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Tips when Addressing Insurance at Mediation

March 9, 2012 • Posted By Susan A. Romano • Complex Litigation

Addressing coverage and insurance issues at mediation can present challenges, in particular other parties and the mediator can view discussions regarding coverage as an impediment to the mediation, especially if the position threatens settlement.  Nevertheless, coverage issues at mediation can be successfully raised to bolster the likelihood that the carrier’s position will be appropriately considered.

Preparation is key and its importance cannot be understated.  A comprehensive understanding of the issues to be discussed and the position of the client and carrier are crucial.  If the carrier is not a party and will not be in attendance, it is important that a clear understanding is reached as to what compromises can be accepted.  

To address these issues effectively at the mediation, it is worthwhile to specifically advise the parties who will attend the mediation that you intend to address the coverage issues with the mediator and outline your position for them.

It is pivotal to obtain information about other insurance before the mediation.  Based upon this information as well as other circumstances, the carrier will be prepared to urge at mediation the most advantageous methods of allocation.  In preparation for the mediation, each involved carrier should consider whether other carriers should pay the entire settlement, or should pay a greater proportionate share. 

A mediation brief outlining the coverage issues should consist of a concise explanation of the coverage issues.  Mediators often look unfavorably upon a carrier whose coverage counsel attends the mediation and advances an unexpected complex coverage argument.  Counsel attending mediations who are presenting complex coverage issues bear a heavy burden of educating the mediator, and oftentimes the parties, about the nuances of the coverage issues.  The  mediator must understand the substance and strength of the coverage defenses and the extent to which the carrier  is committed to enforcing any contractual limitations on coverage.  If the mediator does not fully understand the coverage issues, he may view the coverage defense as weak and believe that the defense is unreasonably impeding settlement. 

A strong coverage position may influence the plaintiff’s position on settlement if they believe that they will not have a guaranteed source of recovery.  In discussing coverage issues with other carriers, the focus should be on the uncertainty of successfully asserting coverage defenses as well as the continuing cost of defending the case. 

There will always be instances where the liability claim cannot be settled due to coverage issues.  In many instances, however, the coverage position can be effectively used during mediation to achieve a reasonable resolution without disrupting the mediation process.