Allocation issues are of increasing importance in complex insurance matters because modern claims often present long-tail or delayed-manifestation claims, where injury or damage is found to take place over a long period of time. The chapter reviews the many approaches to allocation in these settings, the important legal issues presented, and the conflicting interests and policy considerations at stake.
Section 22.02 addresses the interplay between “other insurance clauses in multiple policies that respond to a single loss. In recent years, “other insurance issues have arisen in a broad range of liability contexts outside the automobile arena.
The doctrine of “mutually repugnance” also arises in certain circumstances where “other insurance clauses would effectively cancel each other out. Section 22.02 reviews courts' approaches to interpretation of competing “other insurance clauses and discusses varying scenarios where pro rata, excess and escape clauses come into play.
These other issues include the way in which allocation methods can interact with other preexisting law, such as horizontal exhaustion doctrines, as well as additional issues in applying the allocation method, such as identifying the triggered period over which liability will be spread. As an increasing number of courts have required allocation of damages to all policies or periods implicated by injury or damage at issue in a claim, a growing set of issues has sprung up concerning how to address uninsured periods in an allocation.
Generally, courts have not differentiated how to treat uninsured periods depending on the reason for a coverage gap. As shown in more detail in the section that follows, under the majority rule, the toreador must take responsibility for any periods for which it does not have applicable insurance.
As to the first, there are a variety of circumstances where a single claim may trigger different types of coverage purchased by the insured. But, many courts have rejected these types of distinctions and have lumped all responsive coverage together for allocation purposes and, in the context of concurrent policies, have simply applied the other insurance clauses addressed in Section 22.02.
Other courts have focused on whether an insured has received a “double recovery” and have developed theories by which the policyholder is prevented from recovering more than it has actually lost. The potential impacts of allocation upon excess and umbrella insurance are discussed in Section 22.06.
In addition, an issue that is receiving attention is “stacking,” under which an insured may seek to combine the limits of multiple policies for a single loss. While this “drop” issue may arise for a loss involving a single point in time, it also arises in long-tail claims, especially where the loss potentially triggers coverage in effect years or decades in the past.
As discussed in Section 22.05, in these circumstances some courts have created judicial doctrines to prevent double recovery in the first instance, where others have permitted the targeted insurer to pursue contribution against the settled insurer. It should be noted that most, if not all, of these issues could be avoided if a court were to adopt one of the allocation methods discussed in Section 22.03.
Laura A. Organ is a partner of the Washington, D.C. law firm Wiley Rein LLP. An allocation rate is a percentage of an investor's cash or capital outlay that goes toward a final investment.
An allocation rate shows the total amount of investment in a product. It can be useful to investors as it shows them fees paid as well as total allocation to a particular item.
Investors using full-service brokerage services will typically incur a sales load when buying and selling mutual funds. Sales loads can be front-end, back-end, or trailing, and they will usually detract from the total amount invested in a product.
To determine the allocation rate of capital invested in a product, an investor can use the following equation: Calculating the allocation rate percentage helps an investor to understand better how their money is being utilized.
Wrap accounts through both brokerage firms and robo-advisors offer investors another alternative for making automated investments at a predetermined allocation rate. Also found in: Thesaurus, Medical, Legal, Financial, Idioms, Encyclopedia, Wikipedia.
To set apart for a special purpose; designate: allocate a room to be used for storage. To distribute according to a plan; allot: allocate rations for a week-long camping trip.
Synonyms: allocate, appropriate, assign, designate, earmark These verbs mean to reserve or select for a specified purpose: allocated time for recreation; appropriated funds for public education; assigned the new computers to the science lab; designated a location for the new hospital; money that was earmarked for a vacation. Copyright © 2016 by Houghton Mifflin Harcourt Publishing Company.
(æl like in) 1. The act of allocating; apportionment. In a general sense, distribution of limited resources among competing requirements for employment.
Specific allocations (e.g., air sorties, nuclear weapons, forces, and transportation) are described as allocation of air sorties, nuclear weapons, etc. Earmarked Set aside for a particular purpose; allocated for use in specified ways; marked to be recognized.
This expression, dating from the 1500s, alludes to the practice of marking the ears of cattle and sheep to show ownership. Figuratively, earmarked is often used in regard to monetary allocations although it is heard in other contexts as well.
I need only earmark sufficient time in the summer for certain people whose hospitality I’ve accepted. This expression is derived from Aesop’s fable in which three animals joined forces with a lion for a hunt.
The lion offered the remaining fourth to any of the fellow-hunters who was able to defeat him in a fight. The art of finding a rich friend to make a tour with you in autumn, and of leaving him to bear the lion’s share of the expenses.
Allocated loss adjustment expenses (Alan) are attributed to the processing of a specific insurance claim. Some commercial liability policies contain endorsements, which require the policyholder to reimburse its insurance company for loss adjustment expenses (Alan or Ulnae).
Some commercial liability policies contain endorsements, which require the policyholder to reimburse its insurance company for loss adjustment expenses (Alan or Ulnae). Therefore, loss adjustment expenses are most often those costs incurred by an insurance company in defending or settling a liability claim brought against its policyholder.
It is important to carefully read the endorsement language, which may say that a loss adjustment expense is not intended to include the policyholder’s attorney fees and costs if an insurer denies coverage and a policyholder successfully sues the insurer. In this situation, where the insurance company has done no actual “adjusting” of the claim, it should not be entitled to apply its deductible to the expenses incurred by the policyholder in defending the claim abandoned by the insurance company.
Claims that could result in substantial losses are the most likely to receive extra scrutiny by insurers and may involve in-depth investigations, settlement offers, and litigation. Elm uses sophisticated tools to model the allocation of liability claims against the existing insurance coverage block.
Therefore, Elm works closely with our clients and counsel to define appropriate scenarios and then uses our tools to allocate claims to insurance coverage applying these alternate assumptions, including: Allocation /Exhaustion Methodology: All Sums/Prorate, By Layer/Level, Owens-Illinois, Wellington, “Hopscotch” Definition of “Occurrence” Trigger Theory: Exposure, Manifestation, Injury-in fact, Continuous Self insured Retentions (Sirs), Deductibles and “Stacking” Exclusions: Pollution, Asbestos, Owned Property, etc.
Once these allocations are generated, we work with clients to mold the numerous results into a finite set of “weighted outcomes”. This reduces the often overwhelming amount of data inherent in this process to a codified set of results that our clients can understand, digest, and utilize to make solid, informed decisions for their business goals.