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INSuRANCE LAW

COI, or someday you may regret it when you 6. Protect Your Client’s Own Insurance –
come to find out that in fact your counterparty Include Primary and Non-Contributory
does not actually have in place the insurance Language.
it promised it would have. Their problem Many insurance policies contain what is
becomes your client’s problem at that point. commonly known as an “other insurance”
clause. While these types of provisions
4. Double the Fun with Additional Insured can vary widely, what they typically do is
Status. establish where in the pecking order they
It’s one thing to make sure that your will be in relation to any other insurance
counterparty has enough insurance to cover policy that is also triggered by a given loss
a claim that some third party asserts against or third-party claim. Predictably, often an
it, but you can prove true value to your client insurance company will author its “other
by having the other side’s insurance policy insurance” clause to state that it will only
cover future third-party claims against your pay after any other triggered insurance
client as well. This is a double win, because in policy exhausts its limits.
addition to the fact that the other party pays This can be a hidden trap for the unwary.
the premium for that policy, using their policy You may be proud of yourself for having
also allows you to preserve the limits of your persuaded your client’s counterparty to
client’s own policy. agree to make your client an additional
Here’s how to make this happen. The insured on their policy. However, unless you
magic words are “additional insured.” Have explicitly state that their insurance will be
the other party agree in the deal document primary, you run the risk of their policy’s
to make your client an additional insured on “other insurance” clause ping-ponging
their policy. Again, it’s critically important coverage for a potential loss or third-party
that you lay eyes on the actual insurance claim right back onto your own insurance
policy language or endorsement that will policy. That’s exactly what you sought to
bring that right to fruition. avoid in the first place by getting your client
added onto their policy.
5. Don’t Get Your Client Sued – Include a Solved that riddle. Good enough? Not
Waiver of Subrogation. so fast. Just because your counterparty’s
Under common law as established by Ohio’s insurance agrees to be primary, and thus pay
Supreme Court, and under the express terms before your insurance, the story does not
of most insurance policies, an insurance end there. To double-diaper the protection Matthew A. Chiricosta is a member
company that pays a loss has the right to you’ve gained for your client, you’ll want of Calfee, Halter & Griswold LLP’s
subrogate (i.e., seek recovery) against any to add “non-contributory” language as Insurance Recovery and Litigation
third parties who caused that loss. Essentially, well. This is because under Ohio common practice groups, Matt represents
the insurer stands in the shoes of its insured law, an insurance company that pays a publicly traded and privately held
and inherits the insured’s rights. claim has a contribution right against any companies. Matt’s general litigation experience
Done incorrectly, an otherwise robust other insurance policy that is also triggered includes representing clients in state and federal courts
insurance provision requiring your client’s by a loss or third-party claim. This is very and administrative tribunals at all stages of litigation,
counterparty to a deal to have in place similar to the subrogation rights discussion including trials, post-trial appeals, and administrative
certain insurance coverage leaves a gaping above, but slightly different inasmuch as hearings and appeals. He can be reached at (216)
hole that could boomerang badly on your the subrogation rights being waived are 622-8284 or mchiricosta@calfee.com.
client. Namely, if the insurer pays a claim against your company directly, whereas
under the insurance that you demanded the contribution rights are against your
your counterparty put in place, and then client’s insurance company. Thus, your K. James Sullivan is the leader of
decides your client is to blame, then guess counterparty’s insurer can possibly seek Calfee, Halter & Griswold LLP’s
who that insurer will sue? Yep, you guessed contribution against your client’s insurance Insurance Recovery practice group,
it – your client. company unless you take steps to nip that in James counsels corporate insurance
How to protect against this? It’s easy. the bud. Although you’ve arguably done that policyholders on insurance coverage
Simply have your client’s counterparty waive already by getting their insurance to serve as issues and litigates insurance coverage disputes.
its subrogation rights against your client. primary insurance, the way you make it iron James is one of 24 Ohio lawyers certified as
(And all affiliated individuals and entities!) clad is to include language in your client’s insurance law specialists by the Ohio State Bar
The insurer’s subrogation rights are only as contract with the counterparty committing Association and has served as an expert witness
broad as its insured’s, so when subrogation to get its insurance company to acknowledge on insurance coverage issues. He has been a CMBA
rights are waived by the policyholder — voila! that it will not seek contribution from your member since 2004. He can be reached at (216)
— they disappear as to the insurer as well. client’s insurance company. 622-8567or kjsullivan@calfee.com.
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