Contract Litigation Insurance

Insurance coverage against paying an adversary’s attorneys’ fees for individuals, businesses and corporations.
As a general matter, certain contracts provide that, if a lawsuit arises out of the contract, the prevailing party in the litigation is entitled to recover their attorneys’ fees from the losing party.

Contract Litigation Insurance (CLI) is the first-of-its-kind insurance coverage that is specifically created to help protect both plaintiffs and defendants from the risk of having to pay their adversary’s attorneys’ fees. The policy is underwritten by individual member companies of Zurich in North America, a leading global insurance carrier rated “A” by A.M. Best.*

How The Policy Works.
A CLI policy works much like other common types of insurance policies, such as home, auto or health. Premiums are charged for the amount of insurance coverage, and claims are paid out to the insured when a loss materializes. However, unlike other forms of insurance, there is no complicated claims adjustment process associated with CLI policies. Indeed, in most instances, Sonoma Risk expects to pay the court-ordered award of attorneys’ fees up to policy limits.

In addition, a CLI policy is issued only after a complaint has been filed with the court, providing litigants protection when they are actually exposed to a recognizable risk. The policy provides protection against this risk exposure until the case ends and the possibility of having to pay an adversary’s attorneys’ fees is eliminated.