Occurrence Analysis in First-Party Insurance

First-Party Versus Third-Party

The “time-honored” differences between first-party policies and third-party policies are no less than “fundamental.” Port Auth. of N.Y. & N.J. v. Affiliated FM Ins. Co., 311 F.3d 226, 233 (3rd Cir. 2002). The core difference is that the right to coverage under first-party versus third-party policies is based on completely distinct principles of causation. For first-party policies, causation is based on “fortuity,” i.e., the occurrence of perils “such as lightning, wind, and explosion, which bring about the loss.” Port Auth. of N.Y. & N.J. v. Affiliated FM Ins. Co., 245 F.Supp.2d 563, 578 (D.N.J. 2001). On the other hand, “the right to coverage in the third-party liability insurance context draws on traditional tort concepts of fault, proximate cause and duty.” Id.

Accordingly, the expectations of the parties to the two types of contracts differ significantly. These points have been recognized and thoughtfully discussed by the California Supreme Court in its decision in Montrose Chem. Corp. v. Admiral Ins. Co., 913 P.2d 878, 887 (Cal. 1995). First-party property insurance is typically purchased in an amount sufficient to cover what is a knowable value: the cost of repairing or replacing an item of property when it is subject to direct physical loss or damage. Even in the context of a large commercial insurance program where there may be hundreds or thousands of individual properties insured, the values remain subject to quantification by both the insured and insurer and generally are a key basis on which policy premiums are calculated. In contrast, the scope of third-party liability coverage is broader. The parties to the third-party liability insurance contract do not know the extent of issues that may give rise to such future liability, nor are tools available when the policy is underwritten to quantify with any degree of certainty the associated financial exposure.

Courts also have stressed the dramatically different relationship between the insurer and the insured in the first and third-party contexts. Whereas the two “may generally be considered allies” in the third-party context, where they share a degree of common interest in defending against the claim of the third-party, in the first-party context they occupy an “adversarial position.” Port Auth. of N.Y., 311 F.3d at 233.'

Reflecting these core differences in subject matter, expectations, and the relationship between the parties to the contract, first-party policies are drafted to recognize that the physical loss or damage must occur during the policy term. Moreover, first-party policies often contain provisions requiring the insured to provide the insurer with timely notice of loss and, in the event of a dispute as to coverage, to bring any lawsuit or other proceeding against the insurer within a certain set period of time (e.g., 12 or 24 months) after the loss. Such requirements are consistent with the expectation that within a finite period after the term of a first-party property policy ends, the obligations of the parties have been fulfilled.

In contrast, third-party liability policies generally are triggered by an “occurrence” that causes “damage” or “injury” to a third party. Since any claim under a liability policy turns on a third party sustaining injury and reporting that injury to the insured, different types of wording have arisen to specify what must occur during the policy period to trigger coverage (e.g., wording that responds to “claims made” during the policy period, rather than an “occurrence” which falls during the policy period). Necessarily, notice and suit requirements in such policies differ from those in the first-party context.

Although the points above have all been noted by courts considering these issues, there is one additional difference that courts repeatedly return to in differentiating first-party and third-party insurance principles: Liability claims necessarily involve an injured third-party in need of “adequate compensation.” That consideration ' which often comprises an important public policy concern ' is not present in the first-party property context. World Trade Ctr. Props., LLC v. Hartford Fire Ins. Co., 345 F.3d 154, 187 (2d Cir. 2003), abrogated by Wachovia Bank v. Schmidt, 546 U.S. 303 (U.S. 2006) ; see also, e.g., Winding Hills Condo. Ass'n Inc. v. N. Am. Specialty Ins. Co., 752 A.2d 837, 840 (N.J. Super. Ct. App. Div. 2000); Great N. Ins. Co. v. Mount Vernon Fire Ins. Co., 708 N.E.2d 167 (N.Y. 1999).

Appropriately Recognizing These Core Distinctions

Given that “[w]holly different interests are protected by the two distinct forms of coverage,” it is not surprising that most courts recognize the sharp distinctions between occurrence concepts in first-party property insurance and trigger concepts in third-party liability insurance and thus apply differing legal analysis in each situation. Port Auth. of N.Y., 311 F.3d at 233. Accord Winding Hills Condo. Ass'n, Inc. v. N. Am. Specialty Ins. Co., 752 A.2d 837, 841 (N.J. Super. Ct. App. Div. 2000) (collecting cases from several jurisdictions); Montrose Chem. Corp. v. Admiral Ins. Co., 913 P.2d 878, 905 (Cal. 1995) (same); see also David P. Goodwin et al., 5-41 Appleman on Insurance ' 41.06, n. 290 (2013) (collecting recent cases recognizing differing theories for first-party and third-party claims from New York, Ohio, and Georgia).

For first-party property claims alleged to have occurred over a period of time, courts have found it is appropriate to apply a manifestation theory, under which the “loss” occurs only in the policy period in which it is manifested.

The decision in Prudential-LMI Commercial Ins. v. Superior Court, 798 P.2d 1230 (Cal. 1990) continues to be a leading one on this issue. The plaintiffs in Prudential-LMI were the owners of an apartment unit who obtained a series of “all-risk” homeowners policies from defendant insurers over a 15-year period. Id. at 1233. Upon discovering a crack in the foundation of the building, the homeowners filed suit against the four different insurers who had issued policies for the building. Id. Rejecting plaintiffs' argument that all of the insurers should share liability on a pro rata basis, the court looked to manifestation to determine which policy must respond to the claim. Id. at 1246. The court explained that this made sense from the perspective of both parties, and would benefit consumers generally.'

For the insureds, manifestation makes sense because they have the ability to protect themselves fully each time they obtain or renew their first-party property policy. Likewise, manifestation makes sense for the insurers, limiting complexity and providing predictability because the scope of the insurer's obligations encompasses only those risks discovered during the policy period. That predictability ultimately redounds to the insureds through lower premiums “because insurers will be able to set aside proper reserves for well-defined coverages and avoid increasing such reserves to cover potential financial losses caused by uncertainty in the definition of coverage.” Id. (internal quotations and citations omitted).'

In contrast, courts in a number of states apply some form of continuous trigger theory in cases involving third-party liability claims where the damage to the third-party is characterized as continuous or progressive. Under a continuous trigger theory, each policy in effect during the progressive injury may be called upon to respond. Courts applying a continuous trigger in the third-party context have focused much attention on the public policy interest in providing ample coverage to third parties harmed by the actions of the insured. See Winding Hills, 752 A.2d at 840.'

Courts Must Not Assume a Lack of Distinction

In two recent cases, federal courts applying Wisconsin law have wrongly assumed that a continuous trigger theory applies to all cases involving continuous or progressive damage. These courts have imported and relied on Wisconsin precedent arising from third-party liability matters in deciding issues relating to first-party property claims, without appropriately recognizing the fundamental distinctions between the two forms of insurance.

First, in Miller v. Safeco Ins. Co. of Am., 683 F.3d 805 (7th Cir. 2012), the plaintiff-homeowners obtained a first-party “all risks” homeowner's policy to insure a house which they later learned had major latent structural defects. Upon discovering this, plaintiffs brought suit against the insurer that had issued the homeowner's policy in effect when the full scope of the defects became apparent (even though there were indications that the homeowners were aware of the defects before that policy incepted and all parties agreed that the harm to the property had begun before that policy incepted).”

At the summary judgment stage, the district court looked to Wisconsin precedent in the third-party context without any indication that it had considered the distinctions between first-party property and third-party liability concepts. Miller v. Safeco Ins. Co. of Am., No. 06-C-1021, 2007 WL 2822011, at *5 (E.D.Wis. Sept. 27, 2007). On appeal, the insurer urged recognition of the distinction between the concepts applicable to third-party liability policies and those to be applied in the first-party context. The Seventh Circuit panel declined to draw that distinction on behalf of Wisconsin courts, noting “[w]e aren't inclined to adopt an approach that lacks support from Wisconsin case law.” Miller, 683 F.3d at 811.' That comment plainly is dicta, as the opinion goes on to conclude that “the result would be the same” regardless of whether it employed a manifestation theory or continuous trigger approach. Id. at 811.'

More recently, in a decision from the Eastern District of Wisconsin, Strauss v. Chubb Indem. Ins. Co., Nos. 11'CV'981'JPS, 12'CV'062'JPS, 2013 WL 27344 (E.D.Wis. Jan. 2, 2013), District Judge J.P. Stadtmuller, in apparent reliance on the Seventh Circuit's dicta in Miller, expressed a disinclination to recognize the bright-line distinction between first-party and third-party coverage. Id. at *5. That “disinclination” was later adopted by a Magistrate Judge as “law of the case” and the parties are currently briefing the matter on appeal to the Seventh Circuit.

The error in Miller's dicta, and in the Strauss opinion adopting that dicta, lies in the presumption that concepts from third-party liability insurance can be freely borrowed from and imported into the first-party property context. In fact, the presumption should be precisely the opposite ' concepts from different forms of insurance should not be conflated absent careful consideration and a determination on the merits that it is appropriate to do so, e.g., Allstate Ins. Co. v. Hunter, 242 S.W.3d 137, 141 (Tex. Ct. App. 2007) (noting that “commentators warn that the trigger of coverage theories for both types of insurance [first-party and third-party] should not necessarily be the same and also warn against unintentionally superimposing trigger of coverage theories in one area onto the other” and concluding that Texas would follow ample precedent recognizing the distinctions); Garvey v. State Farm Fire & Cas. Co., 770 P.2d. 704, 706 (Cal. 1989) (chiding the trial court and other California courts for “inappropriately” applying its precedent and failing to start from a premise recognizing the “important distinction between property and liability policies”).

Recognizing These Distinctions and Applying a Manifestation Theory

In the context of first-party property insurance, a manifestation theory best serves the interests of all parties, as recognized in authorities such as the seminal Prudential-LMI case and moving forward. Such benefits should not be abandoned, and certainly must not be swept aside to blindly apply a continuous trigger theory crafted in the context of an entirely distinct form of insurance coverage.

Manifestation promotes contract certainty and creates a framework in which policy premiums can be closely tied to the actual risk presented. In contrast, a continuous trigger would create the potential for the insurer to remain liable for an indefinite length of time beyond the end date of the policy period. If faced with that scenario, first-party insurers would have no choice but to respond by raising premiums to address that risk of post-policy-period liability and the unknowns such a risk presents (e.g., the potential that replacement cost for damaged property might markedly increase in later policy periods). Such impacts would carry through from insurers to their reinsurers to retrocessionaires.'

Manifestation is the majority rule in the first-party context and explicitly adopting it elsewhere would promote consistency on this key point across jurisdictions. At present, there are no jurisdictions that have broadly concluded they will apply a continuous trigger to first-party property claims. If a jurisdiction were to depart from the established norm, it would materially increase the complexity faced by insureds, brokers and insurers in placing commercial property policies that insure multiple locations nationwide. In turn, that complexity is likely to drive up premiums and costs associated with claim disputes.

Manifestation provides for appropriate compensation to the insured for the loss it sustained.' The insured is covered according to the terms of the insurance it procured to protect the values for the property it identified at the time of contracting. On the other hand, a continuous trigger in the first-party property context necessarily raises the question of how to allocate liability across policy periods to avoid inappropriate double (or triple or quadruple) recoveries. Those types of questions inevitably would lead to larger, more complex and more protracted coverage disputes.

Manifestation encourages insureds to act responsibly by, among other things, accurately identifying the values of the properties they wish to insure and monitoring them for loss or damage. A continuous trigger, however, has the potential to encourage gamesmanship. An insured might, for example, elect to intentionally under-insure in certain years (and to be selective in maintenance/inspections) knowing that they could press for coverage in policy years other than the one in which damage is discovered.

Conclusion

As courts and parties consider these questions ' or, indeed, any fundamental insurance issue ' the analysis must proceed by first acknowledging the distinctions between first-party property and third-party liability insurance, and the distinct legal precedent that has developed in each field.

Catherine A. Mondell, a member of this newsletter's Board of Editors, is a partner at Ropes & Gray LLP and has handled a wide range of complex insurance coverage disputes and other commercial litigation matters.

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Among those courts to have considered the issue of what policies respond in the context of a first-party property claim, the overwhelming majority have recognized that manifestation is the appropriate measure. Under a manifestation theory, the insurer(s) on the risk when the loss is discovered (i.e., “manifests”) is obligated to provide coverage for the entire loss, even though the physical loss or damage may take place in more than one policy period.'

In contrast, a “continuous trigger” theory, which is applied by some courts in third-party liability cases to determine what policies respond, provides that all insurers on the risk from the beginning of the loss to the time it manifests owe coverage. The considerations that sometimes lead courts to apply a continuous trigger in the third-party liability context ' chief among them, the interests of an injured third-party who had no role in negotiating the insurance policy but who may be reliant upon it for appropriate compensation ' simply do not exist in first-party property claims.'

Although there is a wide body of case law and commentary recognizing and reinforcing these distinctions under the laws of California, New York and several other jurisdictions, opinions issued in two recent cases arising in Wisconsin have erroneously assumed, without actually examining the issue, that principles applicable in the third-party liability context may be applied without modification to first-party property claims. This article reviews key principles that guide a thoughtful analysis in the first-party context when addressing physical loss or damage that may span multiple policy periods, and the issues that could arise if the first-party/third-party distinction is overlooked in favor of a one-size-fits-all approach.

First-Party Versus Third-Party

The “time-honored” differences between first-party policies and third-party policies are no less than “fundamental.” Port Auth. of N.Y. & N.J. v. Affiliated FM Ins. Co. , 311 F.3d 226, 233 (3rd Cir. 2002). The core difference is that the right to coverage under first-party versus third-party policies is based on completely distinct principles of causation. For first-party policies, causation is based on “fortuity,” i.e. , the occurrence of perils “such as lightning, wind, and explosion, which bring about the loss.” Port Auth. of N.Y. & N.J. v. Affiliated FM Ins. Co. , 245 F.Supp.2d 563, 578 (D.N.J. 2001). On the other hand, “the right to coverage in the third-party liability insurance context draws on traditional tort concepts of fault, proximate cause and duty.” Id.

Accordingly, the expectations of the parties to the two types of contracts differ significantly. These points have been recognized and thoughtfully discussed by the California Supreme Court in its decision in Montrose Chem. Corp. v. Admiral Ins. Co. , 913 P.2d 878, 887 (Cal. 1995). First-party property insurance is typically purchased in an amount sufficient to cover what is a knowable value: the cost of repairing or replacing an item of property when it is subject to direct physical loss or damage. Even in the context of a large commercial insurance program where there may be hundreds or thousands of individual properties insured, the values remain subject to quantification by both the insured and insurer and generally are a key basis on which policy premiums are calculated. In contrast, the scope of third-party liability coverage is broader. The parties to the third-party liability insurance contract do not know the extent of issues that may give rise to such future liability, nor are tools available when the policy is underwritten to quantify with any degree of certainty the associated financial exposure.

Courts also have stressed the dramatically different relationship between the insurer and the insured in the first and third-party contexts. Whereas the two “may generally be considered allies” in the third-party context, where they share a degree of common interest in defending against the claim of the third-party, in the first-party context they occupy an “adversarial position.” Port Auth. of N.Y., 311 F.3d at 233.'

Reflecting these core differences in subject matter, expectations, and the relationship between the parties to the contract, first-party policies are drafted to recognize that the physical loss or damage must occur during the policy term. Moreover, first-party policies often contain provisions requiring the insured to provide the insurer with timely notice of loss and, in the event of a dispute as to coverage, to bring any lawsuit or other proceeding against the insurer within a certain set period of time (e.g., 12 or 24 months) after the loss. Such requirements are consistent with the expectation that within a finite period after the term of a first-party property policy ends, the obligations of the parties have been fulfilled.

In contrast, third-party liability policies generally are triggered by an “occurrence” that causes “damage” or “injury” to a third party. Since any claim under a liability policy turns on a third party sustaining injury and reporting that injury to the insured, different types of wording have arisen to specify what must occur during the policy period to trigger coverage (e.g., wording that responds to “claims made” during the policy period, rather than an “occurrence” which falls during the policy period). Necessarily, notice and suit requirements in such policies differ from those in the first-party context.

Although the points above have all been noted by courts considering these issues, there is one additional difference that courts repeatedly return to in differentiating first-party and third-party insurance principles: Liability claims necessarily involve an injured third-party in need of “adequate compensation.” That consideration ' which often comprises an important public policy concern ' is not present in the first-party property context. World Trade Ctr. Props., LLC v. Hartford Fire Ins. Co. , 345 F.3d 154, 187 (2d Cir. 2003), abrogated by Wachovia Bank v. Schmidt , 546 U.S. 303 (U.S. 2006) ; see also, e.g., Winding Hills Condo. Ass'n Inc. v. N. Am. Specialty Ins. Co. , 752 A.2d 837, 840 (N.J. Super. Ct. App. Div. 2000); Great N. Ins. Co. v. Mount Vernon Fire Ins. Co. , 708 N.E.2d 167 (N.Y. 1999).

Appropriately Recognizing These Core Distinctions

Given that “[w]holly different interests are protected by the two distinct forms of coverage,” it is not surprising that most courts recognize the sharp distinctions between occurrence concepts in first-party property insurance and trigger concepts in third-party liability insurance and thus apply differing legal analysis in each situation. Port Auth. of N.Y., 311 F.3d at 233. Accord Winding Hills Condo. Ass ' n, Inc. v. N. Am. Specialty Ins. Co. , 752 A.2d 837, 841 (N.J. Super. Ct. App. Div. 2000) (collecting cases from several jurisdictions); Montrose Chem. Corp. v. Admiral Ins. Co. , 913 P.2d 878, 905 (Cal. 1995) (same); see also David P. Goodwin et al., 5-41 Appleman on Insurance ' 41.06, n. 290 (2013) (collecting recent cases recognizing differing theories for first-party and third-party claims from New York, Ohio, and Georgia).

For first-party property claims alleged to have occurred over a period of time, courts have found it is appropriate to apply a manifestation theory, under which the “loss” occurs only in the policy period in which it is manifested.

The decision in Prudential-LMI Commercial Ins. v. Superior Court , 798 P.2d 1230 (Cal. 1990) continues to be a leading one on this issue. The plaintiffs in Prudential-LMI were the owners of an apartment unit who obtained a series of “all-risk” homeowners policies from defendant insurers over a 15-year period. Id. at 1233. Upon discovering a crack in the foundation of the building, the homeowners filed suit against the four different insurers who had issued policies for the building. Id. Rejecting plaintiffs' argument that all of the insurers should share liability on a pro rata basis, the court looked to manifestation to determine which policy must respond to the claim. Id. at 1246. The court explained that this made sense from the perspective of both parties, and would benefit consumers generally.'

For the insureds, manifestation makes sense because they have the ability to protect themselves fully each time they obtain or renew their first-party property policy. Likewise, manifestation makes sense for the insurers, limiting complexity and providing predictability because the scope of the insurer's obligations encompasses only those risks discovered during the policy period. That predictability ultimately redounds to the insureds through lower premiums “because insurers will be able to set aside proper reserves for well-defined coverages and avoid increasing such reserves to cover potential financial losses caused by uncertainty in the definition of coverage.” Id. (internal quotations and citations omitted).'

In contrast, courts in a number of states apply some form of continuous trigger theory in cases involving third-party liability claims where the damage to the third-party is characterized as continuous or progressive. Under a continuous trigger theory, each policy in effect during the progressive injury may be called upon to respond. Courts applying a continuous trigger in the third-party context have focused much attention on the public policy interest in providing ample coverage to third parties harmed by the actions of the insured. See Winding Hills, 752 A.2d at 840.'

Courts Must Not Assume a Lack of Distinction

In two recent cases, federal courts applying Wisconsin law have wrongly assumed that a continuous trigger theory applies to all cases involving continuous or progressive damage. These courts have imported and relied on Wisconsin precedent arising from third-party liability matters in deciding issues relating to first-party property claims, without appropriately recognizing the fundamental distinctions between the two forms of insurance.

First, in Miller v. Safeco Ins. Co. of Am. , 683 F.3d 805 (7th Cir. 2012), the plaintiff-homeowners obtained a first-party “all risks” homeowner's policy to insure a house which they later learned had major latent structural defects. Upon discovering this, plaintiffs brought suit against the insurer that had issued the homeowner's policy in effect when the full scope of the defects became apparent (even though there were indications that the homeowners were aware of the defects before that policy incepted and all parties agreed that the harm to the property had begun before that policy incepted).”

At the summary judgment stage, the district court looked to Wisconsin precedent in the third-party context without any indication that it had considered the distinctions between first-party property and third-party liability concepts. Miller v. Safeco Ins. Co. of Am., No. 06-C-1021, 2007 WL 2822011, at *5 (E.D.Wis. Sept. 27, 2007). On appeal, the insurer urged recognition of the distinction between the concepts applicable to third-party liability policies and those to be applied in the first-party context. The Seventh Circuit panel declined to draw that distinction on behalf of Wisconsin courts, noting “[w]e aren't inclined to adopt an approach that lacks support from Wisconsin case law.” Miller, 683 F.3d at 811.' That comment plainly is dicta, as the opinion goes on to conclude that “the result would be the same” regardless of whether it employed a manifestation theory or continuous trigger approach. Id. at 811.'

More recently, in a decision from the Eastern District of Wisconsin, Strauss v. Chubb Indem. Ins. Co., Nos. 11'CV'981'JPS, 12'CV'062'JPS, 2013 WL 27344 (E.D.Wis. Jan. 2, 2013), District Judge J.P. Stadtmuller, in apparent reliance on the Seventh Circuit's dicta in Miller, expressed a disinclination to recognize the bright-line distinction between first-party and third-party coverage. Id. at *5. That “disinclination” was later adopted by a Magistrate Judge as “law of the case” and the parties are currently briefing the matter on appeal to the Seventh Circuit.

The error in Miller's dicta, and in the Strauss opinion adopting that dicta, lies in the presumption that concepts from third-party liability insurance can be freely borrowed from and imported into the first-party property context. In fact, the presumption should be precisely the opposite ' concepts from different forms of insurance should not be conflated absent careful consideration and a determination on the merits that it is appropriate to do so, e.g., Allstate Ins. Co. v. Hunter , 242 S.W.3d 137, 141 (Tex. Ct. App. 2007) (noting that “commentators warn that the trigger of coverage theories for both types of insurance [first-party and third-party] should not necessarily be the same and also warn against unintentionally superimposing trigger of coverage theories in one area onto the other” and concluding that Texas would follow ample precedent recognizing the distinctions); Garvey v. State Farm Fire & Cas. Co. , 770 P.2d. 704, 706 (Cal. 1989) (chiding the trial court and other California courts for “inappropriately” applying its precedent and failing to start from a premise recognizing the “important distinction between property and liability policies”).

Recognizing These Distinctions and Applying a Manifestation Theory

In the context of first-party property insurance, a manifestation theory best serves the interests of all parties, as recognized in authorities such as the seminal Prudential-LMI case and moving forward. Such benefits should not be abandoned, and certainly must not be swept aside to blindly apply a continuous trigger theory crafted in the context of an entirely distinct form of insurance coverage.

Manifestation promotes contract certainty and creates a framework in which policy premiums can be closely tied to the actual risk presented. In contrast, a continuous trigger would create the potential for the insurer to remain liable for an indefinite length of time beyond the end date of the policy period. If faced with that scenario, first-party insurers would have no choice but to respond by raising premiums to address that risk of post-policy-period liability and the unknowns such a risk presents (e.g., the potential that replacement cost for damaged property might markedly increase in later policy periods). Such impacts would carry through from insurers to their reinsurers to retrocessionaires.'

Manifestation is the majority rule in the first-party context and explicitly adopting it elsewhere would promote consistency on this key point across jurisdictions. At present, there are no jurisdictions that have broadly concluded they will apply a continuous trigger to first-party property claims. If a jurisdiction were to depart from the established norm, it would materially increase the complexity faced by insureds, brokers and insurers in placing commercial property policies that insure multiple locations nationwide. In turn, that complexity is likely to drive up premiums and costs associated with claim disputes.

Manifestation provides for appropriate compensation to the insured for the loss it sustained.' The insured is covered according to the terms of the insurance it procured to protect the values for the property it identified at the time of contracting. On the other hand, a continuous trigger in the first-party property context necessarily raises the question of how to allocate liability across policy periods to avoid inappropriate double (or triple or quadruple) recoveries. Those types of questions inevitably would lead to larger, more complex and more protracted coverage disputes.

Manifestation encourages insureds to act responsibly by, among other things, accurately identifying the values of the properties they wish to insure and monitoring them for loss or damage. A continuous trigger, however, has the potential to encourage gamesmanship. An insured might, for example, elect to intentionally under-insure in certain years (and to be selective in maintenance/inspections) knowing that they could press for coverage in policy years other than the one in which damage is discovered.

Conclusion

As courts and parties consider these questions ' or, indeed, any fundamental insurance issue ' the analysis must proceed by first acknowledging the distinctions between first-party property and third-party liability insurance, and the distinct legal precedent that has developed in each field.

Catherine A. Mondell, a member of this newsletter's Board of Editors, is a partner at Ropes & Gray LLP and has handled a wide range of complex insurance coverage disputes and other commercial litigation matters.

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