Offers must contain “complete and truthful information about the pending claim and an unequivocal, secure and explicit invitation to defend it, with an offer to cede control of the claim to the person entitled to compensation, at least with respect to that part of the claim for which the indemnitee ultimately seeks to hold the claimant liable. Notification should be made as soon as the action is brought in order to allow the person entitled to compensation to have full control of the pre-litigation procedure. The offer may be made in writing or orally. The simplest explanation is that your RFP letter could mean the difference between your client paying thousands of dollars in legal and personal fees, and an insurance company paying those dollars under an insurance policy that your client likely bought (and paid premiums) for exactly this scenario. If you`re offering to advocate for your client, deciding who to apply to requires general information about your client`s underlying project and scope of work. At some point, you should work with your client to determine which of their primary policies to offer and which should only be pointed to the lawsuit. These are the policies that were actually purchased by your client (most often general liability insurance). The tender letter is the most important, though often overlooked, task of any lawyer working in the construction industry. This is usually your client`s first communication about a new claim with their insurance company and can often mean the difference between a simple transition to coverage for your client, a protracted battle with an insurance company, or at worst, a denial of coverage. This article discusses the five wâs (who, what, where, when and why – albeit slightly messy) of the offer letter. Offer as soon as possible. In the three jurisdictions examined above, the obligation to defend is triggered by the call for tenders. Haskel v Superior Court 33 Cal.
App. 4th 963, 974 (1995); Co. v. Citgo Petroleum Corp., 166 F.3d 761, 768 (5th Cir. 1999); EmbroidMe.com Co. of Am. case, 845 F.3d 1099 (11th Cir. 2017). This means that every dollar your client spends defending a case before the date of their first offer will not be reimbursed by an insurance company when the defense obligation is triggered. The Arizona holding company, which regulates defense and indemnity tenders, is compliant with most jurisdictions, but some courts have debated whether bids should be determined based on whether actual or implied notice was given to the respondee.
See Home Ins. Co. v. Nat`l Union Fire Ins. of Pittsburgh, 658 N.W.2d 522, 531-34 (Minn. 2003) (conclusion of a multi-state bid analysis that policyholders do not have to explicitly inform insurers of their known obligation to defend and indemnify a claim). Given the above, your letter of offer should be somewhat tailored to your particular situation. If you are in an “eight corners”, you should provide the first plea and analysis for the carrier on how you think coverage can be triggered.
If you are in a state where carriers can take a more holistic view of the facts, provide the carrier with everything you think to understand that there is a possibility of coverage (e.g. contracts, change orders, payment records, error lists, repair proposals, etc.). Remember that when tendering, you try to get as much coverage as possible for your client, so you want to cast as wide a net as possible. Especially when bidding on subcontractors, you shouldn`t be afraid of combinations – this will help you determine what the overall coverage picture will look like in the future and cause your client to potentially change their practices regarding verifying their subcontractors` insurance coverage. As mentioned above, the date of your offer is important, so if there is potential for coverage, send a letter. The legal definition of “tendering” is simple; It is “an unconditional offer of money or performance to satisfy a debt or bond.” BLACK`S LAW DICTIONARY 1479-80 (7th edition 1999). Whereas “defense submission” for the insurance industry is “the act in which a party links its defense and all costs associated with that defense under a contract or other agreement with another party. [which] transfers the duty to defend and any indemnity to the party to whom the offer was made. Int`l Risk Mgmt. Inst., Glossary. When claims arise for construction projects, the defence notice and offers of compensation define the dispute resolution and the insurance product available. If your customer has engaged subcontractors and those subcontractors have asked them to appoint your customer as an additional insured, you must also make an offer to the carriers of these subcontractors to defend themselves as an additional insured.
One of the first things you should discuss with your client when they notify you of a lawsuit is who else was involved, what types of contracts they signed, and who may be obligated to defend and/or indemnify them for that lawsuit. If you represent general contractors, make it a habit to keep an insurance history for the subcontractors they use most often so that you are ready to bid on their carriers immediately after a new bid. DISCLAIMER: Due to the generality of this update, the information contained in this document may not be applicable in all situations and should not be implemented without specific legal advice based on specific situations. In Arizona, tenders are often interpreted by the precedent set in Litton Sys., Inc. v. Shaw`s Sale & Serv., Ltd., 119 Ariz. 10, 14 (App. 1978), which established the following defence and indemnification criteria: Our construction clients can spend a great deal of time, money and effort refining and updating their contractual provisions on compensation and the obligation to defend claims.