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Vol. 7 - Issue 9
December 19, 2018


Study: Insurers Win 80-90% Of Federal Court Liability Coverage Cases


I’ve reviewed the Lex Machina (a Lexis company) 2018 Insurance Litigation Report published in October.  The 24-page report contains a staggering amount of information and statistics – some of it eye-glazing -- concerning the 93,000 federal district court coverage cases filed between 2009 and 2017. 

The report goes well-beyond business liability cases.  It also includes information concerning  life insurance, auto, UM/UIM and homeowners (hurricane and non-hurricane).  The report excludes cases involving interpleader, surety bonds, subrogation, Medicare, Social Security and ERISA. 

I list below some of the findings that I believe will be of most interest to CO readers.  The upshot of the Lex Machina report is that it clearly provides data for both insurers and insureds to consider when deciding to go down the litigation road -- as well as how far to proceed.    

  • The number of business liability cases filed, between 2009 and 2017, has hovered around 3,000 per year (closer to 2,500 for the past three years).
  • In cases with a duty to defend finding, 80% are in favor of insurers (case terminations 7/1/14 to 6/30/18).
  • In cases with a duty to indemnify finding, 85% are in favor of insurers (case terminations 7/1/14 to 6/30/18).
  • Where the issue was the existence of an “occurrence,” the court found no occurrence about two-thirds of the time.
  • In cases involving bad faith (case terminations 7/1/14 to 6/30/18), 90% found no bad faith on the part of the insurer (with about 75% resolved by summary judgment); at trial, bad faith findings were close to evenly split, with insurers winning slightly more.  
  • While insurers won a lot more cases than they lost, that’s not to say that policyholders did not obtain coverage.  About two-thirds of cases involving business liability policies were resolved by a dismissal, which Lex Machina concludes was the likely result of a settlement (case terminations 1/1/09 to 6/30/18)
  • For four jurisdictions the report looks at the median number of days for a case to reach summary judgment (case terminations 7/1/14 to 6/30/18): C.D. Calif.: 343; S.D. Tex.: 475; S.D.N.Y.: 524; N.D. Ill.: 567.


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