This Month's Topic:
Understand Insurance Issues Before Mediating
Understanding insurance issues (coverage, limits and consent) promotes communication focused on resolution. Knowing the status of the coverage encourages a realistic dialogue about trial direction, scope of defense, probability of collection and settlement. Consider making insurance issues the first order of business at the mediation, so as not to waste time.
Before the mediation, communicate with opposing counsel about the insurance issues, secure copies of the policy and any reservation of rights letters. For instance, if the policy limits are low and damages are high, there should be a discussion about the defendant's ability and/or willingness to contribute to the settlement, as well as an asset search prior to the mediation.*
Make sure you know whether the policy has "deductible" or is a "self retention" policy. Essentially where a policy has a "deductible", the insurance company is on risk from dollar one and must pay defense and indemnification costs of all covered claims and seek reimbursement from the insured for the deductible. Where a policy has a "self-retention", the insured is on risk for both the defense and indemnification and the insurance company is not required to pay anything until the insured has paid the full amount of the self retention. This means if you are a Plaintiff's attorney, your client's recovery is limited by the extent to which the insured can cover the "self retention" before the insurance kicks in. If you are a defense attorney, be sure you understand the limits of your client's ability to pay you for your services.
*Thank you to Ralph Williams III my colleague at ADR Services for this great tip.