1. Assuming the applicable law to the coverage analysis is same as the law applicable to the underlying lawsuit. When a lawsuit is filed in the jurisdiction in which you practice, there is a natural inclination to assume the law that is applicable to your coverage analysis is the same as the law, which will apply in the underlying dispute. Do not make this mistake. A few minutes analyzing the choice of law is worth its weight in gold when compared to spending hours rewriting an entire opinion. Some jurisdictions apply the law of the State where the policy was delivered, under the traditional lex loci contractus rule, which is generally identified on the Declarations. Other jurisdictions apply other tests embodied in the Restatement. It is important to know how your jurisdiction handles this issue before you start writing.
2. Failing to confirm that you have all policies issued by your carrier, which may be implicated by the underlying lawsuit. Many policies will state “new” or “renewal” on the Declarations; other policies may not contain such an indication. Regardless, it is generally a good practice to ask your client whether there were prior or subsequent policies to the one you have been provided, unless it is clear that the policy you have been provided will be the only applicable policy. This is particularly true when analyzing coverage in cases where the time of the loss is not easily apparent and an earlier or later policy period may be applicable.
3. Assuming that all policy forms and endorsements have been provided: It is critical that you have every policy form and endorsement, which is identified on the Declarations. You cannot analyze coverage if there are missing forms and endorsements, which may be applicable to your opinion.
4. Failing to confirm that the forms and endorsements provided are listed on the Declarations: This is a corollary to number three, above. A few minutes spent cross-referencing the Form Numbers, which appear on the actual Forms and Endorsements, with the Form Numbers identified on the Declarations, is critical. Some jurisdictions hold that if an Endorsement Form Number does not appear on the Declarations, the Endorsement will not apply.
5. Failing to review the status of the Underlying Lawsuit and all pleadings: Ultimately, you will need to obtain a copy of all of the pleadings in the underlying lawsuit and assess each of them for their impact, if any, on your coverage analysis. For example, even if a lawsuit has just begun, it is important to know if the Complaint has been amended, particularly where the amendment may supersede the Complaint your insurer has provided to you. Also, if the insured has not yet filed a responsive pleading, and a default is imminent, you will need to evaluate whether it is advisable to attempt to obtain a courtesy extension for an answer to be filed, so that you can complete your coverage analysis.
6. Assuming you can only look at the pleadings (or assuming you can automatically look beyond the Pleadings): Most jurisdictions are “four” or “eight” corners states (meaning you will generally look to the allegations of the Complaint and the policy provisions in analyzing coverage). However, circumstances exist when you can look beyond the pleadings. It is important to know when your jurisdiction will allow this, and when it will not.
7. Falling through the cut and paste trap door: It is advisable to look at other lawyers’ coverage opinions to learn the format for writing an opinion; however, it is a serious mistake to simply cut and paste policy language or case discussions into your own opinions. Policy language will often change from policy to policy; also, the opinion of another attorney in your firm may have ignored an exclusion, which was inapplicable to his or her analysis, but may be critical to your opinion. Likewise, analyzing the cases discussing particular policy provisions is important because there may well be subtle differences in how a case applies to a particular fact pattern.
8. Failing to prepare a list of Documents and things relied on in preparing your opinion: Whether you prepare such a list within your coverage opinion, or as an attached exhibit, it is critical that you identify everything you relied on. This is particularly important if you are ever called upon to defend your opinion.
9. Failing to give an opinion: There are certainly going to be times when you cannot give an opinion because more information is needed to resolve a particular issue; however, it is important to remember that insurance carriers hire coverage counsel to advise them on coverage issues (particularly as to the duty to defend and/or indemnify an insured in a lawsuit). It is important to provide an opinion, not just as to whether coverage exists for a loss, but also provide recommendations regarding what the carrier should do, and why.
10. Assuming this post is your only source for pitfalls to avoid: I don’t say this to be glib; rather, it is critical that you examine as many sources as possible for do’s and don’ts when writing coverage opinions, particularly in your jurisdiction. It is important to analyze all of the issues under the various insuring agreement(s) to the policies you review, along with the applicable exclusions, conditions and endorsements. However, it is also important to roundtable issues with which you may be unfamiliar with other attorneys in your firm in order to give your client a logical and concisely written coverage opinion, which gives your clients thoughtful conclusions and real-world recommendations regarding how to proceed.
*This post does not attempt to discuss every issue to be encountered when drafting coverage opinions, or every legal issue to consider when preparing coverage opinions. Rather, the aim of this post is to assist young lawyers in avoiding common pitfalls in drafting coverage opinions.