When a construction company finds itself at odds with an insurance company over the coverage of a piece of faulty equipment, injury to an employee or a project gone awry, Mitchell Lathrop and his associates at Duane Morris LLP are called upon to help mediate the heated debates.
The San Diego attorney practices in areas of insurance and reinsurance law, domestic and international arbitration, environmental law, securities and complex litigation for the San Diego office at 101 W. Broadway, Suite 900. Morris represents both insurance and reinsurance companies, large and small, in claims of negligence (including libel and slander), bodily injury, property damage and advertising injury (defamation).
The firm provides a range of insurance legal services from coverage opinion involving a single policy to litigation on complex insurance projects with billion-dollar exposures.
When a construction company seeks out an insurance firm to obtain a policy to cover its project, it is the reinsurance companies that actually provide a large percentage of the financial support, Lathrop explained. Reinsurance allows an insurance company to offer higher limits of protection to its policyholder than its own assets would allow. If the principal insurance company can only offer $1 million on a $3 million policy, the reinsurance company can undertake the difference. Most reinsurance contracts are shared by several reinsurers.
"It is insurance for insurance companies," Lathrop said.
There are also smaller reinsurance companies that make a niche for themselves creating a market for more creative policies, such as coverage of legs for a model.
"There is a market for any kind of reinsurance, it's just a matter of agreeing on what the policy is going to cost," Lathrop said.
For construction, insurance policies are pretty standard -- a firm can purchase a policy that just covers the project itself, or everything before, during and after the project. The most common types of policies are general liability, project-specific liability, property damage, course of construction, workers' compensation and business interruption. Large, publicly held commercial builders also have directors' and officers' insurance policies.
Other "specialty risk" policies are available including surety and fidelity, aviation, marine and energy, environmental, toxic tort and protection for fires, explosions, building collapses, natural disasters and other catastrophic causes.
The premium can vary. It's hard to put it in monetary terms, as each client differs on what is deemed important to cover, Lathrop said.
Before receiving the insurance, construction companies must meet several prerequisites, including engineering and environmental studies, usually done by a team of engineers and experts hired by the insurance company. The investigation process can take months.
"If I'm the insurance company I will ask dozens of questions to decide what insurance policy is right for the project," Lathrop said.
Following the completion of the study, the two parties then discuss the various policies available.
"You can have anything covered from the first spade hitting the soil or years out after the project is completed," Lathrop explained.
If an incident happens during the construction, the insurance company will call Lathrop and his associates to investigate the claim and find if it is covered under the insurance clause. He has represented insurance companies against reinsurance companies, as well as construction companies against insurance companies.
In the past most disputes have gone to court for long, drawn-out battles, Lathrop said. In recent years, especially at the international level, the idea of going to court has steadily declined, with the parties agreeing to arbitration.
"It's quicker and cheaper and people don't want to have to deal with foreign jurisdiction," Lathrop added.
The Conflict Prevention and Resolution (CPR) Institute and American Arbitration Association are two notable organizations Lathrop has worked with on several occasions.
Lathrop's specialty is environmental concerns. On behalf of insurance companies, he won a jury verdict against Consolidated Edison Co. (NYSE: ED) of New York, and Shell Oil Co. in two separate cases regarding environmental pollution.
The graduate of the University of Southern California and U.S. Naval Academy has been with Duane Morris since 2003, having spent 30 years in the industry for firms in New York and California.
"I really enjoy and love what I do. It is a real intellectual challenge," Lathrop said.
Kurland is a San Diego-based freelance writer.