This article originally appeared in Anderson Kill's Policyholder Advisor (September/October 2014).
Insurance companies often invoke a policy’s cooperation clause to compel a policyholder to share privileged defense information even after the insurance company has reserved the right to deny coverage at a later date. At one extreme, the policyholder might withhold all defense information and risk prompting the insurance company to issue a disclaimer of coverage for failure to cooperate. At the other end of the spectrum, a policyholder might lose the protection of litigation privileges by giving the insurance company unfettered access to defense information, potentially rendering the material discoverable by the policyholder’s adversary in the underlying action. Policyholders can avoid these outcomes by taking proactive steps to preserve the privileged nature of defense materials shared with their primary or excess insurance companies.