Sign up for more with a complimentary subscription to Today’s General Counsel magazine.
Growing Market For High-Stakes Litigation Risk Insurance
March 23, 2022
Litigation risk insurance is a “relatively new set of insurance offerings that allow businesses to better manage the legal risks stemming from known litigation,” explains this discussion from Holland & Knight attorneys, writing in Insurance Journal. It takes many forms, including adverse judgment insurance and judgment preservation insurance. Adverse judgment insurance provides coverage for final judgments and can be especially helpful in an M&A context, they write, “where an otherwise attractive target company is involved in material litigation.” It can be understood as a way of providing a degree of certainty for a price, essentially turning “a contingent liability into a quantifiable insurance cost.”
Another example is judgment preservation insurance, which underwrites the risk of a judgment being overturned. This product can be especially applicable in the context of IP litigation, where appeals can often take years.
The writers characterize the entire broad range of these policies as “highly bespoke,” requiring fact-intensive and labor-intensive underwriting, with the carrier wanting to know virtually everything there is to know about the matter at issue. However, they find a plus side to this process. The insured, they say, “not only benefits from the coverage that may be afforded by the policy, but also [from] the value of an objective review and assessment of litigation risks by a carrier that has aggregated hard data on litigation trends and risks.”
Share this post: