Article
| February 14, 2012
More Porridge Please: Reinstatements in Reinsurance
In a typical reinsurance contract, the reinsurer agrees to indemnify the ceding insurer up to the stated limit of reinsurance coverage. Depending on the type of reinsurance contract and the coverage that is provided, that limit could be on a per occurrence or per risk basis, or it could be in the aggregate, or it could be some combination of limits. The reinsurance limit may include defense costs or defense costs may be outside the stated limit of the reinsurance contract. There
may be what is called a sub-limit for certain special risks like windstorm or earthquake, which comes within the overall aggregate limit of the reinsurance contract if there is one. At the end of the day, a reinsurer generally tries to limit its liability under the reinsurance contract to an ultimate limit after which the reinsurer’s liability terminates (at least on a per occurrence or per risk basis if an aggregate limit is not contained in the contract).
This memorandum is intended only as a general discussion of these issues. It is not considered to be legal advice. We would be pleased to provide additional details or advice about specific situations. For additional information on this important topic, please feel free to call upon your Dewey & LeBoeuf relationship partner. No part of this publication may be reproduced, in whole or in part, in any form, without our prior written consent.
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