Insurance Coverage - The Missing Key to a Successful Mediation
You’re right from your side I’m right from mine; We’re both just one too many mornings and a thousand miles behind.
-Bob Dylan, One Too Many Mornings
Dispute ResolutionDispute resolution is not easy. The process becomes even more complicated when insurance coverage issues are lurking in the background. Unfortunately, all too often, the parties and their counsel have not properly evaluated, or even considered, the insurance ramifications as they pursue their claims and defenses.
But insurance issues are not something that parties and their counsel can afford to ignore. What are the qualifications you look for when selecting a mediator? Does that criteria change in any way if the dispute also involves issues related to coverage? If the goal is to cause the insurance company to fund a settlement, or at the very least, cause the parties to reevaluate their settlement positions in light of coverage considerations, then how important is it to have a mediator at the table that understands insurance?
Coverage Questions You Should Be Asking!There are literally thousands of coverage issues that may come into play and impact the settlement process. Here are just a few important examples:
A. What is the nature of the claim? What insurance or types of coverage potentially apply to the claim?
B. What is covered, not only under primary policies, but also under any secondary/excess/umbrella policies?
C. What are the policy limits? Is more than one exposure covered? What is the per occurrence limit? Is there an aggregate limit? How many occurrences or policy limits may be triggered to respond to the claim or claims? Is there a "burning limit" policy and if so, what are the issues related thereto?
D. Have the policies been provided to the plaintiff/claimant? Do the parties have an understanding, before the mediation, of the various layers of coverage? Have the parties identified the carriers that should be participating?
E. Is coverage counsel participating? Has that counsel evaluated coverage/non-coverage?
F. Is the defense being provided under a reservation of rights? If so, in California, has the insured engaged Cumis (Civil Code ?2860) counsel? Has Cumis counsel provided an evaluation to the insured regarding any potentially covered or uncovered exposures? Are there unpaid Cumis fees or related issues that are obstacles to settlement?
G. Is there a potential that the defendant/respondent will be uninsured or underinsured in the event of an adverse verdict?
H. If there are insured/insurer issues, does the mediation need to be staged in some fashion to address those issues at the outset?
I. Are there contribution and indemnity issues between defendants/respondents?
J. In California, is a carrier claiming a right to reimbursement of defense fees and costs from its insured pursuant to Buss v Superior Court, 16 Cal. 4th 35 (1997) or Scottsdale Ins. Co. v. MV Transportation, 36 Cal. 4th 643 (2005)?
K. In California, is a carrier claiming a right to reimbursement of any settlement payment from its insured pursuant to Blue Ridge Ins. Co. v. Jacobsen, 25 Cal. 4th 489 (2001)?
L. Is coverage under more than one policy triggered under a "continuous injury" trigger?
M. Is coverage litigation likely to ensue if the case does not settle? Are there claim-handling issues that present the potential for extra-contractual litigation? If so, do these extra-contractual issues need to be addressed at the mediation?
N. Is there a prevailing party attorney fee exposure? Is there coverage for that exposure under the Supplementary Payments coverage, or is such exposure otherwise covered under the language of the policy or policies?
O. Has a policy limit demand been presented before the mediation? If so, what is the impact of that on the discussions?
P. Are there "sensitive topics" that the carrier and/or its insured wish to discuss under the umbrella of mediation confidentiality?
In Conclusion...Suffice it to say, there is a long list of problems and issues related to insurance that may come into play at the mediation. So it cannot be overemphasized, if such issues will impact the settlement discussions, then the parties, their attorneys and the mediator must get a handle on the insurance picture well before the mediation. Waiting for the mediation to first evaluate and raise insurance issues will more likely than not disrupt the settlement process. On the other hand, if there is communication about the insurance issues before the mediation, then the parties can engage in a more meaningful mediation and the potential for settlement is enhanced.
It is important to consider the availability of insurance coverage, or lack thereof, and how it impacts the mediation of your case. Otherwise, you may be left "one too many mornings and a thousand miles behind"!