Insurance Coverage, Risk Transfer, and Successful Tenders: Maximizing Limits and Reducing Risk of Excess Liability

Description

A tender for defense or indemnity is a powerful tool. Yet, policyholders and insurers often give short shrift to identifying additional indemnitors beyond the policy issued to a named insured, frequently missing opportunities to shift their liability to a third party.

The key to a successful tender is to gather necessary information concerning the insured's contractual relationships with third parties and insurance that may be available to make good those indemnity undertakings and to do so in a timely fashion.

Tender letters should focus on the claim made against the tendering party and the language in the contract, statute, or case law that sets forth the indemnity obligation. Once made, counsel must keep track of them.

When responding to a tender, insurers must carefully analyze precisely what is required by the indemnification provision and what the indemnitor's obligations are. If an insurer elects to accept a tendered defense, its response should clearly set forth any limitations to the defense or issues upon which the insurer is reserving rights to avoid later controversies due to misplaced expectations as to the losses that will be paid by a party accepting a tender. However, there are many reasons to accept tenders including reduction of costs and increases in litigation efficiencies.

Listen as our experienced panel of insurance coverage attorneys examines how to perfect tenders for maximum effectiveness and risk transfer and reviews what carriers can and should do when responding to tenders made to their insureds.