V E R O N I C A B A T E S M I C H A E L H U D D L E S T O N
H E A T H E R K U B I A K E R N E S T M A R T I N
A M Y E L I Z A B E T H S T E W A R T , M O D E R A T O R
T E X A S B A R C L E 3 R D A N N U A L B U S I N E S S T O R T S I N S T I T U T E
O C T O B E R 1 4 , 2 0 1 1
What Every Business Tort Lawyer Needs to Know about Insurance Coverage
• Commercial General Liability • Directors and Officers Liability • Fiduciary Liability • Errors & Omissions Liability • Employment Practices Liability • Intellectual Property Liability • Cyber Liability
Types of Policies
Commercial General Liability Examples
Bodily Injury Property Damage Advertising Injury Personal Injury
Business disparagement Defamation Malicious prosecution Copyright infringement Misappropriation of style of
doing business Invasion of privacy Misappropriation of
advertising ideas Wrongful eviction False arrest/imprisonment
What’s Covered?
Errors & Omissions Examples
Wrongful Acts (in connection the insured’s profession)
Any professional negligence claim Bankers Accountants Real estate agents Lawyers Architects Engineers
Definition of “professional services”
What’s Covered?
Directors & Officers Liability Examples
Wrongful Acts—acts, errors or omissions
Breach of duty Misleading statements Errors & omissions Mismanagement
What’s Covered?
Fiduciary Liability Examples
Wrongful Acts Breach of fiduciary duty under ERISA
Other breaches of fiduciary duty
[Sometimes] negligence in administration of benefit plan
What’s Covered?
Which Policy Applies
• Policy Period • Claims-made v. Occurrence • Primary v. Excess • Named Insured v. Additional Insured
Claims-Made Policies
• Prior acts and retro dates o Policy may require wrongful act within specific
time • Definition of claim
o Claim requires demand for money o Must be in policy period
Claims-Made Policies
• Incident notice o Can invoke coverage before claim is made o Can freeze coverage in a policy period
different from actual claim • No coverage for previously reported
incidents o Form of known or loss in progress provision
• Was tail coverage purchased? • Claims made and reported?
Notice to the Insurer
• Notify all potential insurers • Check policy for when and where • “As soon as practicable” or promptly • During policy period or within X days • Prejudice • Cooperation
Practical Considerations
• As plaintiff, seek a copy of any reservation of rights letters
• Take inventory • Get parent, subsidiary and associated primary and
excess polices
• Make sure you have complete policies • Use certificates to run down the actual policies
• Read the policies carefully • Involve the broker
Practical Considerations
• Pay attention: different forms and endorsements can change the coverage o Get coverage from the inception with current
carrier o Renewal additions can be eliminated o Check form approval with the TDI
• Err on the side of giving notice • Never assume someone is or will provide
notice and do it correctly for you
Insurer’s Response
• Unqualified defense • Reservation of rights • Denial • Untimely or lack of response
Duty to Defend
• Triggered by allegations • Allegations taken as true • Extrinsic evidence not considered? • Doubts resolved in favor of insured • Broader than duty to indemnify
Under certain circumstances, an insurer may not insist on its right to control the defense—what are those circumstances? What is a reasonable rate and who decides?
Independent Counsel
Declaratory Judgment Actions
• Jurisdiction/Venue • Parties • Prohibitions
• Stowers o Duty not to settle. Pride Transp. v. Continental Cas. Co.,
2011 WL 1197306 (N.D.Tex., Mar 31, 2011)
• Settlement o Gandy/Atofina
• Entity Changes—Conversions and Mergers and Acquisitions o VRV o Ford Bacon o Keller Foundations o Nautilus
Trends in Texas
• Gilbert and blended tort/contract claims versus Lamar Homes
• Nokia o Using the “legal obligation to pay as damages” to expand
coverage o Potentially covered—partial or incomplete pleadings
• D & O o Stanford fallout o Disgorgement/ill-gotten gains
Trends in Texas
• How to deal with a difficult insurer • Resolution strategies • Ideas for maximizing coverage
Practical Advice
Questions?
THANKS!
