August 31, 2018 Feature

Does Counterclaim Litigation Exhaust a SIR? The Visionaid Effect

By Eric Hermanson

An insured—say, an excavation contractor—arranges an excess policy with a cost-erosive self-insured retention (SIR) of, say, $1M per occurrence. Problems develop on a job. The owner says the contractor’s poor work has damaged a neighbor’s property. The owner sues the contractor. It also holds back payment under its contract, to offset the cost of resolving the neighbor’s claim and redoing other poor work it says the contractor performed.

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