May 2007
Coverage Litigation Should Be Stayed to Avoid Prejudice to the InsuredBy Linda Kornfeld
More and more often insureds are being forced to litigate with their insurers to protect rights under insurance policies, while at the same time those insureds must actively defend against the very litigation for which they seek insurance coverage. Indeed, insurers often will pursue litigation against their insureds to establish the absence of any coverage obligation if there appears to be a question regarding the existence of a defense or indemnity obligation with respect to underlying litigation. Alternatively, due to potentially applicable statutes of limitation, or a need to seek judicial intervention to force an insurer to assist in an underlying defense for which the insurer has refused coverage, an insured may be required to file coverage litigation before underlying litigation is concluded.
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