Understanding Litigation Insurance and Its Benefits

Litigation insurance is a type of insurance that protects businesses and individuals from the financial risks associated with lawsuits.

It can help cover the costs of legal fees, settlements, and judgments.

One of the key benefits of litigation insurance is that it can provide peace of mind, allowing business owners and individuals to focus on their core activities without worrying about the financial implications of a lawsuit.

By transferring the financial risk of litigation to an insurance provider, policyholders can protect their assets and maintain their financial stability.

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Every litigation risk insurance policy is bespoke and customized for the insured and its coverage goals, as well as for the specific litigation to be insured and its unique characteristics.

This means that the policy is tailored to the individual needs of the company, taking into account the type of litigation, the potential risks, and the desired level of coverage. Most litigation risk insurance policies do not permit insurers to take over or control the litigation, allowing the insured to retain decision-making power and continue to litigate the case with their chosen counsel.

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Litigation risk insurance policies typically pay out only when the loss-triggering judgment or order against the insured has become final and is no longer appealable. This is known as "judgments only" coverage, which means that the insurance pays out only after the case has culminated in a final, non-appealable judgment against the insured.

If the insured defendant loses at trial, they must challenge that loss on appeal and exhaust their appellate options before the insurance pays out. This can involve retrying the case following remand, and the insurance will only pay out if the insured then loses the new trial and any subsequent appeals.

Unlike other types of insurance, most litigation risk insurance policies do not cover defense costs and settlement amounts. This is because insuring defense costs does not make sense for either party to the insurance policy, as they would simply be trading premium dollars for legal fee dollars.

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Directors' & Officers' policies are the first line of defense for businesses and executives facing increasing liabilities for securities law claims and employment-related claims.

These policies can pay the legal expenses of the company, or its directors and officers, when sued for covered claims. They also address issues such as regulatory actions, defense cost allocation, and ensuring that defense costs are paid as incurred by the insurance company.

General Liability Policies are the staple of corporations' insurance programs, but they can be complex and have exclusions that need to be understood. Our attorneys have handled countless claims and cases involving CGL policies, and have litigated many key coverage issues.

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The underwriting process is a crucial step in the insurance buying journey. It's where the insurance company determines the risk level of the policyholder and sets the premium.

The process typically starts with a review of the policyholder's credit score, which can affect the premium by up to 10%. This is because a good credit score indicates a lower risk.

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The underwriter will also consider the policyholder's age, with younger drivers typically facing higher premiums. For example, a 25-year-old driver may pay up to 50% more than a 40-year-old driver.

The type of vehicle being insured also plays a significant role in the underwriting process. High-performance vehicles, such as sports cars, are often considered higher-risk and may result in higher premiums.

The policyholder's driving history, including any accidents or tickets, is also carefully reviewed. A single at-fault accident can increase premiums by up to 20%.

Directors' and Officers' Policy is a vital protection for businesses and executives facing increasing liabilities.

Directors' & Officers' (D&O) policies are the first line of defense for businesses and executives facing increasing liabilities for securities law claims and employment-related claims.

These policies may pay the legal expenses of the company, or its directors and officers, when sued for covered claims.

The most important attribute of D&O policies is that they may pay the legal expenses of the company, or its directors and officers, when sued for covered claims.

We can assist policyholders with negotiating D&O policies and, if the need arises, securing all available rights under the policies when a claim is brought.

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General Liability Policies are the staple of corporations' insurance programs, often being the most comprehensive type of policy.

Our attorneys have handled countless claims and cases involving CGL policies, and have litigated many key coverage issues and exclusions contained in these types of policies.

These policies are crucial for corporations as they provide protection against a wide range of liability issues, including accidents and injuries that may occur on company premises.

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Bad Faith is a serious concern for insurance companies and policyholders alike. It's a type of misconduct where an insurance company acts in bad faith, denying or delaying claims without a valid reason.

Litigation is a common approach to prevent insurer bad faith. Two notable resources, Litigation & Prevention of Insurer Bad Faith and New Appleman Insurance Bad Faith Litigation, provide valuable information on this topic.

These resources offer practical tools such as sample letters, pleadings, discovery, jury instructions, and verdict forms to help navigate the process. They also contain a complete treatment of tort liability of insurers for wrongful conduct.

The key takeaway is that policyholders have rights and should be aware of their options when dealing with bad faith insurance companies.

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Claim presentation is a critical step in the insurance process. Proper notice must be given to the insurer, both at the time of loss and possibly earlier when the policyholder first learns that a loss may ultimately occur.

Failure to present claims in time may bar coverage, so it's essential to act quickly. This is especially true when characterizing the claim at the outset, as how it's presented can affect coverage.

Adverse judgment insurance is a product that covers an actual or potential defendant in respect of an identified legal exposure. This can include liability risks, contractual disputes, and intellectual property risks, among other things.

Judgment preservation insurance, on the other hand, covers a claimant that has been successful at first instance against the loss of a judgment or award on appeal. Appeals can turn on alleged errors of law, misapplication of facts, or irregularities in procedural rules.

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Real estate transactions can be a minefield of risk, especially when contaminated property is involved. Increasingly, parties are turning to insurance as a way to manage the tremendous risk of environmental liability.

Contaminated property can lead to significant financial losses, making insurance a crucial consideration. We help identify possible insurance solutions that can mitigate these risks.

Real estate transactions often involve complex negotiations, and environmental liability is just one of the many factors to consider. Insurance can provide a safety net against unforeseen environmental costs.

In cases where contaminated property is involved, we work with clients to negotiate the terms of policies that address environmental liabilities. This can help ensure that all parties are protected and that the transaction can move forward with confidence.

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Having litigation insurance can provide a financial safety net in case of a lawsuit, allowing you to focus on the case rather than worrying about the financial implications.

This can be especially beneficial for small business owners who may not have the resources to cover potential legal fees.

Litigation insurance can also help to reduce the emotional stress associated with a lawsuit, allowing you to make more rational decisions about the case.

The average cost of litigation insurance is around $500 to $1,000 per year, which is a small price to pay for the potential financial protection it provides.

By having this type of insurance, you can avoid the financial burden of a lawsuit and focus on resolving the case in a fair and efficient manner.