§ 26.1-06.1-37 — Special provisions for third-party claims

North Dakota § 26.1-06.1-37

• Jurisdiction: North Dakota
• Title 26.1: Insurance
• Ch. 26.1-06.1: Insurance Company Rehabilitation and Liquidation

Text

1. Whenever any third party asserts a cause of action against an insured of an insurer in
liquidation, the third party may file a claim with the liquidator.
2. Whether or not the third party files a claim, the insured may file a claim in the
liquidation. If the insured fails to file a claim by the date for filing claims specified in the
order of liquidation or within sixty days after mailing of the notice required by section
26.1-06.1-21, whichever is later, the insured is an unexcused late filer.
3. The liquidator shall make recommendations to the court under section 26.1-06.1-41,
for the allowance of an insured's claim under subsection 2 after consideration of the
probable outcome of any pending action against the insured on which the claim is
based, the probable damages recoverable in the action, and the probable costs and
expenses of defense. After allowance by the court, the liquidator shall withhold any
dividends payable on the claim, pending the outcome of litigation and negotiation with
the insured. Whenever it seems appropriate, the liquidator shall reconsider the claim
on the basis of additional information and amend recommendations made to the court.
The insured must be afforded the same notice and opportunity to be heard on all
changes in the recommendation as in its initial determination. The court may amend its
allowance as it deems appropriate. As claims against the insured are settled or barred,
the insured must be paid from the amount withheld the same percentage dividend as
was paid on other claims of like property, based on the lesser of:
a. The amount actually recovered from the insured by action or paid by agreement
plus the reasonable costs and expenses of defense; or
b. The amount allowed on the claims by the court.
After all claims are settled or barred, any sum remaining from the amount withheld
must revert to the undistributed assets of the insurer. Delay in final payment under this
subsection is not a reason for unreasonable delay of final distribution and discharge of
the liquidator.
4. If several claims founded upon one policy are filed, whether by third parties or as
claims by the insured under this section, and the aggregate allowed amount of the
claims to which the same limit of liability in the policy is applicable exceeds that limit,
each claim as allowed must be reduced in the same proportion so that the total equals
the policy limit. Claims by the insured must be evaluated as in subsection 3. If any
insured's claim is subsequently reduced under subsection 3, the amount thus freed
must be apportioned ratably among the claims which have been reduced under this
subsection.
5. No claim may be presented under this section if it is or may be covered by any
guaranty association or foreign guaranty association.