Insurance Fights Can Complicate The Bankruptcy Labyrinth

Law360 Insurance Authority

  • August 19, 2022

A company's trek through the bankruptcy process can be arduous enough, and legal experts say the complexities of successfully navigating liquidation or reorganization are amplified when insurance coverage disputes arise.

The bankruptcy process presents obstacles to both policyholders and insurers. While proceedings are intended for the parties to reach a consensual agreement on the resolution of underlying claims and liabilities, each party's competing interests can give rise to disputes that will reach a jurist at either the state or federal court level.

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Robert Horkovich of Anderson Kill told Law360 that standard commercial general liability policies generally have provisions mandated by statutes in 46 out of 50 states prohibiting insurance companies from reducing or eliminating coverage when a policyholder files for bankruptcy.

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