Similar to its Plaintiff Contract Litigation Insurance (PCLI), the new Defendant Contract Litigation Insurance (DCLI) program is designed to insure defendants in contractual lawsuits against the risk of paying their adversaries' attorneys fees if unsuccessful in defending against a breach of contract claim.
“Loser Pays” provisions and statutes are on the rise in the U.S. Also, in many states, plaintiffs have a mandatory statutory right to recover attorneys' fees in contract disputes, and according to Sonoma Risk, contracts between businesses and even individuals are increasingly including these provisions.
“The financial liability of paying your adversary’s legal fees is a serious concern,” said Craig Fundum, president of Programs & Direct Markets for Zurich's North America Commercial business. “The Bureau of Justice Statistics recently reported that, on average, two out of three defendants in contract cases lose at trial. This policy is intended to help mitigate the risk of an adverse judgment.”
Both defendant and plaintiff contract litigation insurance can offer a variety of benefits to businesses and individuals some of which might include:
* Reduced financial risk exposure
* The ability for companies and individuals to pursue strong claims that otherwise may be abandoned due to potential financial liability
* The ability for general counsels and business owners to budget litigation costs more effectively
To provide the maximum amount of flexibility to businesses and individuals, the defendant contract insurance can be applied for 60 days from the date a defendant is served with a complaint. The policy coverage period matches the duration of the litigation and is triggered when the plaintiff prevails at trial or if a summary judgment is issued against the defendant.
“Zurich has been invaluable in helping us meet the strong demand we’ve seen since day one for our policies,” said Kevin Martin, founder and CEO of Sonoma Risk. “Now with both plaintiff and defendant policies, companies and individuals can be protected from paying their adversary’s legal fees – allowing them to pursue cases based on merits, not just financial concerns.”
According to Damiano Servidio, head of Professional Services for Zurich’s Programs unit, Zurich accelerated the introduction of the DCLI Program in response to the legal community’s strong receptivity to the PCLI program and their subsequent demand for a program to cover a defendant in contract litigation.
“Based on the needs expressed by the legal community for a defendant policy, we expect a strong demand for Defendant Contract Litigation Insurance, particularly because defendants in lawsuits have less control over the prosecution, and, according to the Bureau of Justice Statistics, face a greater chance of losing at trial,” said Servidio.
“Because the professional and ethical responsibilities demanded of attorneys to thoroughly assess the strengths, weaknesses and uncertainties of their clients’ cases, many in the legal community have quickly adopted discussing the benefits of contract litigation insurance as a best practice,” Fundum added. “There is simply a greater necessity today for attorneys to be sensitive to the financial risk exposure of their clients, which is something our insurance program is designed to address.”
For more than 50 years, Zurich in North America’s Programs business has provided specialized insurance to commercial and professional markets through qualified program administrators. To learn more about Zurich’s Programs business, go to http://www.zurichna.com/programs.
For more information about Sonoma Risk, go to http://www.sonomarisk.com. Attorneys or litigants interested in receiving a quote should contact a Sonoma Risk litigation insurance specialist at 888-388-7742.
Policy issued by a member company of Zurich in North America. This coverage is offered only in certain jurisdictions and can be purchased only on a surplus lines basis from a licensed surplus lines producer. The description here is a summary only. It does not include all terms, conditions and exclusions of the policies and coverages described.
About Zurich
Zurich in North America is a part of Zurich Financial Services Group (Zurich), an insurance-based financial services provider with a global network of subsidiaries and offices in North America and Europe as well as in Asia Pacific, Latin America and other markets. Founded in 1872, the Group is headquartered in Zurich, Switzerland and employs approximately 60,000 people serving customers in more than 180 countries, including more than 9,500 employees in North America.
Zurich entered the U.S. market in 1912.According to Highline Data LLC (NAIC 2008), Zurich in North America (www.zurichna.com) is the second-largest writer of commercial general liability insurance and the fourth-largest commercial property-casualty insurance company, serving the global corporate, large corporate, middle market, specialties and programs sectors. Zurich's risk engineering services in the United States are provided by Zurich Services Corporation.
About Sonoma Risk
Sonoma Risk is dedicated to providing innovative and affordable litigation insurance to individuals, businesses and corporations. Its policies are underwritten by the companies of Zurich in North America, a leading global insurance carrier.
Based in Los Angeles, with regional offices planned for the Midwest, Southwest, Southeast and Northeast, Sonoma Risk is comprised of a skilled management team of seasoned professionals within the legal and insurance industries.