Interested in training for your team? Click here to learn more

Establishing and Challenging Exhaustion of Insurance Policies: Recurring Issues, Factors to Consider, Below Limits Settlements

Recording of a 90-minute CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, July 11, 2023

Recorded event now available

or call 1-800-926-7926

This CLE course will review what constitutes exhaustion of an underlying policy, how policyholders can prove it, and how insurers can establish or challenge exhaustion.

Description

Even for the most experienced professionals, proving or challenging insurance policy exhaustion can be burdensome and costly. The policyholder generally has the burden of proof, but insurers may will want to test claims of underlying exhaustion, including sometimes seeking review of how the underlying insurer handled and treated underlying claims. Excess carriers sometimes dispute whether all claims paid by underlying policies should be counted toward the applicable underlying limit. Often disputes arise between insurers. Proving proper underlying exhaustion is seldom straightforward.

The parties must have a plan and be aware of their options. Determining how multiple policies with differing language and coverages relate to each other sometimes may appear to be its own Augean task, including ascertaining which policies follow form to what underlying coverage, factoring the impact of other-insurance, non-cumulation and other policy provisions, and considering how multi-year, "stub" policies and policy extensions affect applicable limits.

Courts differ as to whether horizontal or vertical exhaustion is required both in pro rata and “all sums” jurisdictions. Courts also differ on what constitutes "exhaustion," what proof of exhaustion is required, and how to prove exhaustion when a settlement or judgment encompasses covered and uncovered claims, such as a settlement that includes a release of uncovered punitive damages claims. Counsel also should understand whether a settlement with one insurer for less than its full policy limits concurrently precludes access to any overlying excess coverage--policy language and case law (Qualcomm and others) continue to develop in this area. Indeed, functional exhaustion has been the most important excess insurance issue over the past couple of decades.

Listen as the panel discusses what factors must be shown to establish exhaustion, the various types of evidence, data, statistics, and other tools to show exhaustion, and the best approaches for counsel.

READ MORE

Outline

  1. Overview of exhaustion
  2. Factors to establish exhaustion
  3. Types of evidence, data, statistics, and other tools to show exhaustion
  4. Problems encountered in showing exhaustion
  5. Best strategies for showing exhaustion

Benefits

The panel will review these and other issues:

  • What are some of the recent key decisions on exhaustion?
  • How do underlying policy language and wording affect exhaustion?
  • What types of experts are needed?
  • How is exhaustion shown through loss runs, claims data, and various types of allocations?
  • Is exhaustion ever possible with a below-limits settlement under the underlying policies?

Faculty

Hermanson, Eric
Eric B. Hermanson

Partner
White and Williams

Mr. Hermanson represents primary and excess insurance carriers in high-exposure litigation on contested coverage...  |  Read More

Kronenberg, Chet
Chet A. Kronenberg

Partner
Simpson Thacher & Bartlett

Mr. Kronenberg, senior Los Angeles litigator, represents clients in a wide range of complex commercial litigation,...  |  Read More

Seaman, Scott M.
Scott M. Seaman

Co-Chair Global Insurance Services Practice Group
Hinshaw & Culbertson

Mr. Seaman is a commercial litigator and trial lawyer with more than 35 years of experience. Scott is widely regarded...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

Download