During the insurance placement process, important policy terms and conditions are often the subject of negotiation. If things go as intended, the policy that is later issued accurately reflects the outcome of the negotiations. A frequently recurring question is what to do if it is later contended that the policy as issued does not accurately reflect what was negotiated.

These issues were involved in a recent insurance coverage dispute in California between a law firm and its professional liability insurer. When the law firm had renewed its insurance, it had increased the limits of liability available under its professional liability insurance policy from $2 million to $4 million. In arguing that only $2 million of coverage was applicable to a subsequent claim, the insurer sought to rely on a manuscript policy endorsement the insurer argued set policy inception as the past acts date for the $2 million excess of $2 million of limits. In a May 11, 2017 order (here) holding that the full $4 million limit of liability was available for the underlying claim, Central District of California Judge Josephine Staton, called the endorsement on which the insurer sought to rely “indecipherable,” adding that the insurer “must accept the consequences of its slapdash drafting.”
Continue Reading What Happens When the Policy Doesn’t Say What was Intended?