Traditionally tort litigation featured a plaintiff suing a defendant over an incident which took place in a particular location, during a given point of time in the recent past. The next step was the advent of multiple plaintiffs suing multiple defendants. Over the past two decades, the face of litigation has changed yet again. Now the plaintiffs allege that the exposure (to asbestos, silica, benzene or other toxic substances) took place at a number of different locations and over a long period of time rather than at a single location at a single point in time.

Since a number of different years of exposure are alleged, a number of different insurance policies and/or a number of different insurance companies could be called upon to defend their insured in such litigation. How can this be accomplished in a fair and reasonable manner? Each insurance company may owe an equal defense to its client but, in the interest of equity, an insurance company with relatively few years of coverage may not have to pay the same amount as an insurance company with a greater number of years of coverage. Moreover, any single insurance carrier may be reluctant to step forward and assume the defense of the insured without some assurance that it will not be “left holding the bag” while the other insurance companies squabble over the proper course of action.

The answer is the creation and implementation of a cost sharing agreement. In such an agreement, all of the insurers band together to join in the defense of their mutual insured, having decided the proper allocation of costs among the different insurance companies (sometimes to also include the insured). A great deal of care must be used in drafting the agreement so that the interests of all involved parties are properly protected. A number of different methods can be employed to insure that the legal expense is reasonable and that is equitably distributed among all of the participants of the agreement.

The personnel of Enviro-Tox Loss Services are intimately familiar with cost sharing agreements. In their roles as representatives of the insurance companies as well as in their present capacities, they have been heavily involved in the creation and implementation of a variety of cost sharing agreements. Enviro-Tox can use its considerable experience to assist you in crafting an agreement that will be fair and equitable to all concerned parties and can greatly reduce the amount of time and effort needed to produce such an agreement.

Example:

Enviro-Tox Loss Services was called upon by one of its insurance clients to assist in the creation of a cost sharing agreement involving the defense of one of its newly acquired clients. Our client’s claim examiner, with his heavy case load of complex litigation, was unable to find sufficient time to address the issue. To compound matters, our client was in the position of fronting the legal expense and would not be reimbursed by the other insurance carriers until an agreement was signed. Enviro-Tox received the assignment and, within a matter of days, crafted an initial draft of the cost sharing agreement. Within a relatively short period of time, we were able to work with the other insurance carriers to modify the draft agreement so that it was acceptable to all of the involved parties. Shortly thereafter, the agreement was finalized and our client began receiving reimbursement from the other insurance carriers.