Our Positions | American Law Institute (ALI)
The ALI is conducting a project on the Restatement of the Law of Liability Insurance to develop principles of contract law in the liability insurance context, principles of liability insurance coverage, and principles of the management of insured liabilities. Once finalized and published, the Restatement of the Law, Liability Insurance will significantly affect litigation outcomes.
Restatement of Law are meant to reflect the consensus of the American legal community as to what the law is, and, in some cases, what it should become. They restate existing common law into a series of principles or rules. While courts are under no formal obligation to adopt ALI Restatements as the law, they often do because such sections supposedly “restate” the already-established law in that jurisdiction, or on issues of first impression, is persuasive in terms of demonstrating the current trend that other jurisdictions are following.
On May 23, 2017, ALI announced at its annual meeting that rather than hold a final vote on the Restatement of Law, Liability Insurance as scheduled, the draft's Reporters (i.e. authors) "agreed that another year of work" was needed on the project.
NAMIC Position
ALI Restatements of Law projects are supposed to be clear formulations of common law, which provide an unbiased reflection of the law as it presently stands. Unfortunately, this Insurance Law Restatement project has adopted numerous minority rules, which is fundamentally inconsistent with the purpose of a Restatement of Law project. These minority rules generally impede the ability of insurance companies to exercise their legal rights. These minority rules create litigation impediments for insurance companies that are not based upon prevailing judicial determinations. This raises the concern that a court will adopt the minority rule and believe, in error, that it is actually adopting a majority position because the rule is outlined in what is now a “Restatement” project.
The end result of this ALI project could seriously harm all property casualty insurance companies. NAMIC and AIA have enlisted a working group of insurance companies to coordinate and fund the opposition to the ALI’s improper representation of minority positions as established law. This Restatement covers many important areas of the law of contracts in the liability insurance context, liability insurance coverage, and the management of insured liabilities.
