Not too long ago, Jonathan Bench wrote about the significance of insurance coverage coverage for your hemp or recreational marijuana small business. His very first post supplied the standard anatomy of such policies and his second discussed the significance of solution liability insurance coverage. This post highlights current litigation in which insurance coverage is at challenge, or ought to be.
Hemp insurer seeks declaration of no coverage
Typical readers might recall the Significant Bush Farms case —in which Significant Bush brought a $57 million lawsuit arising from a hemp production contract against Boones Ferry Berry Farms and other people. (See right here for additional detail). That lawsuit has now provided rise to a coverage lawsuit by Boones Ferry Berry Farms’ insurer.
Not too long ago, American Loved ones Insurance coverage filed a lawsuit in the federal district court of Oregon looking for a declaration from the court that it has no duty to extend to a defense to co-defendants Boones Ferry Berry Farms, LLC and its principals the Snegirevs (with each other the “Insureds”). American Loved ones sold the Insureds a farm/ranch policy in which it agreed to supply the Insureds “a defense against liability for spend damages for the reason that of ‘property damage’ brought on by a covered ‘occurrence.” The policy excludes coverage for “‘property damage’ anticipated by, directed by, or intended by any ‘insured.’” I count on your eyes are glazing more than so I’ll cease quoting language from the insurance coverage policy!
The gist of the federal lawsuit is that American Loved ones contends the claims against the insureds in the underlying state-court lawsuit do not give rise to a duty to defend or indemnify the insureds.
Oregon retailer sued for damages allegedly brought on by exploding vape pen
As I noted, Jonathan also wrote about the significance of solution liability insurance coverage. (See right here). He described is as a non-negotiable priority. A current lawsuit filed in Oregon state court demonstrates why.
The plaintiff alleges individual injury resulting from a vaping device exploding although touching his mouth, causing element of the device to shoot via his teeth and into his face. The plaintiff alleges he purchased this device from an OLCC retailer primarily based in Bend, which device was manufactured by Korean business. The plaintiff sued each the Oregon-primarily based retailer and the Korean business. The plaintiff alleges claims for strict liability, negligence, breach of the implied warranty of fitness for a unique objective and breach of the implied warranty of merchantability and seeks $1 million in financial and non-financial damages.
For these pondering this lawsuit arises from the current ban on flavored vape items, it does not. The events at challenge occurred in October 2017 but the lawsuit was not filed till October 2019. Concerns for the Oregon retailer contain: Do you have solution liability insurance coverage? Did you have coverage in the course of the applicable period (occurrence v. claims-created)? When, if at all, did you tender the claim to your insurer?
What ought you do?
First—have insurance coverage.
Second—at the outset of any small business dispute think about no matter whether the loss might potentially be covered by insurance coverage. This is not normally an enjoyable knowledge, as Jonathan pointed out, provided the labyrinth of policy language, endorsements, exclusions, and exceptions to exclusions. As somebody who has represented many insureds in disputes with their industrial common liability and other policies, my tips is to tender any potentially covered claim to your insurer ASAP. And I imply do it promptly following the loss or as quickly as you turn into conscious of the prospective of a claim so that your insurer can not argue you did not timely tender the claim. Your policy will spell out the how and when of tendering.
Third—review the insurers coverage position with a coverage lawyer if the insurers denial or reservation appears at all tenuous. Right after you tender a prospective claim, the insurer will supply its personal coverage evaluation and either accept coverage, decline coverage, or accept coverage topic to a reservation of rights. The insured then has the alternative of disputing the insurer’s coverage evaluation and this is exactly where a cautious reading of your policy is just the very first step. Figuring out no matter whether to challenge an insurer’s coverage position calls for insureds to evaluate policy language in light of common insurance coverage law principles of the insureds jurisdiction as nicely as relevant case law interpreting terms inside various types of policies. Insureds need to keep in mind that the duty to defend is broader than the duty to indemnify and that ambiguities in policies are resolved in favor of the insured. Nonetheless, insurers generally discover causes to decline coverage and your coverage lawyer might support you get leverage and attain an agreement with your insurer with regards to defense and/or indemnity.
Fourth—consider commencing a declaratory judgment action. The objective of the action is to have the court “declare” no matter whether or not the information alleged in a complaint give rise to a duty to defend and/or no matter whether or not the insurer will have to indemnify its insured’s loss. This is normally a final resort but it might be required in some situations.