How many layers of coverage are appropriate?
Some layers are necessary; the question is whether layers are a necessary evil. We generally think that fewer layers are better than more layers, but this is something about which reasonable people disagree. Both points of view rest on different conclusions drawn from one observation: the process of persuading any insurer to part with significant sums to fund a settlement will take significant time and effort because the insurer must be persuaded that the risks are real and the settlement amounts are reasonable. Those who favor more layers focus on the frustration felt by plaintiffs’ lawyers eager to make a settlement. Perhaps they will take less to settle the case because of the difficulty or impossibility of persuading one or more of the excess carriers to fund a settlement. Those who favor fewer layers focus on the same frustration from the perspective of a defendant eager to have its risk resolved with the insurers’ money.
