Insurance coverage disputes generally involve a dispute over whether a claim falls within the scope of the grant of coverage or an exclusion of the policy. Accordingly, discovery typically is one-sided because the only evidence needed, other than the policy, is evidence that the claim falls within the scope of the policy language. This evidence is generally in the possession of the insured, which often leaves it with the costs and burden of doing the bulk of document searching and production. It also can weaken the policyholder’s ability to gain settlement leverage during the discovery phase because the policyholder is not gaining evidence to dismantle the insurer’s argument and because the insurer has less of an incentive to resolve the dispute during discovery if it is not being burdened with discovery costs.
However, sophisticated policyholders, with the guidance of experienced coverage counsel, understand the importance of propounding discovery on the insurer both to clarify the issues and arguments in the litigation and to create settlement leverage needed to resolve the case without prolonged litigation. This is particularly the case when the coverage dispute revolves around the meaning of key policy language, either a coverage grant or an exclusion, as is often the case. When the meaning of the policy language is disputed, the deposition of the insurer’s underwriters, and thus the documents related to underwriting, are likely to become a focal point of discovery requests and motions to compel. The discovery of information or documents related to underwriting of the policy typically involves the following: