Reed Smith Client Alerts

On May 22, 2018, the American Law Institute adopted the first Restatement of the Law of Liability Insurance. A Restatement does not create law – only elected and appointed officials and judges can do that. Rather, a Restatement tries to collect and “re-state” the law in a manner that is understandable and digestible. This is particularly important for insurance law as it varies so much from state to state. The Restatement is not binding on any court, but it can be an extremely helpful resource.

The project was the culmination of years of work by many dozens, if not hundreds, of judges, lawyers, and professors. The Restatement process consists of four primary elements: (1) ascertaining the majority rule; (2) recognizing trends in the law; (3) analyzing which rule fits best with the broader body of law and therefore leads to greater coherence in the law; and (4) evaluating the relative desirability of competing rules.

Some of the most important contributions of the Restatement revolve around refining the duties of insurance companies in the defense and settlement of potentially insured claims.