Coverage Spotlight: Contract Litigation Insurance

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According to the National Center for State Courts, contract disputes dominate state court caseloads:  61% of all civil lawsuits filed in state courts in the U.S. are contract disputes (for comparison’s sake, only 6% are tort claims, such as medical malpractice and auto accidents). Many of those contracts in dispute contain “fee shifting” or “loser pays” provisions, which require that the losing party pay the attorney’s fees and litigation expenses of the victorious party.

Insurance coverage now exists to cover the risk of these “loser pays” provisions. Contract Litigation Insurance (“CLI”) covers the losing party’s obligation to repay the victorious party’s attorney’s fees and litigation expenses.