On May 20, the American Law Institute will debate and very likely approve tentative Draft No. 1 of the Principles of the Law of Liability Insurance. The Principles project, which has been in the works now for three years, will set forth the ALI’s view of what insurance law ought to be with respect to diverse topics ranging from the interpretation of insurance policies to the consequences of misrepresentations by insureds or breach by insurers of the duty to defend and finally, more esoteric issues such as allocation and bad faith.
Unlike the more familiar ALI “Restatements,” which seek to codify areas of the law for which there is already a general consensus, a “Principles” is a declaration of what the American Law Institute thinks the law ought to be.
Surprisingly, given the scope of the Principles project and its potential implications for the future development of insurance law, this project has largely flown under the radar as far as most insurance companies and insurance coverage practitioners are concerned
The proposal to create a Principles of the Law of Liability Insurance was approved by the ALI in May 2010. Thomas Baker of the University of Pennsylvania Law School and Kyle Logue of the University of Michigan Law School were appointed as the Reporters, working with a team of three dozen “Adviser” members drawn from academia, industry and law firms that represent both insurers and policyholders. There is also a large “Members Consultative Group” that has offered comments and advice as the project progressed.