Bankruptcy Treatment of Deductibles and Self-Insured Retentions: Insurer and Debtor Rights and Obligations

This CLE webinar will review the rights and obligations of debtors and insurers when claims exist or have been made against a debtor with a self-insured deductible that it has not and cannot pay.

Many businesses manage risk and the cost of insurance with high deductibles or self-insured retentions. This approach is often attractive to policyholders that expect a large number of smaller claims, such as restaurants and retailers.

Whether there is coverage if these companies file bankruptcy and cannot pay the SIR or deductible depends on many variables: whether the policy is a guaranteed-cost or a loss-sensitive one; when coverage is triggered; whether only claims above a certain threshold are covered; and more.

If coverage does not exist until an SIR is satisfied, and the debtor cannot pay, courts differ regarding the effect on the insurer’s duty to defend/and or indemnify. Assuming an insurer does pay claims for which a deductible or SIR was not satisfied in accordance with the policy, bankruptcy courts vary on how they classify and treat the claim.

Listen as this experienced panel helps clarify the often confusing rights and obligations of debtors in bankruptcy and insurers when claims exist or have been made against a debtor with a self-insured deductible that it has not and cannot pay.