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Vol. 5, Iss. 9
September 7, 2016

Update From The Reporters On The ALI Restatement Of Liability Insurance
(And A Chance For Newcomers To Get On Board)


It has now been almost two years since the American Law Institute did a switcheroo and converted its Principles of the Law of Liability Insurance to the Restatement of the Law of Liability Insurance. Just a one word change – but an impact that speaks volumes. So what’s been happening with the project of late? To find out I checked-in with the Restatement’s Reporters – Professor Tom Baker of Penn Law School and Professor Kyle Logue of Michigan Law. The Reporters were kind enough to send me an informative letter for Coverage Opinions readers, which I set out here.

When it comes to the Restatement project, it is a tale of two citizens. I have seen some in the liability coverage world who are very knowledgeable about it – both substance and status -- and others who know very little. For those not familiar with the project, it may seem a daunting task to get up to speed so late in the game. Kind of like tuning in to an episode of Dateline when it’s halfway over. You know someone was killed, and you know the husband is the prime suspect, but you’ve missed the first four twists and turns in the story.

For those in this camp, Tom and Kyle’s update offers one-stop shopping to get familiar with the project, while also being enlightening for those more familiar with the project. I appreciate Tom and Kyle taking the time to put together this thorough update.

Dear Randy,

Thank you for asking for an update about the progress of the Restatement of the Law, Liability Insurance (RLLI). We’re pleased to report that the project is progressing on the schedule we laid out to you in the update last summer.

The RLLI has four chapters. Chapter 1 addresses contract law doctrines with special importance in the insurance context: interpretation, waiver and estoppel, and misrepresentation. Chapter 2 addresses duties relating to the management of potentially insured liabilities: defense, settlement, and cooperation. Chapter 3 addresses general principles of the risks insured: coverage topics such as trigger; the application of exclusions and conditions; and topics related to limits, multiple insurers, and allocation and contribution. Chapter 4 addresses topics related to enforceability and remedies, including bad faith.

The ALI approved the “Tentative Draft” of all of Chapters 1 and 2 and most of Chapter 3 at the May 2016 Annual Meeting. That draft is available in electronic format for a nominal charge on the ALI webpage at this link, where it is called Tentative Draft No. 1 (Restatement 2016). There were a few amendments to this draft at the May meeting, so the final version will be somewhat different, mostly in tiny ways. We ran out of time for discussion at the Annual Meeting just before tackling allocation, so the discussion of the RLLI at the meeting next May will begin with that topic.

In the meantime, we will be finishing up the rest of Chapter 3 and Chapter 4. We will be distributing a draft of these final parts of the RLLI to our Advisers and Members Consultative Group in September and discussing that draft with them in October. The list of the participants in those two groups appears at this link. This is a serious group of insurance practitioners, academics, and judges, so we are getting excellent, well-informed feedback on the drafts.

The plan is to bring these remaining parts to the ALI Council (a truly all star body) for approval in January 2017 and then to the membership for approval at the Annual Meeting in May 2017. In our experience there always are some revisions after the Annual Meeting, so fall 2017 is the earliest that we can expect the truly final RLLI to go to the printer, and it is certainly possible that there will be some issues that will require going back to the Council and the Annual Meeting one more time. If that happens, final approval would not be until May 2018. Restatements are not an overnight project! Readers who would like to see the ALI’s description of how the Restatement process works should look at this link.

Early on we made a decision to focus on topics that apply to all or most kinds of liability insurance, and not to try to address specialized questions that affect only one or two kinds of liability insurance. We’re very pleased with that decision, and not just because it means devoting only seven years to the project instead of twenty. Focusing on general topics means that we have the opportunity to identify the coherent core of liability insurance law and to present it in a manageably-sized volume that explains the most important liability insurance law rules without being too overwhelming. Only history will tell, but we think that the RLLI will be useful to judges, lawyers, and law students, and liability insurance law will be more coherent and predictable as a result. The feedback we’ve received from academic colleagues is that the drafts have already proven useful in teaching and Tom reports that he wished there had been a restatement to consult when he began practicing insurance law in the 1980s.

For people who would like to hear about the project in person, we will be going on the road a bit this year to talk about the project. Tom will be at the DRI insurance coverage event in New York in December and the TTIPS insurance coverage meeting at the Arizona Biltmore in February. Both Kyle and Tom will both be at a San Francisco event the first week in January that will be hosted by Orrick and open to the public. We hope to see many of your readers at these events.

Thank you again for your interest and your efforts to keep insurance practitioners informed about the RLLI. We look forward to seeing you at the Members Consultative Group meeting in October.

Tom Baker and Kyle Logue

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