Procedural Issues in the Coverage Suit After Judgment or Settlement: Garnishing Insurance Policies

August 25, 2000

The purpose of insurance is to shift the risk. All too often it seems, however, the insured finds itself either without a defense or without indemnity for risks it believed were covered, and for which it now faces liability either through judgment or settlement. The problem the insured faces is how to limit its liability for the total judgment or settlement by collecting the policy proceeds and any other relief that it may be due as a result of its insurer’s wrongful breach of the duty to defend or indemnify.
This article suggests a few procedures or devices through which the insured may shift the burden of paying all or a portion of the settlement or judgment back to the insurer. Some of the options described herein may also shift the burden of collecting the policy proceeds to the claimant, rather than the insured, adding further protection to the insured’s assets and allowing the claimant to proceed directly against the insurer without fear of "Mary Carter."

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