By Leslie King O’Neal
Advice From a Bank Robber–Go Where the Money Is
Willie Sutton was a notorious bank robber in the 1920’s and 1930’s.[i] Over his 40-year criminal career, he stole at least $2 million. When a reporter asked him why he robbed banks, he allegedly said, “Because that’s where the money is.” [ii] This later became known as “Sutton’s Law.” (When diagnosing a problem, first consider the obvious).[iii]
Applying “Sutton’s Law” to Mediation–Insurance Is “Where the Money Is”
How does Sutton’s Law apply to mediation and insurance? A major issue in mediation is determining how to fund the settlement. Insurance coverage is often a major source of funding settlements in construction cases. Paraphrasing Willie Sutton, “insurance is where the money is.” Thus, careful research and analysis of available insurance coverage is the obvious place to start when considering how to fund a mediation settlement.
But it’s surprising how often researching and analyzing insurance coverage is left to the last minute before mediation. This can have disastrous effects on settlement if carriers haven’t received timely notice or adjusters haven’t received adequate information to put up reserves for the claim. When this happens, settlement negotiations may stall or the mediation may impasse. In the worst case, the insurer denies coverage altogether, leaving its insured to shoulder settlement costs unexpectedly. Fortunately, advance preparation can help to avoid this situation. Enter the Matrix.
The Matrix & Mediation
The Matrix and its sequels are an enormously popular science fiction film franchise premised on the idea that humans live in a simulated reality called “the Matrix.” However, successful mediation doesn’t happen in simulated reality. Mediators. lawyers and parties must deal with the real world facts in the case. Available insurance coverage is one of these facts. In most construction cases, lawyers and parties who don’t appreciate the realities of insurance may find themselves taking the red pill at mediation with unpleasant consequences.
In analyzing settlement options, a fact-based matrix of the insurance policies and coverages available to contribute to settlement in a case is a useful tool . Having this information before mediation begins helps streamline negotiations and avoid potential obstacles. Previous blog posts on “Success in Multi-Party Mediations” https://theconstructionadrtoolbox.com/2024/10/tips-for-successful-multi-party-mediation/ and “Guided Choice Mediation” https://theconstructionadrtoolbox.com/2024/10/guided-choice-makes-mediation-more-effective/ discuss how pre-mediation discussion and exchange of insurance coverage (and coverage issues) before negotiations begin enhances decision-making.
Insurance Information–How to Collect It
Obtaining copies of all applicable insurance policies for all parties is the first step in creating the matrix. This may not be a simple task.
If there is a pending lawsuit, procedural rules may require disclosure of insurance information. For example, Fed. R. Civ. Pro. 26(a)(1)(iv)[iv] requires parties to provide insurance information as part of their initial disclosures (without waiting for a discovery request). Some states, such as Florida and California, have similar disclosure requirements in their civil procedure rules.[v] In other states, a formal request to produce may be necessary. Sometimes parties are reluctant to disclose their insurance information for fear it will increase the plaintiff’s demand.
If the dispute is in arbitration (where discovery may be limited ) or if there is no pending lawsuit, parties can use state statutes requiring insurers to disclose policy information.[vi] Also, contracts between owners and general contractors or general contractors and subcontractors may include language requiring insurance information be disclosed, especially if the owner or general contractor is named as an additional insured on the policy.
In “Guided Choice” mediations, parties can exchange insurance information confidentially under the mediation umbrella. Be sure to check the mediation confidentiality statute in your jurisdiction to determine if an additional confidentiality agreement is needed. before providing any information See post , Is Mediation Confidential? It Depends! https://theconstructionadrtoolbox.com/category/confidentiality/
Searching for Coverage
When creating the matrix, counsel should ask the client (or its insurance agent or risk management department) for all possible types of insurance coverage available for the dispute, both for the client and for potential defendants. Most general contractors require subs to provide certificate of insurance showing their coverages for each project. Owners may require design professionals to provide their E & O insurance information.
Common types of insurance include commercial general liability (CGL) , builders’ risk (BR), inland marine, professional liability, workers’ compensation, tools and equipment, and umbrella or excess insurance. There may be special policies (or additional coverages within policies) for pollution, design (even for contractors and subcontractors), delays ( such as for owners’ soft costs) and subcontractor default insurance. Also, subcontractors or suppliers may provide performance and payment bonds or letters of credit, which should also be considered in the matrix.
Consider Coverage Counsel
Insurance policies are complex, with numerous notice requirements, endorsements, exclusions, sub-limits, deductibles or self-insured retention limits. Since many construction attorneys are not well-versed in the intricacies of insurance, engaging coverage counsel early to review all the policies and assist in sending required notices can be very helpful. Coverage counsel can advise on notice requirements, defense obligations under additional insured provisions, determining time on risk where multiple policies are involved and what coverage triggers may apply. Sending proper, timely notice of insurance (or surety) claims is critical to coverage and can make or break a case.
Creating the Matrix
As the insurance information becomes available, the matrix takes shape. At a minimum it should include the name of each party, the name of each of its insurers (or sureties) and the type of policy, policy limits, deductible (if any), and policy period. If there are known coverage issues, they could be noted also. Sharing the matrix with the mediator before the negotiation session makes the mediator’s job easier. The matrix is a handy reference for counsel and the mediator. It also helps counsel to formulate the client’s demands on lower tier parties. It’s a good practice for all claimants (plaintiffs, cross-claimants, third party claimants) to send written demands to their target defendants sufficiently ahead of mediation for the defendants (and their insurers) to analyze the demands.
Maximize the Matrix–Keep the Carrier Informed
It’s not enough simply to know what insurance policies are available. Insurance companies need information to adjust claims and agree to pay them. Insurers don’t pay claims without having information in their file to support payment. In addition to the policy information, the insurance matrix could also include contact information for the adjuster each carrier assigns to the claim and the claim number. If the insurer retains defense counsel, include their contact information in the matrix.
Many insurance companies send requests for information to their insured after receiving a claim notice. Private or in house counsel should provide the requested information as promptly as possible. Defense counsel and the adjuster need this information for their evaluation reports, which will include their claim reserve estimate. This will be used to determine the adjuster’s settlement authority at mediation. Failing to provide this information could result in the adjuster coming to mediation without the necessary authority, perhaps causing the mediation to impasse.
Defense counsel and the adjuster should be notified of all formal or informal site inspections and testing. They should be notified of the mediation date as far ahead as possible. If possible, they should be consulted before the date is set. If the plaintiff provides a pre-mediation damages summary (which is advisable), the adjuster and defense counsel should receive a copy promptly.
Takeaways
- Follow Sutton’s Law: Research and analyze insurance information early in the case. Insurance is where the money is.
- Get Assistance on Coverage: Coverage counsel can provide valuable assistance in analyzing types of coverage and sending timely notice to carriers.
- Know the Rules: Parties may be required to disclose insurance information under civil procedure rules; where these rules don’t apply, state statutes or contracts may provide a method for disclosure.
- Use the Matrix: The insurance matrix is a valuable tool for counsel and the mediator in analyzing different parties’ settlement contributions at mediation.
- Early Information Exchange is Key: Provide necessary information to insurance adjusters before mediation.
[i] Crime didn’t pay for Sutton. He spent half his life in jail. https://en.wikipedia.org/wiki/Willie_Sutton
[ii] Sutton denied saying this but added that, “If anybody had asked me, I’d have probably said it. That’s what almost anybody would say…. it couldn’t be more obvious.”. Id.
[iii] Sutton’s law states that when diagnosing, one should first consider the obvious. It is applicable to any process of diagnosis. https://en.wikipedia.org/wiki/Sutton%27s_law
[v] Rule 1.280(a)(1)(D), Fla. R. Civ. Proc. (2025) requires initial disclosures (without a discovery request), including insurance information, within 60 days of service of the complainthttps://supremecourt.flcourts.gov/content/download/2444348/opinion/Opinion_SC2023-0962.pdf%20 Cal. Civ. Proc. Code 2016.090(1)(C) (2024) https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=CCP&division=&title=4.&part=4.&chapter=1.&article= requires initial disclosures of information, including insurance, within 60 days after demand by any party.
[vi] E.g., §627.4137, Fla. Stat. (2025) http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0600-0699/0627/Sections/0627.4137.html; GA Stat. §33-3-28(a)(1)(2024) Georgia Code Title 33. Insurance § 33-3-28 | FindLaw; MGL Ch.175§112C General Law – Part I, Title XXII, Chapter 175, Section 112C;MN Stat. 72A.201§11 Sec. 72A.201 MN Statutes
