Insurance 101: Insurer Intervention—How, Why, and When

An insurer’s reservation of rights letter properly notifies an insured that certain policy provisions ultimately may bar or limit coverage for a claim against the insured, depending on further factual development. It may take further effort by the insurer, however, to ensure that the relevant facts are determined. In particular, an insurer may need to take action so that damages are allocated between covered and non-covered claims. Different jurisdictions provide varying mechanisms for an insurer to clarify the facts relevant to apportionment of any damages that may be awarded. One such mechanism is permissive intervention. This article explains how intervention can be accomplished, the reasons militating in favor of intervention, when an insurer might intervene in the underlying action, and potential pitfalls if an insurer ignores proper intervention procedures.