USA Law and Practice Contributed by: Christina Culver, Rhonda Thompson and L. Michael Brooks, Thompson, Coe, Cousins & Irons, LLP
• the Restatement (Second) of Conflict of Laws most significant relationship test (the majority approach, followed by roughly two-thirds of states); • the traditional lex loci contractus rule (the minority approach, retained by a handful states including Florida and Georgia); and • hybrid or government interest approaches used in a few jurisdictions. When an insurance policy contains an express choice- of-law clause, most courts will honour party autonomy under Restatement (Second) § 187, as long as there is some substantial relationship between the jurisdic- tion whose substantive law is chosen in the policy and as long as the state does not have a significant public-policy interest that is contrary to the law of the jurisdiction selected in the contract. Reinsurance treaties are treated differently because the parties are sophisticated commercial entities, which generally means that forum courts will not be as focused on consumer-protective public-policy interests and will generally be more likely to honour parties’ choice-of- law selections. In US courts, choice-of-law determinations for insur- ance policies generally apply the “most significant relationship” or “centre of gravity” approach, often following the Restatement (Second) of Conflict of Laws §§ 6, 187, 188, and 193. This approach consid- ers factors such as place of contracting, negotiation and performance, domicile or place of business of the parties, and principally, the location of the insured risk. Courts also consider government interests, especially when faced with conflicting state laws affecting cov- erage, notice provisions, or contractual obligations. These rules generally apply across different lines of insurance, with some variation. Property and casualty insurance policies are generally subject to the law of the principal location of the insured risk under § 193. In life-insurance cases, courts apply the general most- significant-relationship factors, with the insured’s domicile and the place of contracting having greater weight. Marine insurance is governed partly by federal admi- ralty law, which can displace a state-law choice-of- law analysis when the federal maritime law provides
a uniform rule. Reinsurance treaties, as well as sur- plus and excess lines policies, are often issued to sophisticated commercial insureds, which generally means that courts will be more interested in enforcing the parties’ freedom to contract and less concerned about the public-policy goals of protecting consumer rights. 2.2 Jurisdiction and Forum Selection Courts in US jurisdictions typically enforce forum selection in insurance contracts. But enforceability depends on: • whether the federal or state framework governs; • the type of insurance involved (surplus lines, rein- surance, commercial, consumer/personal lines); • the nature of the parties (sophisticated commercial insureds versus individual consumers); and • whether a state insurance code expressly prohibits such clauses. The majority of US states will generally uphold these clauses in the absence of fraud, overreaching, depri- vation of the right to litigate, or a strong public-policy violation. A minority of states have enacted statutes that prohibit forum-selection clauses in admitted insur- ance contracts delivered in-state, while often carving out surplus lines and other non-admitted policies. Forum-selection clauses appear most frequently in surplus and excess lines insurance, reinsurance, and marine insurance, and are generally recognised as enforceable even in states that otherwise disfavour such clauses. Forum-selection clauses are appear- ing with greater frequency in some commercial poli- cies covering directors and officers, errors and omis- sions, and professional liability risks, particularly those involving large commercial insureds with negotiated or manuscript coverage forms. These clauses are less common, and more likely to trigger judicial scrutiny, in personal-lines policies sold to individual consumers. In the case of health or disability policies governed by the Employee Retirement Income Security Act of 1974 (ERISA), federal courts are split on the enforceability of such clauses.
293 I NSURANCE L I T IGATI O N 2026
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