Every lawyer likes to believe that he or she thinks outside the box. In the law, that can mean different things to different people. For me, it means finding paths that are not immediately apparent in striving to meet the client’s objectives. Many times, insurance recovery lawyers see an insurance company’s reservation of rights or denial of coverage listing three reasons for denial, and then proceed to research and advocate on those three issues. In doing so, lawyers can miss opportunities for success.
The requirements of statutes and public policy, as well as various legal doctrines (waiver, estoppel, "mend the hold," the made-whole doctrine, the anti-subrogation rule) can be put to good use. Insurance recovery lawyers should also consider whether the loss may be covered by someone else’s insurance. If the client is an additional insured on someone else’s policy, or perhaps falls within the vendor’s coverage, there may be coverage under that policy. Another way to step outside the box is to think about other insurance policies owned by your client that may provide coverage. In pursuing that line of inquiry, I think about Time, Topic, and Tower.
Time. Insurance policies are “triggered” at certain points in time. Claims-made policies are typically triggered when the claim is made. Liability policies are typically triggered when the property damage or bodily injury is suffered. Sometimes the covered bodily injury or property damage was suffered over the course of years, leading to the triggering of many policies. Class actions often allege damages suffered over the course of several years, for example. In many states, policyholders can “pick and choose” which of the triggered policies is to respond, allowing policyholders to maximize recovery.
Topic. Maybe that loss that you thought was covered by a directors and officers policy is really covered by a separate professional liability policy. Is it possible that the property insurance claim you are working on actually falls under a separate boiler & machinery policy? The lines between different types of insurance policy can be fuzzy. A single loss can be covered by more than one type of policy.
Tower. Many corporate policyholders have a tower of coverage including primary insurance, followed by umbrella insurance, and perhaps additional excess insurance at the top of the tower. Umbrella insurance policies typically have two coverage features. The first feature, which it shares with all excess insurance, is to pay loss or liability in excess of underlying primary insurance. Another feature of umbrella coverage is to pay claims that are within the coverage of the umbrella insurance and not collectible from the underlying insurance. In that instance, the umbrella insurance will “drop down” and provide primary insurance. Looking to the potentially broader umbrella coverage can be shortcut to recovery. You don’t like that exclusion that the primary carrier has asserted? Well, maybe it is not in the umbrella policy.
Sometimes, the key to victory is changing the game.