Deferment Considerations

A deferment is typically submitted when coverage is pending and under investigation, or there is a pending companion claim or suit that could exhaust policy limits. The party deferring the case will explain why the hearing needs to be deferred.

An adverse party may challenge the deferment if they believe the postponement is not needed. Similarly, the challenging party will explain why the hearing on liability and/or damages does not need to be deferred.

When challenged, the deferment needs to be ruled on by an arbitrator. So, what considerations should be given when ruling on a deferment?

Perhaps the key question is, “Will hearing the case and rendering a decision on liability and damages prejudice the party that requested the deferment?” For example, if there is a pending BI claim with an undetermined settlement amount, awarding the auto damages might prejudice the Responder’s ability to settle the BI claims when a combined single limit (CSL) policy is involved. Likewise, if the Responder has not confirmed coverage for the insured or loss, it would be prejudicial to render a decision on liability and/or damages.

An argument occasionally made by filing companies is the length of time that has lapsed since the loss, resulting in the Responder having had ample time to identify additional exposures and amounts. The fact remains that there may be additional exposures that could exhaust the policy limits, and a deferment would be appropriate.