A familiar scenario: The eve of mediation or trial arrives, and the parties are still fighting over tenders, additional insured status, contractual indemnification, and the priority of coverage. The underlying claim may have been litigated for years, yet the parties have not determined which insurers should be defending, which policies should respond, or how the ultimate loss should be allocated.

The consequences can be significant. An insurer that might have contributed less—or nothing at all—if risk transfer had been addressed early may find itself paying more to resolve a case. An insurer may also be forced to pay a settlement or defense costs and then pursue another insurer or responsible party for reimbursement. Insurers are understandably reluctant to pay and chase, particularly when the dispute could have been addressed before substantial defense costs and settlement pressures accumulated.

For adjusters and defense counsel, effective risk transfer requires more than sending a tender letter. It requires early identification of potentially applicable coverage, persistent follow-up, aggressive pursuit of contractual remedies, and a coordinated strategy to resolve coverage and indemnification issues before mediation or trial.

Here are ten commonly overlooked or neglected issues that can materially affect the outcome.

1. Tender Directly to the Insurer

Tendering a claim only to the potentially responsible party is not enough. Promptly tender directly to each potentially applicable insurer. Tendering only to the party, rather than the insurer, can delay the assumption of the defense and create issues regarding recovery of pre-tender defense costs, depending on the policy and applicable law.

Obtain certificates of insurance early, but do not treat them as substitutes for the actual policies and endorsements. If the insurance information is unavailable, pursue it through contractual document demands and discovery.

Practical action: At the outset of the claim, identify every potentially responsible party, obtain its insurance information, and send a documented tender directly to each potentially applicable insurer. Calendar confirmation of receipt and retain the tender, supporting documents, and delivery confirmation in the claim file.

2. Follow Up on Outstanding Tenders

A tender that receives no response has not achieved its goal. Calendar follow-ups, confirm receipt, obtain a claim number, provide requested documentation, and demand a written coverage position. Escalate unexplained delays.

Unresolved tenders should be tracked as active claims-management issues, not left in the file until mediation approaches.

Practical action: Maintain a tender log identifying the recipient insurer, date tendered, acknowledgment date, outstanding information, follow-up dates, and current coverage position. Escalate unanswered tenders to a claims supervisor or coverage counsel well before mediation.

3. Timely Commencement of a Third-Party Action

Asserting claims for contractual indemnification and contribution, where available, and alleging the negligence of the potentially responsible party may be necessary to support a tender if that party is not named as a direct defendant. Even if the tender is accepted by a primary insurer, pursuing common-law and contractual indemnification claims may be the stronger risk-transfer path and may be necessary to preserve access to other insurance layers, depending on the policies and applicable law.

Practical action: Plead viable contractual indemnification, contribution, negligence, and failure-to-procure claims as appropriate. Do not assume an accepted primary defense eliminates the need to pursue the responsible party.

4. Evaluate the Merits of a Tender Rejection

An insurer’s denial should be analyzed against the actual policy language, endorsements, pleadings, and applicable law. For example, an insurer may argue that its insured did not cause the accident. However, under New York law, the duty to defend is generally broader than the duty to indemnify; the absence of established liability does not, by itself, resolve the defense obligation.

Other denials may turn on additional insured status, contractual requirements, exclusions, or policy conditions. Obtain the relevant policies, evaluate the tender rejections, and consider grounds to challenge them.

Practical action: Obtain a written explanation identifying the specific policy provisions and factual grounds supporting the denial. Compare the denial with the complaint, contract, and policy endorsements. Submit a focused written challenge and establish a deadline for reconsideration. If the dispute remains unresolved, evaluate declaratory relief.

5. Tender to Excess Insurers

Do not focus exclusively on the primary policy. Identify potentially applicable umbrella and excess policies and tender promptly. Waiting until the primary limits are exhausted—or until a settlement demand exceeds those limits—to involve excess insurers can create avoidable disputes and jeopardize available coverage.

Practical action: Identify the entire insurance tower early, obtain the applicable policies, and provide notice or tender to excess insurers in accordance with their policy requirements. Request written acknowledgment and a coverage position, and keep the excess carriers informed of material developments and potential exposure.

6. Establish Priority of Coverage

Identifying coverage is only part of the analysis; determining priority of coverage can be equally important. Review all potentially applicable policies, additional insured endorsements, and other-insurance clauses, paying particular attention to primary and noncontributory provisions.

Absent controlling policy language or other applicable legal principles, a primary insurer’s acceptance of a defense—or even indemnity—is not necessarily binding on an excess or umbrella insurer. Do not assume one insurer’s acceptance resolves the priority dispute.

Practical action: Obtain all relevant policies and work with coverage counsel to obtain priority analysis and seek written agreement on priority before mediation.

7. Maintain Cross-Claims and Third-Party Actions

A primary insurer’s agreement to defend does not necessarily resolve priority of coverage, particularly with respect to another party’s excess insurers. Cross-claims and third-party actions should not be abandoned or discontinued without evaluating the remaining coverage and indemnification issues.

Practical action: Before discontinuing a cross-claim or third-party action, confirm in writing which insurers have accepted coverage, whether their positions are subject to reservations of rights, whether excess coverage has been addressed, and whether viable contractual claims remain. Obtain appropriate written commitments and evaluate the consequences of any proposed release or discontinuance.

8. File Motions for Summary Judgment Based on Contractual Indemnification

Evaluate contractual indemnification early and pursue summary judgment when the contract and evidentiary record permit. Resolving indemnification before mediation can materially affect settlement positions, allocation of settlement authority, and the insurers expected to fund the resolution.

Practical action: Calendar an early contractual indemnification assessment. Once the necessary evidence is available, determine whether to move for summary judgment sufficiently in advance of mediation to obtain a ruling or meaningfully narrow the issues. Coordinate the motion with the coverage analysis so that the parties understand the potential financial consequences before settlement negotiations.

9. Consider Declaratory Judgment Relief

Repeated correspondence may not resolve a disputed coverage obligation. When an insurer refuses to defend or disputes additional insured status, evaluate whether a declaratory judgment action is appropriate.

A timely coverage action may clarify obligations while the underlying case is still pending and before settlement pressures dictate the outcome. Consider the merits, timing, cost, and practical benefits of the action rather than allowing an unresolved denial to persist indefinitely.

Practical action: Establish a decision point after a substantive denial or prolonged delay. Consult coverage counsel to assess the strength of the coverage position, available remedies, timing, and potential effect on the underlying litigation. Document the decision to pursue or defer declaratory relief and calendar any relevant deadlines.

10. Consider Whether the Accepting Insurer Should Control the Defense

An insurer that accepts a tender without a reservation of rights will typically seek to control the defense through counsel of its choosing. Even when an insurer accepts a defense subject to a reservation of rights, it may assert that the reservation does not create a conflict requiring independent counsel for the insured or tendering party. Whether independent counsel is warranted depends on the nature of the reservation, the potential conflicts, the applicable policy language, and governing law.

A separate but equally important issue arises when the accepting insurer refuses to fund the prosecution of claims against its own named insured. For example, the tendering party may have viable contractual indemnification or other claims against the contractor whose insurer has agreed to defend the tendering party. The insurer may contend its defense obligation does not extend to prosecuting claims against its insured. Allowing that position to go unchallenged may leave the tendering party without an effective mechanism to pursue indemnification and other risk-transfer remedies.

Practical action: When a tender is accepted, evaluate who will control the defense, whether the reservation of rights creates an actual or potential conflict, and whether independent counsel may be appropriate under the governing law. Separately, determine how claims against the named insured will be prosecuted. If the accepting insurer refuses to fund that effort, consider challenging its position or retaining separate counsel to pursue those claims at the tendering insurer’s expense, where legally and contractually supportable. Resolve these issues early, before they undermine the risk-transfer strategy or delay settlement.

The Bottom Line

For insurance adjusters and defense counsel, risk transfer should be addressed at the beginning of a case, not as an afterthought when mediation or trial is imminent.

A disciplined process should include an early tender review, a tracked follow-up system, timely third-party practice, a complete insurance-tower analysis, and an affirmative decision on contractual indemnification and coverage litigation.

These steps can help control defense costs, improve settlement leverage, and reduce the risk that an insurer will be forced to pay more than it otherwise might have paid—or pay first and then pursue another insurer for reimbursement. The earlier the parties identify and resolve risk-transfer issues, the greater the opportunity to put the loss where the contracts and insurance policies intended it to fall.

This article is intended for general informational purposes and does not constitute legal advice. Coverage obligations and risk-transfer rights depend on the specific contracts, insurance policies, facts, and applicable law.

Keep Reading

Expert Expertise: Top Twelve Tips for Trial Attorneys When Liability Jumps the Track: Lessons From the Urban Air Go-Kart Case Non-Billable Hours: Why Time Away from Work Makes Me a Better Attorney Gratitude as an Attorney: Reflections From Jessica Zaragoza Getting to Verdict One Issue at a Time The Scariest Thing This Halloween: Nuclear Verdicts®! A Fall Without a Proven Cause: Causation and the Duty to Preserve Surveillance Footage in Weathers v. John C. Choe, DDS, Inc. Special Report: Five Key Takeaways on Florida Plaintiff Tactics Plaintiffs’ Attempts to Expedite an Appeal Gone Wrong: Maniago v. Desert Cardiology Consultants’ Medical Group, Inc.