Liability Insurance: Top Ten Facts Every In-House Counsel Should Know

Transcription

1 Liability Insurance: Top Ten Facts Every In-House Counsel Should Know Presentation for Association of Corporate Counsel Presented by Osborne & Nesbitt LLP

2 Top Ten Facts 1. Claims Typically Covered 2. Occurrence v. Claims-Made Policies 3. Tender Immediately! 4. Triggering the Duty to Defend 5. Scope of the Duty to Defend 6. Cumis Counsel 7. Drop Down Coverage 8. Don t Settle Without Consent 9. Don t Take No for an Answer 10. Turning a Wrongful Denial into an Asset

3 Claims Typically Covered CGL Policy Bodily Injury Property Damage Personal and Advertising Injury Wrongful Eviction Slander Libel Product Disparagement Invasion of a Person s Right to Privacy Use of Another s Advertising Idea in Your Advertisement Infringing Upon Another s Copyright, Trade Dress or Slogan In Your Advertisement

4 Claims Typically Covered EPL Policy Wrongful Employment Practices Discrimination Sexual harassment Misrepresentation Invasion of privacy Negligent infliction of emotional distress Negligent hiring Negligent supervision

5 Claims Typically Covered D&O Policy Wrongful Acts Breach of duty Neglect Error Misstatement Misleading statement Omission Act

6 Claims Typically Covered D&O D&O E&O UMBRELLA CGL CGL

7 Occurrence vs. Claims-Made Policies 1. Occurrence Damage or Injury during policy period 2. Claims-Made Claim Made during policy period 3. Claims-Made-And-Reported Claim Made during policy period And Reported during policy period

8 Occurrence vs. Claims-Made Policies Claims-Made Claims-Made Claims-Made Occurrence Occurrence Occurrence Damage Claim

9 Tender Immediately! Two Reasons 1. Notice Provisions 2. Pre-tender Defense Costs

10 Tender Immediately! If Claims-Made-And-Reported Policies If Claims-Made Policies The Hartford 1/1/16 to 12/31/16 Policy No The Hartford 1/1/17 to 12/31/17 Policy No. AB Claim Made October 15, 2016 Pretender Defense Costs $$$$$ Claim Reported February 15, 2017

11 Triggering the Duty to Defend (1) Potential for Coverage Standard (2) Facts not Labels (3) Extrinsic Evidence

12 Scope of the Duty to Defend (1) Temporal Scope (2) Mixed Action (3) Can Extend To Prosecution Costs

13 Scope of the Duty to Defend Defense Costs Prosecution Costs

14 Scope of the Duty to Defend Defense Costs Prosecution Costs Reasonably Related Inextricably Intertwined

15 Cumis Counsel PANEL COUNSEL INSURED INSURER

16 Cumis Counsel CUMIS COUNSEL INSURED INSURER

17 Drop Down Coverage Umbrella Following Policy Form Excess Policy Policy Limits in Millions $2M $1.5M $1M $.5M $0M Scope of Coverage

18 Drop Down Coverage Drop Umbrella Down Policy Coverage Policy Limits in Millions $2M $1.5M $1M $.5M $0M Scope of Coverage

19 Drop Down Coverage Drop Down Coverage Policy Limits in Millions $2M $1.5M $1M $.5M $0M Scope of Coverage

20 Don t Settle Without Consent No-Voluntary-Payment Provision No insurer will, except at the insured s own expense, voluntarily make payment, assume any obligation, or incur any expense, other than for first aid, without our consent

21 Don t Take No for an Answer The Economics of a Wrongful Denial

22 Turning a Wrongful Denial Into an Asset Wrongful Denial = Valuable Business Asset

23 Turning a Wrongful Denial Into an Asset

24 Turning a Wrongful Denial Into an Asset

25 Turning a Wrongful Denial Into an Asset

26 Turning a Wrongful Denial Into an Asset Possible Recovery Defense Costs Settlement Costs Judgement Costs Prejudgement Interest Bad Faith Damages Punitive Damages

27 Turning a Wrongful Denial Into an Asset Statute of Limitations Breach of Contract: 4 Years Bad Faith: 2 Years Tolled Until Conclusion of the Underlying Action Lambert v. Commonwealth Land Title Ins. Co (1991) 53 Cal. 3d 1072, 1077

28 Turning a Wrongful Denial Into an Asset Five Questions 1. Was the insured sued? 2. Was the lawsuit tendered? 3. Did the insurer(s) deny a duty to defend? 4. Did the insured spend a substantial amount to defend and/or settle the lawsuit? 5. Did the lawsuit conclude within the last 4 years?

29 Turning a Wrongful Denial Into an Asset Was the insurer s denial wrongful?

30 Conclusion

31 Thank You!

32 Insurance Recovery L awyers Speakers Gary W. Osborne Dominic S. Nesbitt