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Chubb denies coverage for hidden camera in bathroom
April 14,  2022
Chubb denies coverage for hidden camera in bathroom
          A Westchester NY building maintenance worker installed a hidden camera in a women’s building bathroom.  Got caught and got arrested and eventually plead guilty to unlawful surveillance.  Building owner got sued by several women claiming emotional distress.  The building owner turned to claims over to its insurance carrier, Chubb for defense and coverage.  The carrier denied coverage on the ground that intentional acts resulting in intended damage is not covered by the policy.  Whether Chubb will be required to defend or permitted to deny coverage is pending in court. 
          Why should this interest you?  You carry general liability insurance including Errors and Omissions coverage, E&O.  If your subscriber suffers a loss that the subscriber believes the alarm system [or cameras] was intended to detect [and maybe prevent], and didn’t, your subscriber or its subrogation carrier, may sue you.  In fact, lawsuits like this are relatively common all over the United States.  If you haven’t been sued yet you’re lucky. 
          I think you will find that your E&O policy excludes coverage for willful conduct intended to damage another.  What that might mean and how it might be applied in an alarm defense matter is something I’ve often thought about but haven’t researched.  I’ve never had an alarm defense case where the carrier took the position that because the alarm company was accused of willful conduct there would be no insurance coverage for the claim.
          For example, what if an alarm company installed the bathroom cameras and it was the alarm company sued by the offended women?  Would the alarm company be able to turn the case over to its E&O carrier?  What if the lawsuit alleged causes of action for breach of contract, negligence, gross negligence and willful misconduct, would there be coverage? 
          To further confuse the matter, keep in mind that in many states there is very little if any difference between gross negligence and willful misconduct.  While the word “misconduct” is usually preceded by “reckless and wonton”, the lines are quite blurry. 
          Most lawsuits against alarm companies for alarm failure will include causes of action for gross negligence.  Those lawyers who have experience suing alarm companies know that most alarm companies use contracts that exculpate or limit liability for breach of contract and ordinary negligence, but gross negligence generally opens the door for a successful claim against the alarm company.  Fortunately for the alarm industry we have a lot of cases telling us what gross negligence is not, and I am not aware of any cases where we have a clear finding of gross negligence against an alarm company.  If you know of any, let us know.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301