The mediation of insurance and risk transfer disputes involves interpretation of contracts and insurance policies, challenging legal issues, and the interests of multiple stakeholders. Such mediations are not just a matter of exchanging numbers. For parties, how do you advocate your position while, at the same time, exploring settlement? For a mediator, how do you navigate through such specialized advocacy and find common ground? So, in third-party claims, for example, indemnity agreements are often at play. And the so-called “underlying” lawsuit often has coverage issues that pose a principal impediment to settlement. Those are “coverage disputes” too. The dynamics of each case will dictate some strategies, but successful mediations of these cases have several things in common.

II. What Are “Coverage Disputes?”

Coverage disputes are not just about an insurance policy. Disputes also involve other forms of risk transfer, such as indemnity agreements. And often there are factual questions of where the fault actually lies or how the injury or damage relates to the scope of work for each party. Failure to appreciate the broad scope of what lawyers and judges informally call in short-hand a “coverage dispute” can be the first strike that could doom the mediation on an insurance or risk transfer dispute. Knowing the scope of your coverage or risk transfer case can affect when to mediate and even who the participants should be. Obviously, whether a loss is covered under an insurance policy is a “coverage dispute.” And, broadly, it sometimes includes related extra-contractual claims against a carrier. But, it also includes when a third-party may be involved because of an underlying lawsuit—which creates the context in which coverage issues are considered. The key is to remember that the simple phrase “coverage dispute” is part of a broader business concept of risk transfer.

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