CONTRACTUAL RISK TRANSFER

Speakers:
• Stephen Palley, Partner, Anderson Kill
• Phone: 202.416.6552| email: spalley@andersonkill.com

September 12 - 13, 2019

AMA Executive Conference Center
Suite 200
2345 Crystal Drive, Arlington, VA
9:00am - 4:30pm
Learning Objectives
At the end of this session, you will: (list key learning objectives and takeaways that attendees will learn)

 Determine when it is appropriate to transfer risk

 Apply a simple, repeatable process to draft a contract that effectively transfers risk while
reducing your company’s exposure to loss
 Create a glossary of definitions to clarify a contract
 Draft an indemnity agreement
 Identify key strategies and techniques when and how to transfer risk
Workshop Outline
 Introductions, Objectives and Expectations

Foundation
Module 1: Overview of the Process: Contract Basics
Module 2: Indemnity Clauses
Module 3: Uses of Insurance
Module 4: Reviewing a Contract and Preparing a Recommendation
Getting to Know You and Your Expectations
 Name

 Organization

 What is your position in the risk management process?

 What do you hope to gain from this workshop?

 What one thing would people be surprised to learn about you?

4
Workshop Outline

 Introductions, Objectives and Expectations

Foundation
Module 1: Overview of the Process: Contract Basics
Module 2: Indemnity Clauses
Module 3: Uses of Insurance
Module 4: Reviewing a Contract and Preparing a Recommendation

5
 Foundation
• Why we are here…

Source: Wikipedia.com

6
 Risk Transfer in Context
• Risk Transfer is an aspect of Risk Management.
• Management begins by recognizing the risks.
• Preventing losses is always the preferred method of risk management.
• When losses occur, managers try to soften the blow: risk mitigation is the second leg of the
triad.
• When prevention and mitigation fail, it is a good idea to make someone else pay for it.

7
 Risk Transfer in Context

Legal Practical Bargaining

Control Knowledge Considerations
Limitations Strength

Reasons Why Companies Transfer Risk

8
 Risk Transfer in Context
• Where Does Risk Transfer Belong?

Financing

Avoidance Control

9
 Workshop Outline
 Introductions, Objectives and Expectations
 Foundation

Module 1: Contract Basics

Module 2: Indemnity Clauses

Module 3: Uses of Insurance
Module 4: Reviewing a Contract & Preparing a Presentation

10
 Learning Topics
During this module we will cover:
• How to determine whether to transfer risk
• Angle of repose
• Managing risk through inattention
• Managing risk through contracts
• Contract provisions
• Drafting a simple contract

11
 Factors To Consider When Deciding
Whether To Transfer Risk
• Angle of Repose

12
 Factors To Consider When Deciding
Whether To Transfer Risk
• Don’t overlook where the risks rest in the absence of a transfer.
• Weigh the expected cost-avoidance against the price charged by the counterparty for
assuming the risk.
• Risk evaluation is not one-dimensional.
• There are at least two dimensions: frequency and severity.

13
How to Transfer Risk
• First Party Exposures
Leave It • Third Party Exposures
Alone
• Indemnity
Contract • Insurance

14
 Managing Through Inattention
• First Party Exposures
• This means there is a loss to your own property…so if you have
not transferred the risk, you own it.
• Third Party Exposures
• “Initial Loss” may not be the same as “Ultimate Loss.”
• A distributor who sells a defective product may be liable to the injured
consumer, but the distributor may be able to recover from the manufacturer.
• Legal risk allocation is generally based on fault, and wears hats known
as “Indemnity” and “Contribution.”

15
 Managing Through Contracts
• Indemnity is one kind of contractual risk transfer: one party or the other agrees to pay for
losses.
• Insurance is another kind of risk transfer. It follows distinctive patterns, but it is no less
contractual than any other agreement.

16
Contract Provisions

Consideration
Acceptance

Offer

17
 Contract Provisions - The Offer

Source: Paramount Pictures

An offer is an expression of willingness to contract on certain terms, made with the

intention that it shall become binding as soon as it is accepted by the person to whom it is
addressed, the "offeree" [G.H. Tretel, The Law of Contract, 10th Ed., p.8].

18
 Contract Provisions - Acceptance
• Acceptance is a final and unqualified
expression of assent to the terms of an
offer [G.H. Treitel, The Law of Contract,
10th Ed., p.16].

• The "mirror image rule" states that if you

are to accept an offer, you must accept
an offer exactly, without modifications; if
you change the offer in any way, this is
a counter-offer that kills the original
offer.

19
Contract Provisions - Consideration

• The inducement to a contract. The cause,

motive, price, or impelling influence which
induces a contracting party to enter into a
contract.
• Basic, necessary element for the existence of
a valid contract that is legally binding on the
parties. (Black’s Law Dictionary, 6th Ed.)

20
 Exercise: Drafting a Simple Contract
Instructions: Working with your group:
Create a simple contract for services
Scenario:
You contract a painter to paint your beach house (beach address
of your choice)

21
 Exercise: Drafting a Simple Contract
Instructions: Working with your group:
1. Select one of the following scenarios
2. Create a simple contract for services
Scenarios:
a) You contract a painter to paint your beach house (beach address of your choice)
b) School bus services for the local grammar school

22
Key Contract Provisions Relating to
Risk Transfer
Indemnity
Agreements

Insurance Risk Limitation of

Requirement Transfer Liability

Waiver of
Subrogation
23
 Workshop Outline
 Introductions, Objectives and Expectations
 Foundation
 Module 1: Contract Basics

Module 2: Indemnity Clauses

Module 3: Uses of Insurance
Module 4: Reviewing a Contract and Preparing a Presentation

24
 Learning Topics
During this Module we will cover:
• Indemnity agreements, types of clauses
• What to watch for when drafting an indemnity agreement
• Insurance and indemnity
• Testing for enforceability

25
 Indemnity Agreement
• AKA “hold harmless”
• Where do we typically see indemnity agreements?
• Is an agreement to indemnify water tight?
• How does insurance come into play?

26
 What is an “Indemnity” agreement?
• Indemnity Clause—A contractual provision in which one party agrees to answer for any
specified or unspecified liability or harm that the other party might incur.
• Also termed hold harmless clause. [Black's Law Dictionary, 8th Ed.]
• Indemnity agreement is not insurance
• Can be limited by the amount of insurance

27
 Broad Form Indemnity Agreement
• Indemnitor indemnifies indemnitee for
• Indemnitor’s sole negligence;
• Indemnitee’s sole negligence; and
• joint negligence of indemnitor & indemnitee

• Goal: Wholesale transfer of risk to indemnitor

• Reality: Enforceability may be difficult

• U.S. v. Seckinger, 397 U.S. 203 (1970)

28
What’s Wrong With Broad Form
Indemnity Agreements?
It depends:
• Broad form indemnity agreements have been
enforced in a number of states, including: Ohio
(Columbus v. Alden E. Stilson & Associates, 630
N.E. 2d 59 (1993)), and Massachusetts (Speers v.
H.P. Hood, Inc., 495 N.W. 2d 880 (1986)).
• Michigan, California and other states have not
universally enforced.
Source: Paramount Pictures
• Public policy issues.

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 Drafting Broad Form Indemnity
• Specifically state that the parties intend that the indemnitee will be indemnified for sole
negligence.
• Be aware that these clauses are not universally enforceable

30
 Intermediate Indemnity Agreement
WHO PAYS FAULT
You Your sole negligence and our joint negligence
Me My sole negligence
Us Anything else?

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Intermediate Indemnity Agreement
• Indemnitor assumes all risk of loss with some exceptions
• Indemnitor indemnifies for its sole negligence and joint negligence
• Conflict arises where dispute as to whether indemnitee is solely negligent
• May have to litigate fault

32
 AIA Contract Section 4.18.1
• To the fullest extent permitted by law, the Contractor shall indemnify and hold harmless the
Owner and the Architect and their agents and employees from and against all claims, damages,
losses and expenses, including but not limited to attorneys’ fees, arising out of or resulting from
the performance of the Work, provided that any such claim, damage, loss or expense (i) is
attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible
property (other than the Work itself) including the loss of use resulting there from and (ii) is
caused in whole or in party [sic] by any negligent act or omission of the Contractor, any
Subcontractor, anyone directly or indirectly employed by any of them or anyone for whose acts
any of them may be liable, regardless of whether or not it is caused in part by a party indemnified
hereunder. Such obligation shall not be construed to negate, abridge, or otherwise reduce any
other right to obligation of indemnity which would otherwise exist as to any party or person
described in this Paragraph.

33
AIA Contract Section 4.18
• [t]o the fullest extent permitted by law, the Contractor shall indemnify and hold harmless
the Owner, Architect, Construction Manager, and their agents and employees from and
against all claims, damages…, including, but not limited to, attorneys' fees arising out of
or resulting from the performance of the Work, provided that any such claim, damage, …
(1) is attributable to bodily injury, sickness, disease or death, or to injury to or destruction
of tangible property (other than the Work itself) including the loss of use resulting
therefrom, and (2) is caused in whole or in part by any negligent act or omission of the
Contractor ... regardless of whether or not it is caused in part by a party indemnified
hereunder. Such obligation shall not be construed to negate, … any other right or
obligation of indemnity … as to any party or person described in this Paragraph 4.18.
 Simplified Version
Operative Language:
“Caused in whole or in part by the negligence of indemnitor, even if caused in part
by indemnitee.”

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 Limited Form Indemnity Agreement
• Comparative fault
• “But only to the extent . . .”
• To the fullest extent permitted by law . . . but only to the extent caused in whole or in part
by negligent acts or omissions of Indemnitor.

36
 Exercise: Indemnity Agreements
Instructions:
Using the simple scenario contract from the previous exercise, create an indemnity
agreement between the contractor and their service provider.

37
 Test for Enforceability of Indemnity
Agreement
• Liability must fall within scope & subject matter of obligation
• Must be sufficiently clear that indemnitee was to be indemnified for its own negligence
• Does the agreement comply with anti-indemnity statute

38
 Subject Matter
• Threshold question: is the injury or damage covered by the indemnity clause?

• Robert H. Smith, Inc. v. Tennessee Tile, Inc., 719 S.W.2d 385 (Tex. Ct. App. 1986) (scope of work)
• Compare: Perkins v. Rubicon, Inc., 563 So. 2d 258 (La. 1990) (“but for the contract”)

39
 Moot Court
You be the judge!

Instructions:
Using the clauses provided, work with your team
to prepare a case for enforcing or not enforcing
the clause

40
Perkins v. Rubicon
As part of the contract B&B agreed to “indemnify and hold [Rubicon] harmless from all
claims, suits, actions, losses and damages for personal injury, including death and
property damage, even though caused by the negligence of [Rubicon], arising out of
[B&B’s] performance of the work contemplated by this agreement.”

41
 Insurance and Indemnity
Question: Can you require someone to provide insurance for your own negligence?

Answer: General Rule: Yes.

Exceptions:

42
Exercise: Drafting Indemnity Agreements
Instructions:
1. Working with your team, create a quality assurance checklist to follow when drafting an indemnity
agreement
2. Write your check list on a flipchart and prepare to report out to the rest of the class

43
Drafting Indemnity Agreements
Check
Identify & Define Determine
Language

Contracting Choice of
English
Parties Law

Clear and Subject Attorney's

Simple Matter Fees

Consistent Duration

Scope

44
Other Considerations When Drafting
Defense
counsel

Consent
to settle

Be specific
about
forms

45
Indemnity Agreements Can Stand Alone
Indemnity of Director or Officer.

Subject only to the limitations set forth in Section 3, Corporation will pay on behalf of the
Indemnitee all Expenses actually and reasonably incurred by Indemnitee because of any
claim or claims made against him in a Proceeding by reason of the fact that he is or was a
Director and/or Officer.

46
 Workshop Outline
 Introductions, Objectives and Expectations
 Foundation
 Module 1: Contract Basics
 Module 2: Indemnity Clauses
Module 3: Uses of Insurance

Module 4: Reviewing the Contract and Preparing a Presentation

47
 Learning Topics
• During this Module we will cover:
• Subrogation
• Limitations of liability
• Overlaps between commercial liability and insurance coverage
• Contractual liability insurance
• Additional insured
• Certificates of insurance
• Triggers of coverage
• Exclusions

48
 Subrogation
• What’s subrogation?
• What are the elements and what triggers a subrogation right?

49
Subrogation: Hypothetical
Construction Contract Scenario
When would you want to waive subrogation?

50
 Limitation of Liability
• Limits liability to a set amount or type of recovery
• Enables a party to balance risk and profit
• Examples
• Contract price
• Insurance
• “Available insurance”

51
 When are Limitation of Liability
Clauses Valid?
• Negotiated contract or adhesion
• Definite limitation of liability amount
• Clear description of risk
• Clear description of parties / persons covered

52
 Exercise: Limitation Of Liability
Using the Bus Company Scenario, discuss limitation of liability and determine:
1. Who might or should want one?
2. How should the limit be specified?
• Dollar amount?
• Something else?

53
 Day 2 Agenda
Module 3, con’t:
• Contractual liability coverage
• Additional insured status
• Certificates of insurance

Module 4:
• Key coverage issues
• Review a contract excerpt and prepare to present your rationale

54
Summary Checklist
Only as good as the financial condition of the party
who agrees to indemnify

Indemnity agreement does not give you direct rights

under an insurance policy

Is the indemnity obligation limited to “available

insurance”?

What about obligation to defend – who selects

counsel

Choice of law – enforceability varies by state

55
Overlap Between Commercial Contract and
Insurance Coverage
• What it provides
Contractual • Insured contract language in
liability coverage insurance policies

• What is an additional
insured?
• Additional insured
Additional endorsements.
insured status • Advantages and
disadvantages of being
named as an additional
insured.
• Evidence of coverage
Certificates of • Evidence of additional
insurance insured status

56
 Commercial General Liability Policy
(CGL)
• What is an “Insured Contract”
• Defense obligation to indemnitee
• What about policy exclusions
• Limitations

57
 Commercial General Liability (CGL)
• Generally provides liability coverage for a comprehensive host of liabilities that usually do
not involve “purely economic” harms
• “Purely economic harms are generally covered by E&O, D&O, and related policies.”
• CGL covers liabilities arising from bodily injuries, property damage, and personal and
advertising injuries

58
CGL Coverages
Supplementary
Coverage A Coverage B
Payments

Personal and
BI Advertising Injuries
Investigation

PD Bonds

Costs

Interest

Defense costs of
indemnitee

59
 Coverage A
• Coverage A provides “litigation insurance” for Bodily Injury (BI) and Property Damage
(PD) claims

• Standard insuring agreement provides

“We will pay all sums that you become legally obligated to pay as damages because of
“bodily injury” or “property damage” caused by an “occurrence” to which this
insurance applies. We will have the right and duty to defend you against any “suit”
seeking those damages.”

60
 Duty to Defend
• A duty to defend arises by virtue of a “suit”
seeking damages potentially covered by the duty
to indemnify clause (“We will have the right and
duty to defend you against any “suit” seeking
those damages.”)

• “Suit” includes actions filed in a court of law and

in ADR.

• Issue: Does “suit” include an EPA administrative

enforcement action?

61
 General Duty To Defend Rules
• Independent/Broader than Indemnity Duty
• Defense costs outside of limits

• Right to select and control counsel

• General Rules
• 8 Corner Rule (Actual Facts to find but not eliminate duty)
• Arguably or potentially covered Claims (Facts v. Legal Theories)
• Continues indefinitely until such time as underlying action is confined to claims outside scope of policy
• Doubts construed in favor of policyholder

• Issue: Some Covered Claims, Some Excluded Claims

• Independent Counsel

• Issue: Multiple policies triggered

62
 Standard CGL Language
We will pay those sums that the insured becomes legally obligated to pay as
damages because of “bodily injury” or “property damage” to which this
insurance applies. We will have the right and duty to defend the insured
against any “suit” seeking those damages. However, we will have no duty to
defend the insured against any “suit” seeking damages for “bodily injury” or
“property damage” to which this insurance does not apply. We may, at our
discretion, investigate any “occurrence” and settle any claim or “suit” that
may result . . .

63
 Contractual Liability
• Agreement to assume liability in a contract
• Insurance for liability assumed in a contract has been automatically provided within the
commercial general liability (CGL) policy since 1986.

64
 Contractual Liability - Exclusion
This insurance does not apply to . . .
• “Bodily injury” or “property damage” for which the insured is obligated to pay damages by
reason of the assumption of liability in a contract or agreement. This exclusion does not apply
to liability for damage:
1. That the insured would have in the absence of the contract or agreement; or
2. Assumed in a contract or agreement that it an “insured contract,” provided the “bodily injury” or “property
damage” occurs subsequent to the execution to the contract or agreement. Solely for the purposes of liability
assumed in an “insured contract,” reasonable attorneys fees and necessary litigation expenses incurred by or
for a party other than an insured tare deemed to be damages because of “bodily injury” or “property
damage,” provided:
a) Liability to such party for, or for the cost of, that party’s defense has also been assumed in the same “insured contract”;
and
b) Such attorney fees and litigation expenses are for defense of that party against a civil or alternative dispute resolution
proceeding in which damages to which this insurance applies are alleged.

65
 Definition of an Insured Contract
(the fine print)
“Insured contract” means:
• A contract for a lease of premises. However, that portion of the contract for a lease of premises that indemnifies any person or organization for damage by fire to premises while rented to you or temporarily
occupied by you with the permission of the owner is not an “insured contract”;

• A sidetrack agreement;

• Any easement or license agreement, except in connection with construction or demolition operations or within 50 feet of a railroad;

• An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality;

• An elevator maintenance agreement

• That part of any other contract pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort
liability of another party to pay for “bodily injury” or “property damage” to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any
contract or agreement.

Paragraph f. does not include that part of any contract or agreement:

1. That indemnifies a railroad for “bodily injury” or “property damage” arising out of construction or demolition operations, within 50 feet of any railroad property and affecting any railroad bridge or trestle, tracks,
road-beds, tunnel, underpass or crossing;

2. That indemnifies an architect, engineer or surveyor for injury or damage arising out of:
a) Preparing, approving or failing to prepare or approve maps, shop drawings, opinions, reports, surveys, field orders, change orders, or drawings and specifications; or
b) Giving directions or instructions, or failing to give them, if that is the primary cause of the injury or damage; or

3. Under which the insured, if an architect, engineer or surveyor, assumes liability for an injury or damage arising out of the insured’s rendering or failure to render professional services, including those listed
in(2) above and supervisory inspection, architectural or engineering services.

66
 Definition of an Insured Contract
f. That part of any other contract pertaining to your business (including an indemnification
of a municipality in connection with work performed for a municipality) under which you
assume the tort liability of another party to pay for “bodily injury” or “property damage”
to a third person or organization. Tort liability means a liability that would be imposed by
law in the absence of any contract or agreement.

67
 Looking at the Insurance Policy
• What is actually meant by "liability assumed by contract" has been the topic of a considerable
amount of litigation, with varied outcomes. An Alaska case—Olympic, Inc. v Providence
Washington Insurance Co., 648 P2d 1008 (Alaska 1982), as quoted in Gibbs M. Smith v.
United States Fidelity & Guaranty Co., 949 P2d 337 (Utah 1997)—provides this explanation,
which reinforces the concept that coverage is not for breach of contract:

• Liability assumed by the insured under contract refers to liability incurred when one promises
to indemnify or hold harmless another, and does not refer to liability that results from breach of
contract.

• The court went on to explain the differences in the nature of the obligations: Liability ordinarily
occurs only after breach of contract. However, in the case of indemnification or hold harmless
agreements, assumption of another's liability constitutes performance of the contract.

68
Contractual Liability – Insurance
Considerations
Insurance Must be an Indemnification
coverage for “insured provision must
indemnity contract” as Tort and be enforceable
obligations that defined by the contract to trigger
are assumed insurance coverage under
by contract policy policy

69
How Are Exclusions Applied

What about Coverage

Several significant
B (personal and
Coverage A
advertising injury
exclusions.
liability coverage)?

70
 Additional Insured (AI) Status

• What is it?
• Why would you want to be an additional insured?

71
 Additional Insured Status
• Same rights to defense as named insured
• Protection from liability arising out of/caused by operations performed by named insured
on behalf of additional insured (“AI”)
• Direct access to insurance policy
• Potentially broader protection than indemnity agreement
• Belt and suspenders?
• Several pitfalls for the unwary

72
Additional Insured & the CGL Policy
Coverage is only for an insured…

Who’s automatically an insured?

How to become an additional

insured?

73
 Endorsements Of Old
• Example: Form CG 20 09, for use with 1973 CGL
Policy

• Expressly covers the AI’s general supervision of the

named insured

• Deletes certain exclusions in body of policy, but adds

many others

74
 2004 AI Endorsements
• CG 20 10 07 04: AI – Owners, Lessees or Contractors – Scheduled Person or
Organization
• CG 20 33 07 04: AI – Owners, Lessees or Contractors – Automatic Status When
Required in Construction Contract
• CG 20 37 04: AI – Completed operations
• Covers AI for liability caused by the acts or omissions of the named insured, or those
acting on behalf of the named insured, in the performance of the named insured’s
ongoing operations for the AI

75
 Positives Of AI Status VS. Named
Insured Status
• Generally not responsible for policy premiums
• Potentially less stringent loss reporting requirements
• Application of policy exclusions

76
 Negatives Of AI Status VS.
Named Insured Status
• Possible loss of control of defense
• Increased likelihood of coverage disputes
• May not receive cancellation notices
• “Other Insurance” Disputes

77
Discussion: Additional Insured Cautions
Knowing the positives and negatives of additional insured status, identify situations where you
would and would NOT want to be an AI.

78
Certificates Of Insurance
• Often the only document AI will receive to confirm its status
• AI Endorsement
• Seek copy of Policy or, at a minimum, AI Endorsement
• Estoppel argument is possible

79
 Other Insurance
• Coverage under own policy and as AI, which is primary?
• Intention of contract parties may be ignored
• If both policies are “primary,” or both “excess of,” result is pro-rating according to limits
• Obtain clarifying endorsement

80
 Insurance Is A Risk-transfer Contract
• Insurance can be used to hedge the costs of investigating and
defending against claims. See if the “Supplementary Payments” for
expenses are “inside” the limit or “outside” the limit.
• Coverage can be tailored for many small claims, a few significant
claims, or reasonable combinations.

81
 Claims Made Errors & Omissions Coverage

• Sometimes applicable in additional insured context.

• Key terms:
• Wrongful Act
• Professional Service; Omission
• Usually Causing Economic Injury

82
 Wrongful Acts & “Professional
Services”
• Any actual or alleged breach of duty, neglect,
error, negligent misstatement, misleading
statement or omission unintentionally committed

• Solely in the conduct of the Insured’s

Professional Services as specified in the
Declarations

83
 Exercise for end of Module 3
Instructions:
Using the bus service scenario, create a list of possible
liabilities, including:
• Wrongful acts / omissions (E&O)
• Bodily Injury (CGL)
• Property Damage (CGL)

Name one liability that tends to be unique to your industry?

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 Workshop Outline
 Introductions, Objectives and Expectations
 Foundation
 Module 1: Contract Basics
 Module 2: Indemnity Clauses
 Module 3: Uses of Insurance
Module 4: Reviewing a Contract and Preparing a Presentation

85
 Learning Topics
During this Module we will cover:
• Key coverage issues
• Review a contract excerpt and prepare to present your rationale

86
Key Coverage Issues
Who Is Covered?
Trigger of
Coverage
Notice

Duty To Defend
Control of Defense
and Settlement

Exclusions

87
 Final Exercise
Instructions:
1. Read the contractual excerpt provided
2. Using the check list created in Module 2, determine:
a) Which phrases you would like to see changed
b) The change you recommend
c) Your rationale for making the change
d) The value your change brings to the organization from the point of view of:
• The Board
• Your Boss
• The COO

88
CONTRACTUAL RISK TRANSFER -
Appendix

89
 Ten Tips For Pursuing Insurance
Recoveries
1. Take Notice Requirements Seriously
• Establish procedures within the Company
• Ask broker to give notice on all potentially applicable policies
• primary and excess
• All possible coverage periods
• Forfeiture for late notice
• occurrence-based policies
• Claims made policies

90
 Ten Tips For Pursuing Insurance
Recoveries
2. Assemble An Appropriate Claim Team
• Insurance companies will have
• lawyers
• accountants
• adjusters
• investigators
• Don’t be outgunned from the start

3. Analyze Coverage Early

• Identify strengths, weaknesses and gray areas
• Present the claim accordingly
• e.g., description of causation

91
 Ten Tips For Pursuing Insurance
Recoveries
4. Establish Recovery Goal and Develop a Plan to Achieve It
• Identify work to be done
• Establish a timetable
• Set a settlement target

5. Take Control of Your Claim

• Take the initiative in moving the claim
• provide information
• request coverage determinations
• Do not let the insurer dictate the pace or timing

92
92
 Ten Tips For Pursuing Insurance
Recoveries
6. Cooperate With the Insurance Company
• Don’t disengage over burdensome or repetitive requests for information

7. Correspond With The Insurer About Everything

• Every phone call
• Every production of documents
• Every missed meeting
• Every delay
• Lays the foundation for a claim of bad faith
• Deters bad conduct

93
93
 Ten Tips For Pursuing Insurance
Recoveries
8. Do Not Be Put On The Defensive
• Insurer hate mail
• Policyholder failed to cooperate
• Policyholder prejudiced insurer
• Goals
• Undermine bad faith claim
• Forfeiture of coverage
9. Do Not Fear Insurer Retaliation
• Plenty of insurance companies want your business
• An insurer that does not pay claims is worse than useless
10. Honor Deadlines
• Proofs of loss
• Contractual suit limitation periods

94
 Stephen Palley
Partner, Washington, D.C.
202-416-6552
spalley@andersonkill.com

Stephen D. Palley is a partner in the Washington D.C. office of Anderson Kill. A seasoned trial lawyer and litigator with
extensive experience in insurance recovery, Stephen also has significant hands-on software development and design
experience. He is co-chair of Anderson Kill's recently launched Blockchain and Virtual Currency group, a cross-disciplinary
team providing counsel to Blockchain entrepreneurs and investors. Stephen has written and been quoted widely on legal
issues arising from the use of Blockchain technology, with appearances in both print and television media.

In two decades of litigation experience, Stephen has handled a wide variety of commercial disputes in state and federal
courts across the United States, including significant construction insurance and environmental insurance matters. His
most recent trial experience includes a Fall 2017 jury trial in federal court regarding coverage for decades of environmental
cleanup costs under insurance policies issued in the 1970s, leading to an eight figure jury verdict in favor of the
policyholder. He has also represented owners, general contractors, construction managers and others in insurance
transactions concerning tens of billions of dollars' worth of construction projects throughout the United States.

Stephen was selected for inclusion in the 2019 The Best Lawyers in America list for Insurance Law. In 2018, Stephen was
recommended in The Legal 500 United States for Insurance - advice to policyholders.

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