Maximizing Insurance Recovery On Madoff-Related Losses

Andrews Litigation Reporter

PUBLISHED ON: February 26, 2009

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This article originally appeared in Anderson Kill's Policyholder Advisor (December 28, 2008).

Even in a year marked by one shocking financial catastrophe after another, the massive losses suffered by those who had investments with Bernard Madoff’s hedge fund have left the investing community around the world slack-jawed.

Although it might be several weeks or months before many key questions (Who? How? How much? Why?) are answered, those affected should take immediate steps to minimize their losses.

This article provides an overview of the key details to consider in developing a plan to maximize the insurance recovery associated with losses and liability claims arising from these events.

The liabilities and losses of the key figures in this saga generally are so large that they will far outstrip policy limits. At the same time, D&O, E&O and other forms of third-party insurance should in many cases cover some if not all policyholders’ defense costs and possibly much or perhaps even all the policyholder’s liabilities — meaning some investors stand to recover much of what otherwise is thought to have been lost.

There are several steps that policyholders and investors should consider in order to maximize their potential recoveries via available insurance.