December 11, 2012 Articles

The Impact of Insolvent, Bankrupt, or Defunct Insureds

Payment of deductibles or self-insured retentions is the most significant financial implication for a professional-liability insurer when its insured cannot meet obligations under the policy.

By Wendy Keenan

On an increasingly frequent basis and undoubtedly due to the current economic climate, insureds plead poverty and insist to their insurers that they do not have the wherewithal to meet the financial obligations specified in their professional-liability policies. Some of these insureds simply claim that they are insolvent, while others have already filed for bankruptcy protection. In more extreme situations, insurers discover that their insured is defunct, and consequently, not only will financial obligations not be satisfied but also there is no one to assist with the defense of the claim.

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