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An indemnification provision is a legally binding agreement between two parties specifying that one party (indemnitor) will compensate the other party (indemnitee) for any losses or damages that may arise from a particular event or circumstance. This type of provision appears in nearly all commercial contracts and is an important tool to allocate risk between parties. As a result, indemnification is one of the most commonly and heavily negotiated contract provisions. 

For companies doing business across state lines, it is critical to consider differences in states’ laws regarding indemnification. This blog post highlights just a few differences between the laws of neighboring states—Pennsylvania, Delaware, and New Jersey—and the importance of drafting clear contractual indemnity provisions with reference to which state law governs.Continue Reading The importance of drafting clear contractual indemnity provisions

At a time when, globally, insured businesses are under severe financial strain, the availability and extent of their insurance assets take on a new significance. It is significant not just for troubled businesses and their insurers, but also for third parties with potential or actual claims against those businesses. 

An insured may, for example, notify under a professional indemnity or other liability insurance in response to a third party claim. But if the insured goes into some form of insolvency process, will any insurance proceeds (or the right to those proceeds) form part of the insolvent estate? 

In many jurisdictions, that is the case and it would leave the third party claiming on the insolvent estate in competition with other creditors. In other jurisdictions, however, the law instead affords the third party more direct access to the insurance proceeds.

The UK falls under the latter category, based on the Third Parties (Rights against Insurers) Act 1930 (the “1930 Act”) and the Third Parties (Rights against Insurers) Act 2010 (the “2010 Act”). Continue Reading Even positive reforms can carry hidden risks –A potential limitation period “trap” in the UK’s Third Parties (Rights against Insurers) Act 2010

A number of insurance companies have recently entered into reinsurance agreements with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc. When this occurs – and the arrangements do not require the consent of policyholders – the policyholders unexpectedly find themselves involved with NICO and/or its “affiliated claims adjuster,” Resolute Management, Inc. (“Resolute”). But, what happens when a policyholder disagrees with NICO’s and/or Resolute’s approach to adjusting, defending, or resolving claims?
Continue Reading A free pass for NICO and Resolute?