Overcoming Obstacles To Recovering Settlement

Originally published in Risk Management magazine (May 2013)

As many policyholders already know, prompt payments from insurance companies for settlement costs can be hard to come by. Often, the policyholder must settle a case without a commitment to help fund it from its insurer.

If the suit is substantial enough, a policyholder with cash-flow problems may be put out of business by its insurance company's refusal to cover a settlement opportunity. This scenario is what some in the insurance industry refer to as "death of company." But even if a policyholder has the wherewithal to fund a large settlement without its insurer's contribution, challenges remain in the pursuit of an eventual insurance recovery.