May 28, 2019 Articles

The Burden to Allocate Settlement Funds

As social engineering schemes have grown and evolved, so too has the body of case law addressing whether crime coverage policies provide coverage to insureds who fall victim to email fraud

by Christina Culver and Cy Haralson

A common issue that can arise in contentious coverage disputes—especially those with multiple parties and multiple underlying claims—is what to do with settlements that the insured recovers from other parties for the claimed loss or settlements that the insured enters into without the insurer’s participation. A recent case out of the Fifth Circuit, Satterfield & Pontikes Construction, Inc. v. U.S. Fire Insurance Co., showcases a number of issues and arguments regarding a general contractor’s burden to allocate settlements it received from subcontractors between covered and uncovered damages owed to a plaintiff property owner. A number of other recent cases from around the nation highlight basic principles of allocation jurisprudence in the context of an insured seeking indemnity for settlements it has entered into with injured third parties.

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