Treatment of Self-Insured Retentions in Bankruptcy
When an insured files a bankruptcy case, disputes involving insurers, insureds, and claimants can arise when the insured is unable satisfy the self-insured retention (SIR) on its liability policy. In that situation, insurers often argue that they are relieved of their coverage obligations to judgment creditors because payment of an SIR is a condition precedent to coverage. Whether a debtor’s failure to satisfy an SIR relieves the insurer of its coverage obligations often depends on the relevant policy language, state law, and public policy. This article discusses some of the key decisions in which courts have addressed this issue.
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“Treatment of Self-Insured Retentions in Bankruptcy,” by Seth D. Lamden was published in IRMI Insurance Law Essentials Deep Dives in November 2021. Reprinted with permission.