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Relying upon the insurance of others is risky, since additional insured (“A/I”) coverage isinherently tenuous.Because catastrophic litigation could put your company out of business, considerrevisiting the question of whether insurance coverages are commensurate with thepotential exposure arising from complex projects or transactions. When the value ofclaims dwarfs the available insurance limits, a policy-limits demand will arrive quickly.This will stress the insurer-insured relationship. This will also negatively impact acompany’s ability to clear its name through the litigation process when it may not wantto settle.Insufficient insurance limits will mandate a fast, unsatisfactory settlement (assuming theplaintiffs will accept the limits). In another recent case, a company worked on amassive minerals project and faced over $20 million in claims from the owner, most ofwhich were completely meritless. However, to defend itself, the company had only a $1million professional liability policy with eroding limits. It never occurred to the owner orthe company to obtain more coverage before the project began. Without the client andcounsel undertaking significant defense efforts, the matter settled quickly for policylimits to avoid the risk of spending the limits fighting the dubious claims, and then stillfacing the possibility of an excess judgment. 66 A good resource on the benefits of a healthy insured-insurer relationship is: John Degroote and WendyTolin Breau, Bet the Company Litigation from a Policyholder’s Perspective, 2009 ACC Docket 25. Theauthors advise on what an insured should be doing with its carriers before and after catastrophe strikes,distilling their recommendations down to four rules: “1) Always act like a reasonably prudent insured; 2)Never try to outsmart yourself; 3) Apply an age-old rule (an insured cannot sue for bad faith withoutacting in good faith); [and] 4) Remember – insurers hate surprises.”