Compliance Stuff

It’s said that an ant can carry fifty times its own weight. That’s nothing. A recent decision out of the U.S. Court of Appeals for the Fifth Circuit provides a compelling reminder to policyholders and their counsel: Even the smallest word in an insurance policy—and even the  placement of a punctuation mark —can carry tremendous weight . In fact, it can alter the meaning of an entire insurance policy. In  Paloma Resources, L.L.C. v. Axis Insurance Co. , the court vacated summary judgment in favor of the insurer based on the placement of a single word— “the” —in an exclusion clause. The decision reaffirms the bedrock principle in insurance policy interpretation that where a policy purports to bar coverage for an insured’s claim, it must do so in an unambiguous and clear manner . When a policy exclusion is unclear, courts will construe the provision in favor of coverage for the policyholder. Paloma’s Claim: A Trade Secrets Lawsuit, a Settlement and a Denial of Coverage In 2017,...

  Over the past decade, technological innovations have quickly transformed how companies operate their IT infrastructure. T raditional on-site servers and hardware have often been replaced or supplemented by off-site solutions such as cloud computing, SaaS (Software-as-a-Service), virtualized servers, or “Bring Your Own Device” (BYOD) programs. These developments allow a business’s IT operations to be spread across a complex IT ecosystem rather than confined to physical devices located on its premises. They have the potential to reduce costs while expanding the computing capabilities at a company’s fingertips. But they don’t come without risk. The ever-evolving nature of IT systems can create disconnects between the core features on which policyholders rely to operate their businesses—and that they seek to insure against cyber risks—and the defined terms used within their cyber policy’s coverage grant(s). While businesses may expect their cyber insurance policies to cover the ful...