Hunton Insurance Recovery Blog

In 2015 and 2016, we discussed certain provisions of the then drafts of the Restatement of the Law, Liability insurance, including the Duty to Cooperate, here, and Duty to Defend, here and here. In late May 2017, the American Law Institute met to approve the Proposed Final Draft—the culmination of over seven years of work on this project. Not surprisingly, many of the issues discussed in the Restatement have been hotly contested by insurers. While in many instances, the reporters simply opted for the majority rule, in a few instances, the Restatement may seek to move the law on key issues to align the law and the incentives underlying insurance and claims-handling. In a recent article for Risk Management Magazine, Lorie Masters, Syed Ahmad, and I address some of the most hotly debated sections of the proposed Restatement, including: policy interpretation principles, such as when a term is deemed ambiguous; the standard for determining the insurer’s duty to defend; the insurer’s duty to make reasonable settlement decisions; and the allocation of liability in long-tail environmental claims. The article can be found here. We will also be speaking at the upcoming Florida RIMS Conference in Naples, Florida on this subject on July 28th. Please see the Florida RIMS website for more information on that conference.

The vote on the final draft has been pushed to the American Law Institute’s next annual meeting in May 2018. In the meantime, policyholders may consider submitting comments on sections of interest and can look to the current Proposed Final Draft as guidance on what the law may be should they encounter a coverage dispute with their liability insurer.