Insurance carriers are reviving an old trend called coverage-litigation leapfrog—where a carrier races to the courthouse before the policyholder can file suit. The reason for the leapfrog? Some forums provide a real or perceived advantage to carriers. For example, some state laws can limit a carrier's ultimate payout by allocating payments among multiple carriers. Other state laws could eliminate a policyholder's recovery based on settled case law interpreting certain policy provisions. Or consider the pandemic-related cases, where carriers have preferred litigating in federal courts rather than state courts, presumably out of a fear that a state-court jury, which tends to be more localized, would be sympathetic to a local policyholder and hostile to a carrier. Whatever the reason, here are four steps to avoid getting leapfrogged by your carrier:
- Assess the risk.
- Does the policy have a forum-selection clause requiring the parties to file in a particular court, or does it have a choice-of-law provision that would apply a certain state's laws regardless of where the lawsuit is filed?
- Determine your favorable forums.
- Identify possible forums and determine which one offers the most favorable case law.
- Strategically draft your complaint.
- Make front and center all facts that support jurisdiction in a particular forum, such as where the policy was issued or where the claim occurred.
- If your carrier leapfrogs you, then file in your preferred
forum ASAP.
- Don't give in to the carrier's lawsuit if there is an alternative forum out there. Instead, pursue your suit in the best applicable forum for you.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
