Vertically Challenged

We noticed in the stats section of our blog, that some people had happened upon our blog using the search terms "vertical liability." Turns out we're third from the top on the Google search for that term because of our brief post on products liability where we mentioned that we had vertical files with subject information.

Unfortunately, I am not sure exactly what the searchers were looking for. The term vertical liability is not, as far as I know, standard language in insurance. One possibility for what might be of interest is supply-chain liability. In other words, what is the liability for the person up or down the chain if there's been a loss at some point in the chain. While I am sure we could provide more information on the topic, if pressed, it seems like the best plan is to try and avoid losses like this in the first place. As it says on the Risk and Insurance Management Society website: "supply chain management can stop supplier issues from becoming your own." To this end, Risk Management Magazine published an article in their April edition titled: How Spend Analysis Can Reduce Supply Chain Risk: Domino effect They also had a great article in August of 2008 entitled: Understanding Supply Chain Risk which included helpful flow charts.

Another possible topic of interest might have been vertical exhaustion of limits which has to do with the interaction of primary policies and excess or umbrella insurance policies. Vertical exhaustion of limits is described in a July 2002 article in Defense Counsel Journal as such: "vertical exhaustion allows an insured to seek coverage from an excess insurer as long as the insurance policies immediately beneath that excess policy, as identified in the excess policy's declaration page, have been exhausted, regardless of whether other primary insurance may apply." It turns out that vertical exhaustion of limits is actually somewhat controversial. Most case law appears to support horizontal exhaustion of limits, which requires exhausting the limits of ALL primary insurance which might apply before an insured can turn to his excess policies. The Defense Counsel Journal article described above and entitled Excess-Primary Insurer Obligations and the Rights of The Insured by Thomas M. Hamilton and Troy A. Stark addresses this issue quite well. For more up to date information on the topic, you might try getting your hands on a Donald Malecki article from the December 2008 edition of Malecki on Insurance entitled Horizontal Versus Vertical Exhaustion of Limits (found in a subscribers forum issue). He provides case law from 2007 and 2008 on the topic as well as his expert opinion.

While we'll continue to look at the stats for possible areas of interest, we also welcome suggestions for future blog posts. You can email the library or post a comment!