Second Wave Allocation Issues: SIRs, Deductibles, Exhaustion, and More
Timothy R. Sullivan
McCormick Barstow LLP
Donna J. Vobornik
Dentons US LLP
Alex E. Potente
- Policy years with insolvencies
- SIRs and deductibles
- Differences between SIRs and deductibles
- Exhaustion of same
- Key question for policyholders – how many SIRs do they pay?
- Bankruptcy considerations
- Number of occurrences
- Non-cumulation clauses
- Horizontal exhaustion – exhaustion by layers (primary vs. excess)
- Who is responsible for gaps as coverage in a given layer exhausts?
- Lincoln Electric
- White space (i.e. underinsured years due to exhaustion or failure to buy enough coverage)
- Stacking issues
- Types of policies that can be stacked
- Impact of SIRs, deductibles, etc.
- Issues that can arise as policy layers exhaust
- How do you prove exhaustion of underlying coverage?
- What do you do when excess insurers refuse to acknowledge exhaustion?
- Who controls the defense when some coverage is primary and the rest is excess or exhausted with no defense duty?