3 AAC 26.535 - Cost sharing provisions

(a) A cost-sharing provision that affects the amount of coverage for defense costs may be extended to apply specifically to coverage for attorney fees awarded as costs against an insured under Alaska Rule of Civil Procedure 82. A cost-sharing provision may not apply specifically to coverage for attorney fees awarded as costs against an insured under Alaska Rule of Civil Procedure 82 unless the application is at least as favorable with respect to that coverage as it is with respect to defense costs coverage in general.

(b) For purposes of this section,

(1) a cost-sharing provision is

(A) a policy provision relating to a deductible;

(B) a policy provision relating to policyholder retention;

(C) a policy provision relating to a policyholder loss reimbursement obligation; or

(D) another policy provision for the sharing of costs between the policyholder and insurer;

(2) a provision that limits coverage for defense costs to a specific dollar or percentage amount is a provision relating to sharing of defense costs between the policyholder and insurer, except for a provision that

(A) makes coverage for defense costs subject to an applicable limit of liability; or

(B) applies to defense-only coverage;

(3) a policy provision that establishes an insurer's right to participate in the defense of its insured at its own cost is a provision relating to the sharing of defense costs between the policyholder and insurer; and

(4) a provision is at least as favorable with respect to coverage for attorney fees, awarded as costs against an insured under Alaska Rule of Civil Procedure 82, as the provision is with respect to defense costs coverage in general if the proportion of attorney fees, awarded as costs against an insured under Alaska Rule of Civil Procedure 82 and covered after application of the limitation allowed under (a) of this section, to the minimum amount of coverage for the attorney fees that would be required by 3 AAC 26.510 and 3 AAC 26.520 if no limitation existed, is at least as great as the proportion of those defense costs, that are either covered by the policy or incurred by the insurer through its participating in or providing a defense, after application of a limitation allowed under (a) of this section, to the total incurred defense costs.

Notes

3 AAC 26.535

Eff. 12/20/2020, Register 236, January 2021

Authority:AS 21.06.090

AS 21.36.900

AS 21.42.120

AS 21.42.130

AS 21.42.160