Drafting Effective RWI Coverage Exclusions

Coverage exclusions are a key risk management tool for transactional liability insurers. But they can also be traps for the unwary. In the event of a claims dispute, the insurer will likely bear the burden of proving that an exclusion applies, and a judge or arbitrator may (depending on the circumstances) be tasked with interpreting the exclusion based solely on its terms, without external evidence of what the underwriter intended. Exclusions therefore must be carefully drafted with potential disputes over their meaning in mind.

This article provides guidance for transactional insurers drafting coverage exclusions based on our extensive practice advising on insured transactions and handling claims for our clients.