Tell It Like It Is: The ALI’s Liability Insurance Law Project Will Be Converted To A Restatement
The ALI has converted its Principles of the Law of Liability Insurance project to a Restatement of the Law of Liability Insurance. This is a significant change. Restatements codify the law as it exists. Principles declare what the law should be.
Insurers should welcome this development, because some sections of the ALI’s tentative draft of the Principles took a minority position favorable to policyholders. For example, under Section 21 of the Principles, a breach of the duty to defend would eliminate any right to contest coverage, although the insurer could still contest the reasonableness of a settlement. This is the law in a minority of states – the majority permit an insurer in this position to contest coverage, sometimes shifting the burden of proof or imposing other limitations. Presumably, the ALI will now revisit those sections of the project so that they describe the law as it is rather than recommend changes.
I previously blogged about some of the more significant sections of the proposed Principles of the Law of Liability Insurance.
Posted In: Policy Construction