Bullet-Proof Insurance Coverage Opinions – Part II

In Part I of this post we looked at the beginnings of a good coverage opinion – clear identification of the issues, and a comprehensive matrix of facts upon which the coverage opinion is based.  In Part II, we examine the remaining building blocks of a bullet-proof coverage opinion.

 Include The Policy Provisions At Issue

In order to launch into the meat of the coverage opinion, the applicable provisions of the policy should be included in the coverage opinion.  I prefer to actually “snapshot” .pdf cuts of the actual policy terms into the body of the opinion so that the reader sees not just the provision, but how it appears in the policy.  This is by no means mandatory, but verbatim inclusion of the policy provisions at issue is, however.

The opinion writer should take care to not only produce coverage terms, but applicable exclusions, and exceptions to the exclusions, so that all of the tools are in full view of the reader.

Analysis and Discussion of Applicable Law

There is nothing totally new under the sun, which means more likely than not the policy provision on which outside counsel is providing opinion has been interpreted in prior opinions.  These prior rulings provide the important, and in some cases binding, context in which the applicable policy terms will be viewed.

Any judicial guidance of the same or similar coverage issues  is useful, but the best guidance comes in the form of cases with similar factual backgrounds (yet another reason for a comprehensive discussion of the known facts near the top of the coverage opinion).   While the opinion writer needn’t necessarily provide an answer to the coverage question in this phase of the opinion,  good analysis of applicable law may start to orient and point the reader in the direction the opinion is going to read.  As we said, there is nothing really new under the sun.

While jurisdictional case law is obviously ideal, outside counsel should also include opinions from other jurisdictions which bear factual similarity to the coverage analysis  being undertaken.

Tying It Together: Legal Analysis and Opinion

With the groundwork laid, outside counsel can now gather all of the materials she has collected in the opinion, and provide a logical analysis of the coverage question presented to outside counsel by the client.  The conclusion of the opinion letter should be the culmination of the facts, the policy provisions implicated, and the applicable law.

This is not the time for surprise endings:  a good coverage opinion will logically flow to the conclusions drawn.  Conclusions which are incongruent with anything that has come before, whether it be the facts, the policy provisions, or the law, is a sign that something is amiss, either with the predicates to the conclusion, or the conclusion itself.  It is not the kind of disconnect a client is looking for, so during the draft phase, the inconsistencies must be reconciled for the opinion to be reliable.

Going The Extra Mile:  Providing for Contingencies

The best outside coverage lawyers anticipate the needs of their clients.  They also recognize, in cases where investigation is ongoing, that further developments might impact the opinion.  Such possibilities should be included in the coverage opinion, so that the client knows how the validity of the opinion could be impacted by newly developed facts.  It is also a good reminder to the legal department requesting the opinion that the process is a fluid one, and an updated opinion might be the best course after new, significant information is learned.

Insurance company legal departments want solid coverage opinions which will withstand scrutiny of not just themselves, but others should that become necessary down the road.  For that reason, a comprehensive statement of facts, of the applicable policy, and of the relevant law should be provided.  The analysis of coverage and conclusion should flow from these elements, and the client should be notified that there may be contingencies in an ongoing investigation which could impact the opinion, requiring supplementation.

Author: CJ Haddick

C.J. Haddick is a Director with the law firm of Dickie, McCamey, & Chilcote, PC, based in Pittsburgh, Pa. He has advised and represented insurers in insurance coverage and bad faith litigation for more than three decades, and written and spoken throughout the United States on insurance coverage and bad faith prevention and litigation. He is Managing Director of the firm's Harrisburg, Pa. office. Reach him at chaddick@dmclaw.com or 717-731-4800. View all posts by CJ Haddick