USA Law and Practice Contributed by: Christina Culver, Rhonda Thompson and L. Michael Brooks, Thompson, Coe, Cousins & Irons, LLP
One frequently litigated issue involves the determina- tion of who is an insured, sometimes requiring analysis of policy declarations, definitions in primary coverage forms, and additional-insured endorsements. In recent years, broadly worded additional-insured endorse- ments that identify additional insureds by their role in a particular project or work (eg, describing all gen- eral contractors or site owners as additional insureds) has resulted in litigation as putative insureds vie for insured status under the endorsement. Such endorse- ments generate even more questions. In personal-lines policies, similar additional-insured issues arise when a person’s status as a resident rela- tive in the named insured’s household is questioned, requiring analysis of familial relationships to determine whether someone is a relative, as well as the various factors that determine residency, an analysis that is further complicated when individuals have multiple potential places of residency (eg, adult children of divorced insureds who split time between their par- Insurers and insureds, alike, frequently explore options for early resolution of insurance disputes, including early mediation or filing of early dispositive motions to get prompt rulings on purely legal issues. Increasing litigation expenses, long waiting time for trial dates, and uncertainties about how lay jurors will respond to complex coverage issues, are frequently identified as motivators for seeking early resolution. In cases where the primary dispute involves interpretation of policy text or other pure legal issues, litigants may file early summary-judgment motions, asking the judge to construe the policy and apply the policy interpretation to undisputed facts. Such early rulings may resolve core issues that may make settlement more likely or, in some cases, resolve the entire case. Many US jurisdictions either mandate or strongly encourage mediation or other forms of alternative dispute resolution to facilitate settlement. Rule 26 (f) of the Federal Rules of Civil Procedure requires litigants to confer early about the possibilities for promptly settling or resolving the case, and Rule 16 (a) empowers courts to use court conferences to facili- ents’ residences and university housing). 1.3 Dispute Resolution Strategy and Outcomes
tate settlement, among other things. Many states have copied the federal approach or adopted analogous procedures to encourage early discussions about the potential for settlement. Mediators with specialised experience or training in insurance-related disputes are available in most US jurisdictions. In addition to private mediation services, some federal and state courts allow magistrate judges or other judicial offic- ers to provide free, or lower-cost, mediation services. With increasing litigation expenses impacting both insurers and insureds, there is generally a strong incentive to pursue early settlement as an alternative to costly litigation. Long wait times for trial dates fre- quently have a disproportionate impact on insureds and sometimes lead to settlements out of necessity. For insurers, the proliferation of “nuclear” or highly unpredictable jury verdicts and judicial aversion to dismissing entire cases on summary judgment incen- tivise early exploration of settlement. Many insurers have adopted early-case assessment tools designed to require in-house professionals and outside counsel to strategise shortly after receipt of a new lawsuit to address, among other things, the pos- sibility and desirability of early settlement. Those tools help insurers and their lawyers to spot opportunities for early settlement, identify problems in pre-litigation claim handling that make early settlement desirable, and develop strategies for engagement with insureds and their counsel. 2. Jurisdiction and Choice of Law 2.1 Choice of Law in Insurance Contracts In the United States, the determination of which law to apply to insurance and reinsurance contracts is, itself, a matter determined primarily by the law of the state where the dispute has arisen, referred to as the “forum state”. It is principally the role of a court to make the choice-of-law determination. Courts apply three pri- mary methodologies to determine which jurisdiction’s substantive law governs insurance policy interpreta- tion:
292 I NSURANCE L I T IGATI O N 2026
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