Common use of Reserving Clause in Contracts

Reserving. Each claim should be reviewed and evaluated according to the merits of the claim and based upon the most current and reliable information received, starting with the initial report of claim and continuing through final resolution. Delays result in understated reserves and, possibly, missed opportunities to settle. A. An accurate and appropriate initial indemnity reserve shall be established on all reportable claims based on facts known, upon completion of the initial investigative report or when suit is filed, whichever occurs first. In addition, separate legal and adjusting reserves shall be established. Indemnity reserves shall reflect the most probable outcome plus exposure to plaintiff attorney’s fees and costs. Most probable outcome is the potential total amount a plaintiff could expect to receive, either through settlement or verdict, after factoring in the Member’s percentage of liability. (This approach is neither the best or worst case outcome). Factors to consider for when evaluating the potential total settlement or verdict a plaintiff could expect to receive include but are not limited to: • Extent of injuries and/or damages • Medical expenses • Loss of income • Any other related expenses • Future anticipated expenses • Total of both gross and out-of-pocket expenses • Permanent injury • Disfigurement/scarring • Pain and suffering • Any other intangible factors which may result in a higher or lower claim value such as jurisdiction, credibility of parties/witnesses, etc. Percentage of liability is determined by various factors that are discovered during an investigation. Reserves shall be adjusted accordingly, as facts are developed, to properly reflect the exposure. These factors include but are not limited to: a. Facts of loss b. Applicable laws c. Defense Counsel evaluations d. Jury Verdict evaluation e. The extent of plaintiff's liability (comparative negligence) f. The number of co-defendants and their percentage of liability g. The ability of the co-defendants to respond financially to any settlement or verdict. h. On cases occurring after June 3, 1986, Proposition 51 allows defendants to limit their liability on non-economic damages to their percentage of fault. i. On cases involving uninsured motorist claimants the recovery is limited to economic damages in accordance with California Code of Civil Procedures sections 3333.3 and 3333.4 (Prop 213). j. Any other mitigating factors

Reserving. Each claim should be reviewed and evaluated according to the merits of the claim and based upon the most current and reliable information received, starting with the initial report of claim and continuing through final resolution. Delays result in understated reserves and, possibly, missed opportunities to settle. A. An accurate and appropriate initial indemnity reserve shall be established on all reportable claims based on facts known, upon completion of the initial investigative report or when suit is filed, whichever occurs first. In addition, separate legal and adjusting reserves shall be established. Indemnity reserves shall reflect the most probable outcome plus exposure to plaintiff attorney’s fees and costs. Most probable outcome is the potential total amount a plaintiff could expect to receive, either through settlement or verdict, after factoring in the MemberParticipant’s percentage of liability. (This approach is neither the best or nor worst case outcome). Factors to consider for when evaluating the potential total settlement or verdict a plaintiff could expect to receive include but are not limited to: • Extent of injuries and/or damages • Medical expenses • Loss of income • Any other related expenses • Future anticipated expenses • Total of both gross and out-of-pocket expenses • Permanent injury • Disfigurement/scarring • Pain and suffering • Any other intangible factors which may result in a higher or lower claim value such as jurisdiction, credibility of parties/witnesses, etc. Percentage of liability is determined by various factors that are discovered during an investigation. Reserves shall be adjusted accordingly, as facts are developed, to properly reflect the exposure. These factors include but are not limited to: a. Facts of loss b. Applicable laws c. Defense Counsel evaluations d. Jury Verdict evaluation e. The extent of plaintiff's liability (comparative negligence) f. The number of co-defendants and their percentage of liability g. The ability of the co-defendants to respond financially to any settlement or verdict. h. On cases occurring after June 3, 1986, Proposition 51 allows defendants to limit their liability on non-economic damages to their percentage of fault. i. On cases involving uninsured motorist claimants the recovery is limited to economic damages in accordance with California Code of Civil Procedures sections 3333.3 and 3333.4 (Prop 213). j. Any other mitigating factors