Policyholder Pulse
In my December 18, 2017, blog post, I wrote about “choosing the right path” to settle complex insurance claims and emphasized the benefits of private structured negotiation, a type of negotiation undertaken without the assistance of mediators. At that time, I identified mediation as “a good potential next step.” Since 2017, the world has suffered through a pandemic, and it has become apparent to me that private settlement discussions can sometimes become discoverable in litigation, even if compromise communications are not permitted in evidence. In the wake of these developments, what I previously counseled as a good potential second step is now in my view the proper first step in most cases. Notwithstanding, while mediation has many benefits, its efficacy depends on identifying the right mediator, selecting the right timing and format (now, likely virtual), and making sure that any settlement reached in mediation does not later unravel.
Even if an insurance company attempts to deny its coverage obligations, there are still processes that a policyholder can explore, short of litigation, that could resolve a coverage dispute. Appraisal is an alternative dispute resolution process designed to efficiently resolve measurement disputes between policyholders and their insurers. Appraisal can streamline a coverage lawsuit and narrow the disputed issues—it may even limit the need for expert reports and depositions. There is a strong 
As coverage counsel, we see the situation arise time and again: facing down substantial potential liability in a pending lawsuit, a policyholder engages in good-faith settlement discussions with the plaintiff. After animated negotiations between the parties, the plaintiff finally makes a reasonable offer, only for the policyholder’s insurance carrier to throw up a roadblock by refusing to fund or consent to the settlement. But policyholders need not always resign themselves to continuing costly and time-consuming litigation—a “covenant not to execute” may be the switch to put the settlement back on track.
