Zurich Introduces Insurance Policies for Defendants in Contract Litigation

Zurich’s has announced that one of its programs unit is expanding its contract litigation policy to now help protect defendants. The policy will be provided through Sonoma Risk Insurance Agency (Sonoma Risk).

Similar to its Plaintiff Contract Litigation Insurance (PCLI), the new
Defendant Contract Litigation Insurance (DCLI) program is designed to
insure defendants in contractual lawsuits against the risk of paying their adversaries’ attorneys fees if unsuccessful in defending against a breach of contract claim.

Loser pays provisions and statutes are on the rise in the U.S. Also, in many states, plaintiffs have a mandatory statutory right to recover attorneys’ fees in contract disputes, and according to Sonoma Risk, contracts between businesses and even individuals are increasingly including these provisions.

“The financial liability of paying your adversary’s legal fees is a serious concern,” said Craig Fundum, president of Programs & Direct Markets for Zurich’s North America Commercial business. “The Bureau of Justice Statistics recently reported that, on average, two out of three defendants in contract cases lose at trial. This policy is intended to help mitigate the risk of an adverse judgment.”

Both defendant and plaintiff contract litigation insurance can offer a
variety of benefits to businesses and individuals some of which might

To provide the maximum amount of flexibility to businesses and individuals, the defendant contract insurance can be applied for 60 days from the date a defendant is served with a complaint. The policy coverage period matches the duration of the litigation and is triggered when the plaintiff prevails at trial or if a summary judgment is issued against the defendant.

According to Damiano Servidio, head of Professional Services for Zurich’s Programs unit, Zurich accelerated the introduction of the DCLI Program in response to the legal community’s strong receptivity to the PCLI program and their subsequent demand for a program to cover a defendant in contract litigation.

“Because the professional and ethical responsibilities demanded of
attorneys to thoroughly assess the strengths, weaknesses and uncertainties of their clients cases, many in the legal community have quickly adopted discussing the benefits of contract litigation insurance as a best practice,” Fundum added. “There is simply a greater necessity today for attorneys to be sensitive to the financial risk exposure of their clients, which is something our insurance program is designed to address.”

Source: Zurich, Sonoma Risk