Multiple Insurance Policies Covering a Single Claim


In this post, Brian Friel wraps up his series The Ten Biggest Mistakes Made By Corporate Insurance Policyholders, discussing how multiple types of insurance policies can cover a single claim.

When a claim comes in, it is important for corporate policyholders to look at all potentially applicable insurance policies, which include not just the most obvious kinds of coverage.  Multiple insurance policies typically cover a single claim.  The reason for this is that lawsuits often allege more than one thing.  Within a single claim, certain allegations may trigger D&O (Director and Officer) coverage, others may fall under E&O (Errors and Omissions) coverage, while others may trigger EPLI (Employment Practices) coverage. More often than not, a claim will extend into multiple lines of coverage, effectively multiplying the potential coverage.  Insurance policies are complex, and the law controlling coverage even more so.  What corporate policyholders do early in the claims process is critical. 

Watch the video to learn more.

We have included a transcript of today’s video below:

Multiple Insurance Policies Covering a Single Claim

Another common mistake made by corporate policyholders is not understanding or appreciating the fact that more than one policy, or type of policy, can potentially respond to a claim. Here at Miller Friel, we have cases come in all the time where we are contacted. We are provided a copy of a company’s general liability policy. Maybe it’s a copyright infringement case. Maybe it’s a product liability case. The exclusive focus, up until that point, is on the general liability policy, which is fine because there could be coverage under your GL policy.

What we do is we step back and we ask the client, “What other policies do you have? Do you have errors and omissions? Do you have employment policies? Do you have a directors and officers policy? Do you have a fidelity policy or what we call a crime policy or what sometimes is known as an employee dishonesty policy?” What we have found is lawsuits, whether it’s again product liability, commercial transaction, intellectual property, there are multiple angles to a claim involving multiple theories by the underlying plaintiff.

It could involve an act of discrimination involving a security sale where maybe there was some fraud involved but there was an employee who was also complaining about some discrimination and started off as a discrimination case, a whistleblower, and ultimately resulted in finding of some fraud that was being done in terms of disclosing, or not disclosing, full information to the marketplace. We can have a product liability case that involves not only the company but also bringing a claim against an individual director or officer for not adequately monitoring or managing the process internally for a certain product, or if it’s a pharmaceutical, properly managing the distribution or labeling of a certain drug.

Well, that could be general liability because there could be personal injuries or bodily injuries to third parties, but it also could involve errors or omissions or negligence by management, which is not just a general liability policy now. It’s your directors and officers policy.

Oftentimes in claims, in all sorts of contexts and formats, we have allegations, and sometimes they start off as suggestions or hints, and it evolves over time when the company does an internal investigation that perhaps there is some dishonesty going on at the company by certain employees. It could be line employees, it could be middle management, it could be upper management, but that’s not how the claim first started.

We’re talking about perhaps your fidelity policy coming into effect, covering some of those losses that you thought were just general liability policy losses or a directors and officers policy loss. What we do is we look at the whole spectrum of possible coverages, see what our clients have in their insurance portfolio, and look at each of those carefully. We make no assumptions here. Our view is going to a claim that there’s a possibility that every single policy within reason, within a company’s insurance portfolio, could possibly respond and provide coverage. We feel, and in our personal experience, oftentimes we have come out with coverage under more than one policy line, maybe a professional liability, a general liability, and combination of two or three, each providing funding for both defense and ultimately indemnity on settlement or a court judgement that was not viewed or not thought about when the claim first came in.

That is something that we are always examining, always focusing, and some of what we call the value add that we try to bring to our cases.

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