ALI restating liability insurance law, final product on schedule for May meeting

By Nicholas Malfitano | Oct 19, 2016

PHILADELPHIA – A reporter chosen by the American Law Institute to re-interpret liability insurance law says he was encouraged by feedback at a meeting earlier this month.

The ALI issues "Restatements" of certain areas of the law in attempts to guide judges who handle those cases.

“There were lots of very constructive comments,” said Tom Baker, a reporter for this ALI project who also serves as a professor at the University of Pennsylvania Law School.

The meeting took place on Oct. 6-7 at the ALI’s Conference Center at 4025 Chestnut Street in Philadelphia.

Per the ALI’s website, this restatement “covers the law of contracts in the liability insurance context, liability insurance coverage, and the management of insured liabilities.” 

“We’re trying to harmonize 50 jurisdictions, and no one is under any illusion that every court is going to do what the ALI says about anything," Baker said. 

"But, the goal is to elevate the analysis and discussion, so that even if a court decides not to adopt the rules that we’re following, that they’ll have access to what are the best arguments in favor of that rule."

Baker termed the work session as very productive, in advance of the group’s next winter meeting.

“The next step is, we are revising [the project] for the council, which will meet in January. Barring some unusual happening, I expect the council will approve. It’s up to them, but so far we’ve received approval, in part because we listen so much to what our advisers say,” Baker added.

Baker explained this meeting devoted much of its focus to the project’s fourth chapter, which dealt with insurance-related legal issues such as bad faith liability, remedies and the question of under what circumstances are insurance policy terms not enforceable.

“The things that we talked about were contribution and allocation, when there’s multiple insurance companies that are liable, and then in relation to Chapter Four, we talked about some rules about what’s enforceable in an insurance policy and remedies for breach,” Baker said. 

“I would say the remedies for breach is a bigger deal, because that’s when we get into things like what’s bad faith, which is a super-hot topic in insurance law.”

Planned discussion centered on liability for insurance brokers was not conducted, according to Baker, due to the subject already being covered elsewhere in the Third Restatement of Torts.

“The ALI has already made rules about broker liability, and we agree with them. We wouldn’t do anything different,” Baker said.

Baker said in these meetings, the Advisers and Members Consultative Group provide guidance on the material involved, but do not vote on it.

“Our Advisers and Members Consultative Group, these are super-expert people in this area. Or else, they’re judges who have an interest, but are certainly an expert at being a judge. And so, we really listen to them,” Baker said.

Baker said following the council meeting in January, further suggestions and revisions for the project are typically submitted during the approval process.

“The final product will be [discussed] at the annual meeting next May,” Baker said.

Baker explained the goal for the annual meeting would be for the new material to be approved, as well as the project as a whole.

“Even the material that was approved as a tentative draft is not finally approved, until the membership approves it as a final product. Typically, that happens at the same time as we finish up the last edit,” Baker said. “My understanding is it takes almost a year to be published, once it’s fully approved.”

Baker added despite the nearly year-long waiting period for publication, the interim tentative drafts are cited immediately because they are public documents.

However, Baker expressed confidence that the project would meet with future council approval.

“We will make some changes based on the input of our advisers and members, but we’re pretty confident that the council will approve the remaining, relatively small chapter. It’s a whole chapter and probably the shortest chapter, but what remains to be approved would be on the order of maybe 15 or 20 percent of the project. Much of that are things that the council already approved, but we just didn’t get to at the annual meeting,” Baker stated.

Baker stated the interim feedback to which the ALI listened most was from judges.

“Most of the lawyers personally involved with the project either represent insurance companies regularly or policyholders regularly. It’s a practice where people typically don’t do both sides. They come from a particular perspective. Whereas judges, they just want a good set of rules that they can follow,” Baker said.

Baker said the response received from the advising judges has been encouraging.

“The feedback we’ve gotten from judges has been really positive about these being clear, well-explained rules that they can learn from and follow. That’s been very gratifying,” Baker said.

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at

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