Weigh your Options before Suing Insurers

Litigation partner David Klein says the pros include increasing pressure on insurers, which can result in a high dollar settlement, and securing a favorable forum to handle the dispute if the company sues before its insurers do.

Klein says the cons include litigation expense, the possibility of not recovering anything from the insurer if the case is lost and the difficulty settling once a lawsuit is filed.

“You want to be very thoughtful, particularly about pursuing bad-faith” litigation, Klein said. “The truth of the matter is 99 percent of the coverage lawsuits above a certain dollar amount do end up in settlement because no one wants to be responsible for losing that $100 million case on either side. But when you accuse someone of bad faith, you make them your enemy, at least for a while, and you make the hurdles to settlement more difficult.”