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'Pay First' Provisions and the Insolvent Policyholder
When an insured entity becomes a debtor in bankruptcy, the interests of liability insurers collide with fundamental principles of the Bankruptcy Code. Most liability insurance policies require the policyholder to pay a deductible or self-insured retention (“SIR”) before the insurer is obliged to pay anything. And many insurance policies require the policyholder to pay the entire claim first and to seek reimbursement from the insurer afterward. Almost by definition, however, insolvent policyholders are unable to make these upfront payments. Indeed, in many cases, the policyholder's inability to do so in the face of a deluge of litigation was the principal cause of the insolvency in the first place.
Deductibles, SIRs and Reimbursement Policies
Liability insurance policies requiring upfront payments by the policyholder (in addition to the standard premium) take several forms, but courts tend to treat them similarly once the policyholder becomes insolvent. First, insurance policies with deductible provisions generally require the policyholder to pay the first portion of the claim, up to the deductible amount, after which the insurer pays amounts in excess of the deductible up to the limits of liability. The deductible is considered to be within the limits of liability, and the policy may provide that the insurer has no duty to defend the policyholder for claims that fall entirely within the deductible. Second, policies with SIRs may require the policyholder to shoulder all expenses, including defense costs, until the SIR is exhausted. The SIR is not considered to be within the limits of the policy, and the insurance coverage may be effectively excess rather than primary. Third, reimbursement policies provide coverage only after the policyholder has become “legally obligated” to pay and has actually paid the entire amount of the claim. Nevertheless, many courts ignore these distinctions and treat deductibles, SIRs, and reimbursement provisions in virtually the same way once the policyholder becomes insolvent.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.