Alternative dispute resolution (ADR) has been controversial since its inception more than 30 years ago. To date, most of the debate has focused on the effect of ADR on the particular kinds of disputes that are viewed as raising public policy concerns. For example, scholars have expressed concerns about the use of ADR in disputes between parties with unequal bargaining power, such as consumer contracts of adhesion and tort claims brought by indigent plaintiffs against corporations, or those addressing issues with widespread public impact, such as school desegregation or antitrust cases. In the context of complex commercial litigation, such as insurance coverage disputes, however, ADR is not typically viewed as implicating public policy concerns.
This article addresses a largely overlooked issue of public concern arising from insurance coverage ADR (or ADR in connection with analogous complex commercial transactions): the depletion and impoverishment of the body of common-law that practitioners rely on to guide the resolution of coverage disputes and provide certainty to insurance transactions. As more insurance coverage disputes are resolved privately and confidentially, the number of published cases addressing policy interpretation and other coverage issues necessarily dwindles. Yet, private decision makers rely on the body of common-law decisions when resolving disputes, and policyholders and insurers rely on it when determining the extent of the coverage being purchased and agreeing on an appropriate price for that coverage. The solution to this dilemma is far from clear, but this article explores a policyholder’s best options given these circumstances.