Jenner & Block

"‘Pay First’ Provisions and the Insolvent Policyholder," Law Journal Newsletters: The Insurance Coverage Law Bulletin, Vol. 3, No. 5

In this article from Law Journal Newsletters: The Insurance Coverage Law Bulletin, Jenner & Block Partner Patricia A. Bronte explains that when an insured entity becomes a debtor in bankruptcy, the interests of liability insurers collide with fundamental principles of the Bankruptcy Code. Most liability insurance policies require the policyholder to pay a deductible or self-insured retention (“SIR”) before the insurer is obliged to pay anything, but many insolvent policyholders are unable to make these upfront payments. Therefore, Ms. Bronte argues that deductibles and SIRs serve as a financial incentive for policyholders to operate their businesses in a manner that minimizes the number of claims asserted against them.