Insurance 101 – Chapter 9 – Volume 99 – Effect of Bankruptcy on Coverage

Effect of Bankruptcy on Coverage

A Bankruptcy Court order allowing a claim against an insured does not constitute a judicial finding that the insured was liable in the claimed amount. In Wolkowitz, the insured’s bankruptcy trustee and the claimant reached an agreement on the amount of the claim. At a hearing, the Bankruptcy Court granted the trustee’s unopposed motion to approve the agreement and allow the claim. The trustee then filed an action for breach of contract against Redland, the insurer, alleging “that the bankruptcy court’s allowance of [the] claim constituted a ‘final judgment’ against [the insured] and that Redland is liable to the trustee in that amount.”

The following video was adapted from my book, “Insurance Claims A Comprehensive Guide” Published by the National Underwriter Company and is available at the Zalma Insurance Claims Library

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The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

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