Insurance Coverage Litigation
Second Edition

By Eugene Anderson, Esq., Jordan S. Stanzler, and Lorelie S. Masters, Esq.

TABLE OF CONTENTS
Preface xxxv
Acknowledgements xxxix

CHAPTER 1 AN INTRODUCTION TO STANDARD-FORM GENERAL LIABILITY INSURANCE 1-1
§1.01 Introduction 1-3
§1.02 Standardization 1-7
          [A] Revising and "Saleability" 1-16
          [B] Effects of Standardization 1-18
§1.03 The Drafting Process: Improvements and Clarifications 1-20
§1.04 Origins of "Comprehensive" Coverage 1-22
           [A] Benefits and Selling Points of Comprehensive Coverage 1-25
           [B] Drafters of the Standard-Form Policy 1-30
§1.05 Insurance Coverage for Gradual Injury 1-31
§1.06 Insurance Coverage Under Multiple Insurance Policies 1-34
§1.07 Broad Insurance Coverage for Bodily Injury 1-35
§1.08 Broad Insurance Coverage for Loss of Use 1-36
§1.09 The Sudden-and-Accidental Pollution Exclusion 1-37
§1.10 Insurance Coverage for Business Torts 1-38
§1.11 Post-1985 Comprehensive General Liability Insurance Policies 1-39
§1.12 Anatomy of an Insurance Policy 1-42
           [A] The Declarations 1-42
           [B] Who Is an Insured 1-43
                      [1] Additional Insureds 1-45
                      [2] Exclusions 1-48
                      [3] Anti-Indemnity Statutes 1-49
                      [4] Causation and Negligence 1-49
                      [5] The "Other Insurance" Problem 1-50
                      [6] Certificates of Insurance 1-51
                      [7] Coverage for Additional Insureds 1-51
                      [8] Coverage Under Additional Insured Endorsements 1-52
                      [9] Extent of Additional Insured's Coverage 1-57
                      [10] Effect of "Other Insurance" Clauses 1-57
           [C] The Limits of Insurance 1-59
           [D] The Coverages 1-61
           [E] Exclusions 1-63
           [F] Definitions 1-64
           [G] Conditions 1-65
§1.13 Self-Insurance 1-65
           [A] Captives 1-67

CHAPTER 2 RULES OF INSURANCE POLICY INTERPRETATION 2-1
§ 2.01 Introduction: Insurance Policies as Contracts of Adhesion and Modern
           Contract Theory 2-3
           [A] The Textual Approach 2-7
           [B] Modern Contract Theory 2-9
§2.02 The Purpose of Insurance 2-21
§2.03 Plain and Ordinary Meaning 2-24
§2.04 Ambiguity Construed Against the Drafter 2-28
§2.05 The Reasonable Expectations Doctrine 2-36
           [A] Varied Applications 2-44
§2.06 Use of Evidence Outside the Insurance Policy to Interpret the Meaning
           of an Insurance Policy Term . 2-49
§2.07 Evidence of Trade Usage, Course of Dealing, and Course of Performance 2-57
           [A] Trade Usage 2-57
           [B] Course of Dealing and Course of Performance 2-59
§2.08 Varieties of Evidence 2-60
           [A] Regulatory History 2-67
           [B] Advertising and Promotional Materials: Elements of the "Contract" 2-68
           [C] Inconsistent Positions 2-70
           [Dl Other Documentary Evidence 2-70
           [El Expert Testimony 2-73
§2.09 Arguments for Relaxing the Contra Proferentem Doctrine 2-76
           [A] Rules for Interpreting Insurance Policy Terms Drafted by the
                  Policyholder 2-77
           [B] The "Sophisticated Policyholder" Defense 2-78

CHAPTER 3 INSURANCE COMPANY'S DUTY TO DEFEND AND PAY DEFENSE COSTS AND DUTY TO SETTLE 3-1
§3.0l Introduction 3-3
           [A] The Duty to Defend and the Duty to Pay Defense Costs 3-4
           [B] Contents of This Chapter 3-7
§3.02 The Potential-for-Coverage Standard 3-9
           [A] Groundless, False, or Fraudulent Claims 3-15
           [B] Multiple Claims, Some Covered, Others Not 3-18
           [C] Environmental Cases 3-25
           [D] Pre-Tender Defense Costs 3-30
§3.03 Use of Extrinsic Facts to Determine an Insurance Company's Duty to
           Defend 3-34
§3.04 Insurance Company's Duty to Investigate 3-40
§3.05 Resolution of Doubts Regarding the Insurance Company's Duty to Defend 3-45
§3.06 Disclaimers of Liability and Reservations of Rights 3-51
           [A] Reservation of Rights 3-53
           [B] Disclaimers of Liability 3-56
                    [1] Effect of Failure to Assert Defenses with Specificity in
                          Disclaimer 3-57
                    [2] Timeliness of Disclaimer 3-60
                    [3] Liability for Costs of Settlement or Judgment 3-65
                    [4] Estoppel or Waiver When Insurance Company First Accepts,
                          But Later Attempts to Disclaim, Coverage 3-68
§3.07 Right to Independent Counsel 3-69
§3.08 Effect of Insurance Company's Erroneous Refusal to Defend 3-76
           [A] Recoverable Damages 3-78
           [B] Loss of Rights Under the Insurance Policy 3-82
§3.09 Duty to Defend upon Exhaustion of Indemnity Limits 3-89
           [A] The Unlimited Duty to Defend: Defense Clauses 3-89
           [B] Decisions Construing Pre-1966 Form Language 3-90
           [C] Decisions Construing 1966 Form Language 3-92
                      [1] Showing of Prejudice Required 3-95
                      [2] Cases Finding a Failure to Cooperate 3-98
                      [3] Waiver of Right to Rely on Defenses if Coverage Denied 3-99
§3.10 Effect of Coverage Defenses on the Insurance Company's Duty to Defend 3-101
           [A] Allegations of Fraud in the Procurement - 3-104
           [B] Other Coverage Defenses 3-107
§3.11 Direct-Action Statutes 3-110
           [A] Louisiana 3-111
           [B] Wisconsin 3-113
           [C] Puerto Rico 3-113
           [D] Guam 3-115
           [E] Use of Direct-Action Statutes Against Reinsurers 3-116
§3.12 Allocation of Defense Costs 3-117
           [A] Case Law Refusing to Prorate Defense Costs to the Policyholder 3-118
           [B] Case Law Apportioning Defense Costs to the Policyholder 3-123
           [C] Apportionment of Defense Costs Among Insurance Companies 3-126
§3.13 Insurance Company's Duty to Settle 3-130
           [A] Basis of Duty in the Implied Covenant of Good Faith and Fair
                  Dealing 3-131
           [B] Settlement of a Claim by the Insurance Company Without the
                  Policyholder's Consent 3-134
                      [1] Prejudice Requirement 3-136
           [C] Policyholder Need Not Prove Its Own Liability - 3-144
                      [1] Claims in Mass Tort Cases 3-148
                      [2] Public Policy 3-150
Exhibit 3-1 A Policyholder's Checklist: Responding to Reservation of Rights 3-151

CHAPTER 4 TRIGGER OF COVERAGE 4-1
§4.01 Background
           [A] Introduction: The General Rule and Coverage Under Multiple
                  Policy Periods 4-5
                      [1] Policy Language 4-6
                      [2] Repeated and Progressive Injury Cases 4-9
           [B] Drafting History: Coverage Under Multiple Policies; Rejection of
                  Alternative Trigger Theories 4-15
                      [1] The 1966 CGL Program: Clarification of Coverage for
                            Gradual Injury 4-16
                      [2] Why the "Occurrence" Definition? 4-20
                      [3] Coverage Under Multiple Insurance Policies/ Manifestation
                            and Other Trigger Theories Rejected 4-22
                      [4] The Toxic Tort Crisis (l970s-1980s): Manifestation Again
                            Rejected 4-28
                      [5] Proposed Solution to the Multiple Policy Issue: The Claims-
                            Made Policy 4-31
§4.02 Continuous Trigger 4-33
           [A] Continuous Trigger of Coverage 4-33
                      [1] Po1icyholders' Expectations 4-35
                      [2] Courts' Concerns About Administrative Convenience 4-37
           [B] Application of Continuous Trigger 4-39
                      [1] Trigger for Liability for Implantation of Silicone Gel Breast
                            Implants 4-41
                      [2] Application of the Continuous Trigger in Construction Defect
                            Cases 4-43
                      [3] Other Characterizations of the Trigger 4-46
                      [4] Insurance Industry Arguments for a Continuous Trigger 4-48
                      [5] Choice-of-Law Issues 4-50
                      [6] Conclusion 4-50
           [C] Application of Continuous Trigger in Environmental Insurance
                 Coverage Cases 4-51
§4.03 Exposure Trigger 4-57
           [A] Exposure Trigger 4-57
           [B] Application of Exposure Trigger 4-58
           [C] Exposure Trigger in Environmental Insurance Coverage Cases 4-60
§4.04 Injury-in-Fact Trigger 4-61
           [A] Injury-in-Fact Trigger 4-61
           [B] Application of Injury-in-Fact Trigger 4-66
           [C] Injury-in-Fact in Environmental Insurance Coverage Cases 4-74
           [D] Proof of Injury-in-Fact 4-77
§4.05 Manifestation Trigger 4-84
           [A] Manifestation Trigger 4-84
           [B] Application of Manifestation Trigger 4-87
                      [1] Date of Diagnosability 4-87
                      [2] Assumption of Administrative Convenience - 4-87
                      [3] Application in Particular Contexts 4-89
                      [4] Claims-Made Effect 4-95
                      [5] Analogy to the "Known Loss" Theory 4-96
                      [6] Conclusion 4-96
           [C] Manifestation Trigger in Environmental Insurance Coverage Cases 4-96
§4.06 Triggers of Coverage Under Other Circumstances 4-99
           [A] Triggers of Coverage Applied in Other Fact Situations 4-99
                      [1] Installation of a Defective Product 4-100
                      [2] Installation of Asbestos 4-104
                      [3] Negligent Installation
                      [4] "Cause" Trigger
           [B] Trigger of Coverage for a Policyholder's Liability for Loss of Use 4-111
                      [1] 1966 Form 4-111
                      [2] 1973 Form 4-112
                      [3] 1986 Form 4-115
§4.07 Allocation 4-116
           [A] Allocation: The Scope of Each Insurance Company's Duty to
                  Indemnify 4-119
                      [1] Applicable Policy Language
                      [2] Insurance Industry's Contemporaneous Understanding of the
                            Policy Language 4-122
                      [3] Majority Rule: Joint and Several Liability 4-126
                      [4] "Other Insurance" Clause Does Not Change the Result 4-139
                      [5] Minority Rule of Allocation: Proration 4-143
                                 [a] Pro Rata Decisions 4-144
                                 [b] Pro Rata Schemes 4-148
                                 [c] Complications Raised by Proration 4-153
§4.08 "Anti-Stacking" Arguments and "Deemer Clauses" 4-156
           [A] "Anti-Stacking" 4-159
           [B] So-Called "Deemer Clauses" 4-160
§4.09 Survey of Law 4-163
           [A] Survey of Law on Trigger of Coverage 4-163
           [B] Survey of Law on Allocation 4-188

CHAPTER 5 NOTICE OF A CLAIM OR ACTION 5-1
§5.01 Introduction 5-3
§5.02 Jurisdictions Following Modern Rule 5-6
           [A] Basis for the Modern Rule: Recognition of Insurance Policies as
                 Contracts of Adhesion 5-8
                      [1] Reasonable Expectations 5-11
                      [2] Forfeiture Interpretation 5-11
                      [3] Public Policy Considerations 5-12
                      [4] Excess Insurance 5-14
           [B] Purpose of Notice Provisions 5-14
           [C] Two-Step Test 5-16
                      [1] Did the Delay Constitute a Breach 5-19
                      [2] What Constitutes Prejudice? 5-20
§5.03 Jurisdictions Following Old Rule 5-25
           [A] Is Timely Notice a "Condition Precedent"? 5-26
           [B] Reasonableness of Policyholder's Notice 5-28
§5.04 State-by-State Survey of the Notice Issue 5-32
§5.05 The Duty to Cooperate 5-51
§5.06 Difference in the Standard for Notice Under Excess Insurance Policies 5-56
           [A] Reasonableness Standard Under the Notice Provisions in Excess
                 Insurance Policies 5-57
                      [1] Notice-Prejudice Rule and Prejudice-Presumption Rule 5-63
                      [2] Per Se Notice Rule 5-66
           [B] Notice Law in New York 5-70
                      [1] Timeliness of Notice as Question of Fact 5-72
                      [2] New York's Modern Rule for Insurance Companies 5-75
           [C] Insurance Industry Custom and Practice Recognizing That Notice to
                 Umbrella and Excess Insurance Companies Is Different 5-77
           [D] Waiver of a Notice Defense by Excess Insurance Companies 5-83
§5.07 "Loss Payable" Clauses 5-89
Exhibit 5-1 A Policyholder's Checklist: Responding to Reservation of Rights
                   and Nonwaiver Agreements 5-95

CHAPTER 6 CHOICE OF LAW 6-1
>§ 6.01 Introduction 6-3
§6.02 Threshold Issues for Choice of Law 6-5
           [A] Choice-of-Law Analysis Usually Is Considered Necessary Only as
                  to Issues Upon Which Actual Conflicts Exist 6-5
           [B] Addressing Choice of Law on an Issue-by-Issue Basis Rather Than
                 on a "Global" Basis 6-12
                      [1] Issue-by-Issue Basis 6-12
                      [2] Global Choice of Law 6-17
§6.03 Choice-of-Law Provisions 6-19
           [A] Ambiguity Created by Lack of a Choice-of-Law Clause in Most
                 General Liability Insurance Policies 6-19
           [B] "Service of Suit" Clause as a Choice-of-Law Provision 6-25
                      [1] Use of London Insurance Companies' Contemporary
                            Drafting History of the Service of Suit Clause 6-28
                      [2] Rules of Contract and Insurance Policy Construction on the
                            Service of Suit Clause 6-34
§6.04 Approaches to Choice of Law 6-37
           [A] Lex Loci Contractus 6-37
           [B] Restatement (Second) of Conflict of Laws 6-47
                      [1] Evaluation of Contacts Under Restatement Second
                            Section 188 6-47
                      [2] Place of Contracting 6-48
                      [3] Place of Negotiation of the Contract 6-49
                      [4] Place of Performance 6-50
                      [5] Location of the Subject Matter of the Contract 6-51
                      [6] Domicil, Residence, Nationality, Place of Incorporation,
                            and Place of Business of the Parties 6-53
                      [7] Evaluation of Conflicts Principles Under Section 6 of
                            Restatement (Second) 6-54
                      [8] Needs of the Interstate and International System 6-55
                      [9] Relevant Policies of the Forum 6-56
                      [10] Relevant Policies of Other Interested States and the
                              Relative Interests of Those States in the Determination of
                              the Particular Issue 6-57
                      [11] Protection of Justified Expectations 6-60
           [C] Other Approaches Similar to That of Restatement (Second) 6-64
                      [1] Government Interest Analysis 6-64
                      [2] Choice-Influencing Considerations Analysis 6-66
           [D] Site-Based Choice of Law in Environmental Coverage Actions 6-66
                      [1] Section 193 of the Restatement (Second) 6-66
                      [2] The Interest of the State of the Site 6-69
§6.05 Miscellaneous Issues Affecting Choice of Law 6-80
           [A] Provisions of Some Case Management Orders Setting Separate
                  Discovery and Briefing Phases for Choice of Law 6-80
                      [1] Why Courts May Enter CMOs 6-80
                      [2] CMO Provisions Relating to Choice of Law 6-81
                      [3] Cases Rejecting Phasing of Choice of Law 6-84
           [B] Change of a Policyholder's Principal Place of Business in the
                  Middle of the Period of Insurance Coverage 6-86

CHAPTER 7 INSURANCE COVERAGE FOR NEGLIGENT AND INTENTIONAL INJURY 7-1
§7.01 Introduction . 7-3
§7.02 Burden of Proving That the Policyholder Expected or Intended the Injury 7-6
§7.03 Standards 7-7
§7.04 Historical Evidence That the Insurance Industry Intended That a
           Subjective Standard Apply 7-9
           [A] History of Exclusion (a) 7-10
           [B] Rejection of Foreseeability Standard 7-12
           [C] Required Proof of Intent to Cause Injury by High- Level Management 7-15
§7.05 Decisions Applying Subjective Standard 7-16
§7.06 Courts That Have Followed So-Called Objective Standards 7-19
§7.07 Separate Standard for "Expected" 7-21
§7.08 Decisions Regarding Intentional Acts 7-23
           [A] Negligent or Reckless Conduct 7-25
           [B] Morally Culpable Conduct and Public Policy 7-27
§7.09 Standard on Expected/Intended Issue in Environmental Insurance
           Coverage Cases 7-32
§7.10 Standard in Products Liability Cases 7-39
§7.11 Cases in Which the Policyholder Is Held Liable for the Actions of
           Third Parties 7-43

CHAPTER 9 THE NUMBER OF OCCURRENCES IN CASES INVOLVING CONTINUOUS OR REPEATED BODILY INJURY OR PROPERTY DAMAGE 9-1

§ 9.01 Introduction 9-3
§9.02 Policy Language and Drafting History 9-6
           [A] Insurance Industry Intent 9-9
           [B] Deductibles Issue 9-12
§9.03 "Cause" Test 9-12
           [A] Court Decisions Finding One Occurrence 9-13
                      [1] Discrimination Claims 9-18
                      [2] Child Molestation Cases 9-20
                      [3] Fraudulent Acts 9-21
                      [4] Products Liability Cases 9-22
                      [5] Criticism of the Cause Test 9-27
           [B] Court Decisions Finding Multiple Occurrences 9-27
§9.04 Number-of-Occurrences Test Focusing on the Liability-Triggering Event 9-32
           [A] Application of the Liability-Triggering Event Test 9-32
           [B] Case Law Using Similar Reasoning 9-36
§9.05 "Unfortunate Events" Test Applied by Some New York Courts 9-36
§9.06 English Rule: Accident or Occurrence May Be Viewed from the
           Perspective of the Victim 9-39
§9.07 Number of Occurrences in First-Party Insurance Cases 9-42
§9.08 Number of Deductibles 9-43

CHAPTER 10 COVERAGE FOR THE COSTS OF LOSS MITIGATION 10-1
§ 10.01 Introduction 10-3
§10.02 Insurance Industry Documents Discussing Insurance Coverage for
           Costs Paid by a Policyholder to Mitigate Damages 10-5
§10.03 Case Law Addressing Coverage for Loss Mitigation Costs Spent to
           Reduce the Amount of Damages 10-9
           [A] Globe: Bases for Coverage of Loss Mitigation Costs 10-9
           [B] The Hauenstein Doctrine 10-11
           [C] Equity and Policy Interpretation 10-13
           [D] Rejection of Equitable Considerations 10-15
           [E] Distinctions between "Prophylactic" Measures and Mitigation Costs 10-19
§10.04 Case Law Addressing Coverage Costs to Replace Defective Products
           or Work 10-22
           [A] Asbestos-Related Property Damage 10-23
           [B] Refusal of Coverage 10-27
§10.05 Case Law Addressing Loss Mitigation Costs in the Environmental
           Context 10-29
           [A] Response Costs versus "Prophylactic" Costs 10-30
           [B] New Jersey Law on Coverage for Cleanup of Groundwater 10-35
                      [1] New Jersey Case Law 10-36
                      [2] Trend in the New Jersey Courts - 10-41
           [C] Refusal of Coverage 10-41
§10.06 Case Law Addressing the Policyholder's Reasonable Expectation of
           Coverage for Loss Mitigation Costs 10-42
§10.07 "Mitigation Clauses" in General Liability Insurance Policies 10-44
           [A] Scope of Mitigation Clause 10~44
           [B] Absence of Mitigation Clause - 10-46
           [C] Insurance Industry Drafting History of the "Mitigation Clause" 10-47
§10-08 Concluding Remarks 10-50

CHAPTER 11 BAD FAITH REGARDING CONDUCT OF INSURANCE COMPANIES 11-1
§11.01 Introduction 11-5
§11.02 Insurance Companies' Duty of Good Faith and Fair Dealing 11-8
§11.03 Breach-of-Contract Actions for Insurance Company Bad Faith 11-9
§11.04 Tort Cause of Action for Bad Faith for Third-Party Insurance Claims 11-12
§11.05 Special Nature of Insurance Contracts - 11-16
§11.06 Insurance Companies' Fiduciary Duties to Policyholders 11-26
§11.07 Tort Cause of Action for Bad Faith for First-Party Insurance Claims 11-34
           [A] Public Policy Considerations in Favor of the Bad-Faith Tort 11-35
           [B] Unequal Bargaining Power in Favor of the Insurance Company 11-36
           [C] The Minority Rule: Refusal to Recognize Tort in First-Party Context 11-44
§11.08 Standards for Proving Bad Faith in a First-Party Action 11-45
           [A] "Negligence" Standard 11-46
           [B] Hybrid Standard 11-46
           [C] "Evil Mind" Standard 11-48
§11.09 Whether a Finding of Coverage Under the Insurance Policy Is Necessary 11-50
§11.10 Specific Types of Insurance Company "Bad Faith" 11-53
           [A] Failure to Settle 11-53
           [B] Failure to Investigate 11-57
           [C] Other Examples of Bad-Faith Conduct by Insurance Companies 11-61
                      [1] The Law of Contract 11-65
                      [2] The Duty of Good Faith and Fair Dealing 11-67
                      [3] The Reasonable Expectations Doctrine 11-68
                      [4] Fraudulent Misrepresentation 11-70
§11.11 Insurance Company's Continuing Duty of Good Faith During Litigation 11-70
§11.12 Duty of Good Faith and Fair Dealing of a Primary Insurance Company
           to Excess and Umbrella Insurance Companies 11-76
§11.13 Damages Available for Bad Faith 11-80
           [A] Extra-Contractual Damages 11-80
           [B] Recoverability of Attorneys' Fees in Insurance Coverage Cases
                 Generally 11-81
           [C] Recoverability of In-House Legal Costs 11-84
           [D] Pittsburgh Plate Glass and Its Progeny 11-86
           [E] Pitfalls to Policyholders' Recovery 11-88
           [F] Continental Casualty Co. v. Cole 11-90
           [G] Punitive Damages 11-91
                      [1] Public Policy Issues 11-92
                      [2] Evil Intent 11-94
                      [3] Reasonableness of Failure to Pay 11-95
                      [4] Other Standards 11-95
                      [5] Failure to Investigate 11-97
                      [6] Failure to Settle 11-97
           [H] Recovery of Consequential Damages 11-98
                      [1] Standards for Recovery of Consequential Damages from
                            Insurance Companies 11-99
                      [2] Death-of-a-Company Damages 11-107
§11.14 Types of Discovery Available in Bad-Faith Actions 11-108
           [A] Work-Product Doctrine 11-108
           [B] Attorney-Client Privilege 11-111
§11.15 Statutory Bases for insurance Company Liability for Bad Faith 11-112
           [A] Unfair Claims Practices Acts 11-113
                      [1] Private Right of Action 11-115
                      [2] General Business Practice Requirement 11-116
                      [3] Remedies 1-118
                      [4] Potential Preemption of Common-Law Cause of Action 11-118
                      [5] Violation of Statute as Evidence of Bad Faith if Pleaded
                            Through Another Statute 11-119
           [B] State Consumer Protection Statutes 11-120
                      [1] Private Right of Action Under State Consumer Protection
                            Laws 11-121
                                 [a] No Cause of Action for Business Consumers 11-122
                                 [b] Cause of Action Available to Business Consumers 11-122
                      [2] Deceptive and Unfair Acts or Practices 11-125
                      [3] Statutes of Limitations 11-127

CHAPTER 12 ESTOPPEL AND ALTERNATIVE CAUSES OF ACTION 12-1
§12.01 Introduction 12-3
§12.02 Estoppel and Related Theories 12-3
           [A] Judicial Estoppel 12-5
                      [1] Preservation of Judicial Integrity 12-6
                      [2] Application of Doctrine 12-8
                      [3] Broad View of Doctrine: "Success" of Prior Statement Not
                            Required 12-11
                      [4] Narrower View of Doctrine: Prior Statement Must Have
                            Been "Successful" 12-13
                      [5] Interpretation of "Success" 12-14
                      [6] Public Policy Arguments in Favor of the Broader View 12-15
           [B] Equitable Estoppel 12-17
                      [1] Reasonable Expectations 12-18
                      [2] Promissory Estoppel 12-25
           [C] Regulatory Estoppel 12-26
                      [1] Morton and Related Cases 12-26
                      [2] Roots of Regulatory Estoppel Doctrine in Patent Cases 12-31
           [D] Quasi-Estoppel 12-32
                      [1] Elements of the Doctrine 12-32
                      [2] Application of Doctrine 12-34
           [E] Mend-the-Hold Doctrine 12-35
                      [1] Procedural or Substantive Rule 12-38
                      [2] Comparison to Judicial Estoppel 12-39
           [F] Inconsistent Positions as Admissions Against Interest - 12-39
§12.03 Alternative Causes of Action 12-40
           [A] Breach-of-Implied Warranty Theories 12-43
                      [1] C&J Fertilizer 12-44
                      [2] Other Case Law 12-46
                      [3] Congressional View 12-47
                      [4] Insurance Industry Representations 12-48
                      [5] Expectation of Coverage 12-49
                      [6] UCC Applicability 12-50
           [B] Conspiracy to Conceal Facts 12-51
           [C] Other Attempts 12-53

CHAPTER 13 ISSUES ARISING UNDER UMBRELLA AND EXCESS INSURANCE POLICIES 13-1
§13.01 Introduction 13-5
§13.02 Structure of a Multilayer Insurance Program: Characteristics of
           Primary, Umbrella, and Excess Insurance 13-5
§13.03 Primary Insurance Underlying Excess Layers 13-7
§13.04 Distinctions Between Umbrella and Excess Insurance 13-10
           [A] Umbrella Insurance Coverage 13-11
                      [1] Ultimate Net Loss 13-12
                      [2] Limits of Liability 13-16
                      [3] Other Features 13-17
           [B] Excess Insurance Coverage 13-18
§13.05 Need to Examine Insurance Policy to Determine Whether It Is an
           Umbrella or an Excess Policy 13-20
§13.06 Development of Umbrella and Excess Insurance 13-21
§13.07 Characteristics of Umbrella and Excess Insurance Policy Forms:
           Follow-Form and Stand-Alone Insurance Policies 13-25
           [A] Use of Standard-Form Language in Umbrella and Excess Insurance
                  Policy Forms 13-25
           [B] Follow-Form Provisions in Excess Insurance Policies 13-29
                      [1] Clear Identification of Underlying Policy 13-31
                      [2] Amendment or Deletion of Terms 13-34
           [C] Stand-Alone Excess Insurance Policy Forms 13-38
§13.08 Exhaustion of Underlying Layers and Attachment Point of Umbrella
           and Excess Insurance Policies 13-39
           [A] Aggregate Limits 13-40
                      [1] Ambiguous Provisions 13-40
                      [2] Exceptions in Follow-Form Provisions 13-44
           [B] Issues of Potential Dispute Under Excess Insurance Policies
                 Regarding Exhaustion of Underlying Coverage 13-45
§13.09 Payment of Defense Costs by Umbrella and Excess Insurance
           Companies 13-49
           [C] Coverage for Defense Costs Under Umbrella and Excess Insurance
                  Policy Forms 13-50
                      [1] Limitation of Defense Obligations to Be Explicit 13-51
                      [2] Defense Costs Within or in Addition to Limits of Liability . . 13-53
                      [3] "Assume Charge" Clause 13-54
                      [4] "Consent" Provision 13-59
                      [5] Follow-Form Provision .. 13-61
           [B] Assigning Defense Obligations to Primary and Excess Insurance
                 Companies 13-61
                      [1] When Duty to Pay Defense Costs Attaches 13-64
                      [2] Equitable Allocation of Defense Costs 13-69
                      [3] Resolving the issues 13-72
§13.10 Standard for Notice Under Umbrella and Excess Insurance Policy 13-72
§13.11 Excess Insurance Company's Right to Sue for Failure to Settle an Action 13-73
           [A] Equitable Subrogation 13-74
           [B] Triangular Reciprocity . 13-76
§13.12 Duties of an Excess Insurance Company When an Underlying Insurance
           Company Becom