Contingent Liability Insurance

Contingent Liability Insurance is a bespoke insurance product that enables an insured to de-risk pending litigation and other known exposures. The two primary coverages within the contingent liability space are adverse judgment and judgment preservation insurance. Litigation insured under these policies typically include intellectual property (e.g., patent, trademark and trade secret litigation), antitrust and breach of contract litigation.

Adverse Judgment Insurance is purchased by defendants in pending litigation, allowing the defendant-insured to limit losses by covering a portion or all of the potential damages if awarded to plaintiff pursuant to final adjudication. By ring-fencing the potential exposure of pending litigation, adverse judgment insurance allows insureds to move past pending litigation and get back to running their business. Adverse judgment insurance can be particularly useful for parties in overcoming potentially deal-breaking risks in an M&A transaction.

Judgment Preservation Insurance protects a plaintiff by guaranteeing a portion of the value of a judgment awarded by the court. If the favorable results are reversed on appeal or the awarded damages are reduced, the policy covers the plaintiff against this negative outcome. Insureds can use this policy as collateral to secure funding from lenders to pursue other strategic initiatives, including M&A and other growth initiatives.