Litigation Management

Example

“The insurance company's litigation management team decided to settle the personal injury case for $150,000 rather than risk a larger jury verdict at trial.”

Memory Tip

Litigation Management = 'Legal Game Plan' - insurers manage the legal game plan for defending their insureds in court.

Why It Matters

Effective litigation management can save insurance companies and policyholders significant money by controlling legal costs and achieving favorable outcomes. Poor management can result in excessive legal fees and unfavorable verdicts that drive up insurance premiums.

Common Misconception

Many policyholders think they control litigation decisions when they're sued, or that their insurer will always fight every case to the end. Actually, insurance companies typically retain control over litigation strategy and settlement decisions within policy limits, prioritizing cost-effective resolutions.

In Practice

A homeowner faces a $500,000 slip-and-fall lawsuit with $100,000 in liability coverage. The insurer's litigation management team assigns a defense attorney costing $300 per hour, estimates $50,000 in defense costs, and projects a 60% chance of a $200,000 verdict. They decide to offer a $75,000 settlement, saving potential costs of $175,000 in verdict plus $50,000 in legal fees, while staying within the policy limits to protect the homeowner from personal exposure.

Etymology

Combines 'litigation' from Latin 'litigare' meaning 'to dispute in court' with 'management,' indicating the systematic administration and control of legal proceedings by insurance companies.

Common Misspellings

More in insurance

Other insurance terms you should know

See Also