Insurance carriers are reviving an old trend called coverage-litigation leapfrog—where a carrier races to the courthouse before the policyholder can file suit. The reason for the leapfrog? Some forums provide a real or perceived advantage to carriers. For example, some state laws can limit a carrier’s ultimate payout by allocating payments among multiple carriers. Other state laws could eliminate a policyholder’s recovery based on settled case law interpreting certain policy provisions. Or consider the pandemic-related cases, where carriers have preferred litigating in federal courts rather than state courts, presumably out of a fear that a state-court jury, which tends to be more localized, would be sympathetic to a local policyholder and hostile to a carrier. Whatever the reason, here are four steps to avoid getting leapfrogged by your carrier:     

  1. Assess the risk.
    • Does the policy have a forum-selection clause requiring the parties to file in a particular court, or does it have a choice-of-law provision that would apply a certain state’s laws regardless of where the lawsuit is filed?
  2. Determine your favorable forums.
    • Identify possible forums and determine which one offers the most favorable case law.
  3. Strategically draft your complaint.
    • Make front and center all facts that support jurisdiction in a particular forum, such as where the policy was issued or where the claim occurred.
  4. If your carrier leapfrogs you, then file in your preferred forum ASAP.
    • Don’t give in to the carrier’s lawsuit if there is an alternative forum out there. Instead, pursue your suit in the best applicable forum for you.