Universal Cable Productions v. Atlantic Specialty Insurance (2019)

In July 2014, Universal Cable Productions was filming the series Dig in Jerusalem when Hamas fired rockets at Israel from Gaza. The dispute that followed, Universal Cable v. Atlantic Specialty, turned on whether that fire was war under the policy. The production left the country and finished shooting elsewhere, at great cost. Its insurer, Atlantic Specialty, a OneBeacon company, refused to pay the extra expense under the exclusion for war and warlike action by a military force. The district court agreed with the insurer. On July 12, 2019, the Ninth Circuit reversed. In its view, "war" and "warlike action" carry a settled meaning in insurance through custom and usage: hostilities between sovereign states or quasi-sovereign entities, in the sense of Pan Am v. Aetna. Hamas, even though it runs Gaza, had not been treated as such by the United States, which designated it a terrorist organization. It sent back to the district court the third exclusion, insurrection, rebellion or revolution, which that court had not reached. It also vacated the bad faith ruling, which rested on the mistaken reading of the first two. The market took the lesson: an insurer that wants to exclude violence by a non-state group has to say so in plain words. Cyber wordings learned it in turn: LMA 5567 defines war and cyber operation without relying on ordinary meaning.