The Institutes

Creative Strategies For Claims Settlement

 Wednesday, April 15, 2020

 CLM Magazine

In nearly every litigation, there are three parties: The plaintiff, the defendant, and the insurer. Once the duty to defend is triggered, an insurer must typically provide a “complete” defense to the litigation until settlement is reached, even if uncovered claims are included.

Challenges can occur when the time arrives to resolve a claim, and indemnification and allocation disputes arise. The disagreements can occur both between insureds and insurers, and strictly between insurers.

Inviting insureds and their coverage counsel to mediation often can resolve their indemnification contribution for uncovered claims.

Allocation between carriers can be more difficult to achieve, however, given debates regarding time-on-risk, priority of coverage, sole negligence application arguments, and proper reservation of rights.

These issues are compounded if policy limits are eroding as defense continues; additional claims impair limits making exposure containment critical; there is a policy-limits settlement demand; or there is concern that litigating outstanding coverage issues might result in adverse precedent.
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