The Role of a Policyholder's Advocate
On occasion people have asked me why I named our firm newsletter “The Policy Holder Advocate”. For a simple reason; there is a ‘missing’ in the equation of insurance product delivery that threatens the rights of policy holders, especially in the context of third party litigation against companies where a range of business tort claims are asserted. Distinctions between various forms of Commercial General Liability Media/Cybernet/Intellectual Property Defense policies are rarely understood by the broker community. There are few resources to distinguish which policies offer the best coverage for the majority of insureds or for the particular insured who is seeking insurance. Underwriters often write policies without appreciating how litigation activity will implicate coverage there under. When information is fed back to underwriters from the claims department, it is often so particularized that the overview to understand the broader complications of the policy language may not readily be appreciated.
Risk management focuses on a range of different topics and the particularized distinctions between various versions of Commercial General Liability Umbrella policy language and how it might intersect with a range of business torts, antitrust, and intellectual property claims and is not a specific focus of the review of policies. While more emphasis is placed on claims made Directors & Officers insurance, which is of keen interest to corporate officers and directors, less attention to the precise language of commercial liability policies tends to be paid. This is unfortunate because such policies often contain opportunities to cover a range of business torts because of the fact allegations in specific complaints, as clarified through discovery responses, may implicate potential coverage triggering at minimum, a duty to defend, or in certain policies, reimbursement of defense fees.
In short, to understand the “true meaning” of policies you have to litigate coverage suits and understand the underlying torts to litigate therein. Since without appreciating how liability can attest, it is hard to gage the potentiality of coverage. The distinctions garnered from coverage litigation as well as also litigation the underlying business tort typically are resources not readily accessible within corporations. While outside counsel may have this knowledge it is often diffused through various sources of attorneys in large law firms and not always brought to bear on a particular issue for coverage analysis.
Recently, I had occasion to assist in the drafting of a high level patent defense excess policy my most significant interaction was between the intellectual property group, risk management, and the insurance broker. Our team found it effective to develop a detailed protocol about what claims would and would not be covered in order to explain the practical impact of proposed charges to policy language. It also provided a far more realistic sense of what would fall within the policy and without was known before its acquisition, and was circulated to the underwriter so that it would be well appraised of what exposure could vest under its policy.
While these exercises would be difficult to orchestrate for standard form Commercial Liability policy renewals, it is a useful exercise to consider when renewing insurance policies with newer forms that have little litigation history to clarify products.
I also had occasion to seek the renewal of our law firm’s Commercial General Liability policy. I was surprised to find it virtually impossible to obtain “advertising injury/personal injury” coverage that did not include a “professional services” exclusion. Lawyer’s Errors & Omissions policies, which traditionally permitted some form of “personal injury” coverage but rarely “advertising injury” coverage, did not fill this gap. Multimedia/cybernet policies offered the best solution but are written on a claims-made, not occurrence basis. I ultimately located an ISO Properties Inc. 2004 BP 00 03 01 03 Policy which contained liability coverage analogous to that in a 1998 ISO CGL policy.
Inspired by this challenge, I crafted an article for the Intellectual Property Owners Association doing a comparative study of cyberspace/multimedia products to assess which might be of interest to a broad range of corporate buyers. I did not, however, find ready access to these tools through my broker or when asking insurers about the nature of their products. The kind of internal advice about when policies should be accessed and contribute to active oversight in litigation where coverage may be clarified by the nature of discovery that occurs in underlying action and can play a role in addressing settlement needs in the underlying case or assuring that if indemnity exposure arises it is more likely to fall within coverage. In short, policy holder coverage expertise, especially that garnered in litigation activity with carriers over complex business issues, represents a valuable asset that can enhance the way policy programs are structured.
