From John DeGroote’s Settlement Perspectives
When the big case comes in, will you be ready for it? As you work to better understand your story, lock down your documents, and brace for the PR impact, what else do you need to worry about? Unfortunately insurance coverage is often way down the list — a mistake most don’t realize until it’s too late.
Recently the ACC Docket featured a piece that Wendy Toolin Breau and I coauthored on managing insurance relationships in the midst of significant litigation, entitled “‘Bet the Company’ Litigation from a Policyholder’s Perspective”. Although you may want to read the entire article when your next big case comes in, the 4 rules and 10 tips we discuss appear below.
Preserving Insurance Coverage: 4 Rules
Insurance is a practice area unto itself, and there are few rules that apply in all situations. But I have never seen an exception to these four:
Apparently I’m not the only one who thinks this way. As I discussed these rules with Philip J. Loree Jr. at the Loree Reinsurance and Arbitration Law Forum the other day, I learned that they don’t only apply to policyholders – apparently insurers must live by these same rules to collect from their reinsurers:
You would be surprised how frequently reinsurers contend that the carrier colluded with the policyholder in direct insurance coverage litigation. If the reinsurer can establish collusion concerning the fact, amount or allocation of coverage, or if the reinsurer otherwise shows that the carrier acted in bad faith, then the reinsurer will usually be relieved of liability for the claim. Like policyholders making direct insurance claims, carriers making reinsurance claims need to avoid even the appearance of collusion or bad faith, and following rules analogous to yours helps them do that.
With these 4 rules in mind, there are a few more tips to guide your relationship with your carriers in major litigation.
When your next big case comes in, think about these 4 rules and 10 tips, and take a look at our article for more detail. You’ll be glad you did.
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