A Lawyer's Guide to Insurance and Contractual Risk Transfer

As lawyers, we know that insurance plays a role in paying judgments, defense fees, and sometimes dictating settlements. Insurance allows plaintiffs to recover their damages and defendants to defend themselves from even frivolous lawsuits and to better manage and finance their risk. For those who are not practicing insurance coverage law, how much do you really understand about how insurance works? How much do you need to understand?

In recent years, it has become even more important for transactional lawyers to understand the insurance being required by contracts. The language in the contract itself can be critical in determining what the policy covers, who it covers, and the extent of coverage. To avoid surprises after a claim arises, lawyers need to be aware of how their language can affect coverage, how to trigger the coverage, and how to properly give effect to the parties intent.

In this primer, Mr. Pepe will discuss:

• Statutory and common law limitations on contractual risk transfer

• The difference between insurance obligations and indemnity obligations

• The different types of insurance coverage and how they respond to losses

• Insurance coverage issues that are influenced by triggering language in the contract, including limits and scope of coverage for additional insureds, the priority of coverage, and subrogation issues

• Strategies to ensure that risk transfers as the parties expect

Learning Objectives:

1. Identify first-party and third-party insurance available to commercial entities and how they respond to losses
2. Discuss strategies to transfer risk contractually to other parties and to their insurers and understand the difference
   
3. Review strategies to craft effective contract language to transfer risk through indemnity agreements, insurance requirements, and claim/subrogation waivers