Insurance Policy Fails to Provide Pre-Judgement Interest

Case Overview

This case takes place in Georgia and involves a provision of an insurance policy with fairly high limits. The insured had given her consent to settle several legal malpractice cases pending against her. The cases were tried, and a large amount of pre-judgment interest was assessed on the covered insurance limits. The policy provided for additional coverage of post-judgment interest as a supplementary payment, however it did not address pre-judgment interest. Although the state in which the plaintiff lived provides for pre-judgment interest on judgments, the insurance company contended that it will not be provided as it was never on their policy.

Questions to the Insurance expert and their responses

Would an insurance company using reasonable diligence and good faith include information in the insurance policy as to whether or not the payment of pre-judgment interest, which is required by law, will be a supplementary payment?

A lot of times it comes to policy language. I would be glad to examine this policy closely.

Would a reasonable construction of the insurance policy by practitioners in the field of insurance be that the pre-judgment interest is covered as a supplementary payment, or is not so covered or regarded as an ambiguous provision?

A reasonable construction of the insurance policy could, indeed, be that pre-judgment interest is covered as a supplementary payment.

About the expert

This highly qualified expert serves as a distinguished professor of insurance at a top ranking university. Prior, he served as the Midyette Eminent Scholar in Risk Management & Insurance in the College of Business at Florida State University and as the Katie Research Professor at Illinois State University. He is a Past-President of the American Risk and Insurance Association, the world's premier academic risk and insurance organization. He also is a Past-President of the Western Risk and Insurance Association, a member of the Risk Theory Society, and a member of the Southern Risk and Insurance Association. He served as Interim Editor for the Journal of Insurance Regulation, as Editor for the Journal of Insurance Issues (2001-2005), and he serves as a referee for various publications and on several editorial boards, including Risk Management and Insurance Review, Journal of Financial Service Professionals, and Journal of Risk Education. He holds the CPCU, CLU, and ARM professional designations.

E-011178

Specialties:

Insurance