Insurance Coverage Litigation - Some Food for Thought
Insurance coverage disputes in the D&O and E&O arena provide substantial grist for the mill that is this blog. Perusing these decisions on a daily basis has led me to some interesting conclusions and many unanswered questions.
My career in D&O and E&O insurance began in 1985 as an in-house claims lawyer. Since then, the coverage litigation landscape has drastically changed, primarily as follows.
We are now bombarded with new decisions on almost a daily basis from various sources, including blogs such as this one, law firm newsletters, electronic and print litigation reporting services, legal newspapers, the insurance press and sundry other sources.
- Although many of these decisions are ultimately reported officially, and thus will carry more precedential weight than others, there are a host (if not the majority) of decisions that are picked up only on one of the electronic reporting services such as Westlaw or Lexis or are simply unpublished decisions of various courts picked up by enterprising sorts like myself.
- Like a black market hidden economy, there are an increasing number of coverage disputes that are resolved without seeing the light of day. In addition to old-fashioned face to face negotiations (which in my opinion is the ideal way to resolve these disputes), many disputes are decided in arbitration – either because the insurance policies contain a mandatory arbitration provision or the parties freely elect to arbitrate. Although arbitration can often be a valuable alternative dispute resolution mechanism, one of the downsides is that the results are typically confidential and, unlike with most court decisions, we do not build up a body of precedent to guide the parties in future disputes. An unfortunate result of this is that parties frequently arbitrate the same issues repeatedly.
- Who wins most of these disputes? I am unaware of any statistics in this area, but I just examined the current issue of LexisNexis® Mealey’s™ Emerging Insurance Disputes, a respected source and not one that has any apparent bias in reporting decisions favorable to one side over the other. That issue contained reports on 11 decisions, with six in favor of the insurer and five in favor of the insured. This is a bi-weekly publication, so the fact that there were 11 decisions in it only underscores my point above about the frequency of coverage disputes.
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