. And if you're a business submitting a notice of claim as opposed to an individual. Strongly consider providing notice on behalf of not only the insured company, but also all of its affiliates and subsidiaries to make clear that you're providing notice on behalf of every entity that might be insured and has suffered a loss under that policy. You want to include all losses known or losses that are suspected in your notice. And consider using a descriptor like, you know, providing notice of this and all related losses when describing your known loss. I think I mentioned as the timing, it's important to do provide notice as soon as you can. Typically, a policy will include some language to that effect. It'll say you need to provide notice as soon as practicable. It might purport to require prompt notice of the loss or damage, including a description of the items of property damaged, the cause of the damage, and the time it occurred. But don't let perfect be the enemy of the good. Since you could submit updates to the insurance company and supplement your notice of claim, it's important to submit the notice as early as possible. Prevent the insurance company from raising any late notice offenses to potentially exclude coverage down the line. Now, if you're listening to this a long time after you have suffered a loss due to a natural disaster, don't worry. You still want to provide notice as soon as you can, but California and other states generally follow a notice prejudice rule, although some jurisdictions do vary. But under the notice prejudice rule, even if your notice is technically late or wasn't as soon as practicable as the policy might require, in order for the insurance company to deny coverage on the basis of late notice, it's going to need to show that it was substantially prejudiced by the timing of your notice. Now that could be another podcast topic entirely, but I did just want to allay any fears. Yes, get it in as soon as you can, but it's never too late under many circumstances. So after you provide notice, the next step really is that the insurance company will require you to submit a proof of loss. And we're going to address that next. I'm going to pass it to Chris. Can you tell us about submitting a proof of loss to the carrier?  Chris: Yeah, sure. And just a practical tip. To Max's point, notice the insurance company needs to be timely. If you are in a situation where you don't have a copy of your policy because, for example, it was in your property when it burned, you haven't received a copy either by physical mail or more likely electronic mail from your insurance company, in order to avoid a situation where an insurance company may try to assert a late notice defense, it may be a good idea to check the insurance company's website, which will often have email addresses or even physical addresses to send your notice of claim before you even receive your policy. So just a sort of best practices tip there. In terms of proofs of loss, typically those are going to be due. This is going to be policy dependent. So again, always look at your policy, but typically these are going to be due within 60 days of your loss or within 60 to 90 days of the insurance company's request for a proof of loss. So some of our listeners may find themselves in a situation where they've given notice to their insurance company, there's some back and forth with the insurance company, you are providing documents, you're providing evidence of your loss, but there's been no formal request for proof of loss. Unless the policy requires the proof of loss automatically without a request from the insurance company, you're under no obligation to provide a formal proof of loss, which, by the way, is a sworn statement setting forth typically what the cause of loss is in your view and what your damages are. There's no requirement to submit that unless there's a request by the insurance company absent, again, express language in the policy saying you have to do it no matter what within a certain time after the loss. Again, if you are in a situation where you know within the 60 days of some of your damages, but your investigation is still continuing or your damages are continuing, a good best practice is to mention to your insurance company just that, that you're still investigating, your damages are continuing, your proof of loss is based on what you currently know and have currently been able to quantify, but you reserve the right to amend it and supplement it as additional information comes to light later on in the process. So that's really some of the high-level tips on

    37 min

  7. 12/04/2024

    Hit by a cyberattack? You may be covered for that!

    Cyberattacks, including hacks, ransomware and malware attacks, are on the rise. Nearly every industry has been or could be affected, including professional and financial services, manufacturing, distribution, health care, education, tech, retail, energy, government and non-profit. Experts believe this trend will only continue. But insurance may be able to help manage the growing risks, as Lisa Szymanski and Adrienne Kitchen discuss in this episode. ----more---- Transcript: Intro: Hello, and welcome to Insured Success, a podcast brought to you by Reed Smith's insurance recovery lawyers from around the globe. In this podcast series, we explore trends, issues, and topics of interest affecting commercial policyholders. If you have any questions about the topics discussed in this podcast, please contact our speakers at insuredsuccess@reedsmith.com. We'll be happy to assist.  Adrienne: Welcome back to Insured Success. I'm Adrienne Kitchen, and I'm joined by Lisa Szymanski. Cyberattacks, including ransomware, business email compromise attacks, third-party breaches, network intrusions, inadvertent disclosures, and malware attacks are on the rise. Nearly every industry has been or could be affected, from professional and financial services to manufacturing and distribution, healthcare to education, tech to government, and non-profits and retail to energy. And experts believe this trend will only continue.  Lisa: The cyber threat landscape is quickly evolving, creating new and unique risks. Data and privacy breaches are disruptive, expensive, and embarrassing, and many lead to litigation. Malicious attacks are on the rise. So it's a question of when, not if, a business will suffer a data breach.  Adrienne: That's right, Lisa. And most states, including D.C. And the U.S. minor outlying islands, have data breach notification statutes. A handful of states have statutes mandating methods by which businesses must secure data. The federal government also has enacted several statutes and regulations addressing data privacy and security in different realms, from health to finances and government to family.  Lisa: With respect to insurance, traditional insurance like commercial general liability policies typically exclude losses arising from a data breach. However, other policies like employment practices liability policies, directors and officers policies, errors and omissions, and even property policies may provide some cover. This is because security breaches may give rise to claims against management, commercial crime policies may cover certain direct losses, and computer fraud and property policies may provide cover for damage to types of electronic data.  Adrienne: An often overlooked, unpurchased, optional feature of some cyber policies is system failure insurance, which is usually triggered by an unplanned outage of a computer system resulting from operator error, erroneous updates of software, or a similar unintentionally damaging maintenance of computer systems. Another often overlooked aspect of cyber policy is customer attrition, which provides cover for lost profits due to a residual loss of customers following a service interruption.  Lisa: Data security and privacy liability policies may be placed as standalone policies, or coverage sections in package policies, or endorsements to traditional liability policies. All of this cover is relatively new, so the forms vary significantly and are always evolving. Data security and privacy liability insurance is negotiable, and policyholders should compare the policies and try to obtain bespoke coverage whenever possible. Generally speaking, data security and privacy liability policies may cover several risks, including, for example, misappropriation of private information, unintentional disclosure of private information leading to a risk of or actual identity theft, failure to protect confidential information from misappropriation or disclosure, failure to disclose or notify victims of a breach incident, violations of federal, state, local, or foreign laws governing data protection and privacy, including certain regulatory actions, as well as business interruption. Adrienne: Data security and privacy liability policies may also cover certain costs incurred when a business responds to, investigates, or remedies a breach. This includes things like breach notification costs, attorney's fees for legal assistance from privacy counsel following the breach. Sometimes these are called breach coaches, the costs of a forensic examiner. Various other response costs like maintenance of a system for those affected to communicate with the company. Remedial measures like credit monitoring and expense reimbursement may also cover defense and claims administration costs, damages, and consumer redress fund payments. It also may cover business interruption costs to hire communications professionals to address the effects of negative publicity so the company can maintain goodwill, and other costs like replacing or restoring electronic information, extortion payments, and criminal rewards.  Lisa: Data security and privacy liability policies typically contain a number of exclusions, and I'd like to highlight a few of those for you. These include intellectual property violations, products liability, violations of anti-spam, blast facts, and similar laws, misconduct committed by senior management, infrastructure failures, inability to use, the performance of, development of, expiration of, or withdrawal of support of certain tech products and software, and content created by third parties.  Adrienne: Right. And as mentioned, cyber insurance is vital. It's also vital to check your kidnap, ransom, and extortion policies. They may cover things like ransomware attacks, although you want to take a look at your policy language because that is becoming less the norm, but the older policies do, and some may still. Cyber and KRE policies may cover the costs of independent forensic analysts, independent consultants, lawyers, and others, either expressly or as part of the loss mitigation coverage. Importantly, many policies have pre-approved vendors and counsel that must be used or require that the insurer give consent before the policyholder retains any vendors or counsel.  Lisa: Publicity costs may also be covered, and this is particularly important because reputational harm may be one of the largest damages to a corporation following a cyber attack. Adrienne, maybe you could talk about steps that policyholders can take before and after the breach to help protect their business.  Adrienne: Before the breach, selecting the right policy and the application process are crucial. You have to consider all possible areas of exposure and ensure your business has enough coverage for its risks. Cyberattacks are costly and can shut down a business completely if networks and computers are unusable, if the business cannot afford recovery costs, faces third-party liability, or cannot survive any temporary loss in income. Costs can vary and rise very quickly following a cyber attack. So it's vital to fully assess all potential exposures that your business might face and ensure you have adequate coverage, including for things like business interruption, ransomware payments, third-party liability, data recovery costs, legal fees, PR, and payment to customers. In determining what losses are likely, businesses should consider things like potential damages, including loss of a computer system or the data within. A business shutdown, potential fines and penalties, reputational damage, and things like theft and extortion. It's also really important to keep your IT security officers and the stewards of the IT systems in the loop when completing cyber insurance applications. Cyber insurance applications increasingly focus on cybersecurity infrastructure and controls, and an inadvertent error in an application may be used as a basis to deny coverage. So it is crucial to consult the people with the most information about your business's IT systems and keep them closely involved with the application process.  Lisa: It's also crucial to understand your company's specific risks and exposures. For first-party costs, where the company is hacked or is subject to a ransomware attack, look for coverage for notification and credit monitoring expenses if your customer's personal information could be stolen in a data breach. These expenses add up quickly. Some policies cover credit monitoring and identity theft protection services for customers as well. With respect to third-party costs, look for liability costs associated with a breach of personally identifiable information. Also look for coverage for lost business income and extra expense due to a cyber attack, including express coverage for mitigation costs, particularly if you use your own IT and cybersecurity salaried employees to respond to an attack, to the extent they are working to respond to and recover from a cyber attack. It is also important to look for defense costs in the event your business is sued following a breach.  Adrienne: Exactly. It's also important to consider obtaining coverage for employee or vendor acts. Insurers may decline claims if an employee or vendor with access to your data was at fault. Look for policies that include coverage for these kinds of incidents. Some policies bar coverage for rogue active employees but will cover the negligent active employees. This issue is increasingly important given the rise of social engineering fraud. Also be aware of sublimits that may leave your business without sufficient coverage following a social engineering fraud loss.  Lisa: Another thing you should do is consider obtaining retroactive coverage. The reason for this is because breaches can occur months before they are discovered. Consider whether your business would benefit from retroactive coverage of breaches that occur before the

    23 min

  8. 11/14/2024

    The Bermuda Form (part 2): Perfecting coverage and dispute resolution

    Continuing our two-part series on Bermuda Form policies, John Ellison, Richard Lewis and Catherine Lewis return to discuss how policyholders can perfect their coverage and handle the dispute resolution process. ----more---- Transcript: Intro: Hello, and welcome to Insured Success, a podcast brought to you by Reed Smith's Insurance Recovery lawyers from around the globe. In this podcast series, we explore trends, issues, and topics of interest affecting commercial policyholders. If you have any questions about the topics discussed in this podcast, please contact our speakers at insuredsuccess@reedsmith.com. We'll be happy to assist.  John: Greetings, everyone. Thanks for joining us again for another session of Insured Success. This is part two of our podcast on the Bermuda Form, and today we are focusing on perfecting the coverage available under the Bermuda Form coverage and how to deal with the dispute resolution process. We've already covered the history of the form and key policy terms and coverage issues in our part one podcast, but now we're on to how the policy actually works and how you can put it to use. Joined today by two Lewises, Richard in New York and Catherine in London. And without further ado, I'll turn it over to you, Rich.  Richard: Okay. We're going to talk a little bit about some of the issues that we've seen at the claim side from the manner in which the program is structured. As we covered, I think, in the first one, the limits of Bermuda Form policies are huge. A program can have hundreds of millions of dollars in limits. And so are the retentions. They can be, I think when the policies first came out, they were 25 to 50. And a lot of policy holders have up to a hundred million dollars in retentions. And what will often happen is a policy holder will buy different products, whether it be captive insurance or actual domestic GL insurance and put that in their retention. And this can lead to some issues. The first issue being, as we covered in the first podcast, that the trigger of the occurrence-first reported policies, the Bermuda Form policies, is notice of an occurrence or notice of an integrated occurrence during the annual period. The problem would be if the policyholder in the retention purchase GL insurance that's triggered on a different mechanism, either an occurrence policies or claims made policies. Occurrence policies are policies that are generally triggered by injury during the policy period. And the issue you can see that may occur, and we've seen it many, many times, is that, you know, the policyholder gives notice in say 2005 of an integrated occurrence or an occurrence under its Bermuda Form policies. And there have been problems with this, you know, say a product over a 10-year period with injuries triggering a 10-year period in the occurrence policies. And so what the Bermuda Form carrier will say is that I'm excess not only of the retention in my year 2005, but I'm also excess of all the other limits that were recoverable under the occurrence policies from years 1995 to 2005. So I'm excess of 10 retentions. There's language you can use in your occurrence first report or in your occurrence policies, either like a deeming clause or something that deems only one year to be triggered. Similar issues occur with claims made policies, although generally claims made policies have a batching mechanism where only one year is triggered. Unfortunately, if the first claim came in in say 2003 and you give notice of integrated occurrence in 2004, the same issue can occur. The Bermuda Form carrier will say that I'm excess of two retentions. The other big problem that we've seen a lot is where the underlying coverage has defense costs outside the limit. Obviously, in these mass tort cases that implicate Bermuda form coverage, the defense costs can be massive. And a lot of those defense costs are incurred before there's any settlements or judgments. And if for some reason, the coverage and the retention, whether in a captive policy, we've seen that, or an actual real insurance has defense costs outside of limits, it's very difficult to recover those defense costs under the Bermuda Form policy. They say the only thing that eats through my retention where defense costs are outside of limits are settlements and judgments. And then I think I'm handling it back to John for the underwriting process.  John: So issues that can arise in these Bermuda Form claims often will implicate what happens during the underwriting process. And just like with any application process for any type of insurance, insurers will often look for misrepresentations as part of that. One of the things that's a little unique about Bermuda is that some of those forms, analogous to what some D&O insurers do, will be attached as exhibits to the policy when issued. So there has to be care taken to be candid and honest and open about your business and any issues you have with claims when applying for the product. But one of the things that we've seen that there's often a blurring between underwriting and claims that happens in the insurance world. And oftentimes policyholders are of the view that if they tell their underwriter something as part of the process of buying a policy, that will satisfy notice of claim requirements. That is generally not the case under the Bermuda policy. It really does need to be a separate line of communication with respect to claims and claim issues that is independent of and separate from any communications that are engaged with an underwriter at a Bermuda insurance company because the Bermuda carriers will take the position that information passed to the underwriter doesn't necessarily satisfy the obligation to provide information of claims to the claims department. So that's a point that is often overlooked and policyholders can be confused or taken advantage of if they don't recognize that distinction in how they're communicating with the Bermuda market. Now, another thing that needs to be kept in mind when you're potentially restructuring a program and maybe moving insurers around from their historic participation in the program, like changing layers or maybe actually switching from one Bermuda carrier to a new one, these policies have inception dates and retroactive dates. And typically, when the structure of the program is changed and a participation layer is different or a new carrier comes onto the program, the inception date that you will get for the new policy is often not back to the beginning of the time of the program when you were first buying Bermuda coverage so that there can be a gap in coverage. And the historic coverage that you thought you had because you've been buying in Bermuda for years or maybe decades can be disrupted substantially. And that is something you really need to keep in mind when you're renewing coverage in Bermuda and how the policies line up against the historic structure of the program. And you need to work on that closely with the broker to make sure you don't have gaps created by different inception dates or different retroactive dates that can leave huge holes of coverage based on the limits that Rich described earlier. One other thing I'll just talk about on the underwriting thing is there are oftentimes best terms provisions that are attempted to be put into policies, usually at the higher layers of a program that tries to, it's like a most favored nations type of clause. That can really be disastrous if there is some policy in the tower that is different or has more limited terms than potentially others in the program and just need to be aware of these things. They're often attempted to be slipped in, in my experience at least. Right near the renewal date, so there's not a lot of time to deal with them. You have to be vigilant about knowing what sorts of endorsements are being tacked on to the policies at the last minute. Again, that's something that should be a joint project with your broker, but it's definitely something you need to take into account. So we're now going to segue into actually perfecting your rights to coverage under the policy. And if you get into a claim dispute, how you may need to deal with the underlying defense issues and then perfecting rights under the Bermuda program. And I'm going to turn it over to Catherine to take this on.  Catherine: Thanks, John. So as Rich touched on at the start, the notice provisions in a Bermuda form policy are really important. And first point to note is that the notice clause will operate to trigger cover. And its second purpose is that it fixes the limits and retentions that will apply. What I mean by this is that the timing of the notice and the policy year in which it is noticed will confirm the retention or policy limits and the terms and conditions that will apply to that claim. So that will include any retroactive dates, discovery provisions and endorsements. So the policy year to which it's noticed is really important. Failure to give proper notice may defeat a coverage claim and now that's not a hard and fast rule but the clause typically requires notice to be given as soon as practicable and during the policy period or the discovery period and I say may defeat cover i mean the strictness of that is a question of New York law and will depend to the extent to which an insurer can show that it was prejudiced by the timing of the notice but typically the obligation to give proper notice will afford some sort of protection to insurers and in our experience is a real risk area for policyholders. And this on terms of formalities, notices must be in writing and we'll have to include general information about the underlying claim. The Bermuda Form also allows a policyholder to give notice of an integrated occurrence and we discussed integrated occurrences in some detail in our first podcast but in short it enables a policyholder to give notice of all of the personal injury or

    31 min
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Insured Success provides cutting-edge commentary on a range of insurance coverage issues affecting commercial policyholders. Reed Smith insurance recovery lawyers and guest speakers from around the world discuss emerging trends, legal developments and insurance best practices and provide timely insights to assist your organization.

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    Reed Smith LLP
  • Years Active
    2024 - 2025
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