Arbitration & Mediation

You Must Create Disputes to Resolve Conflicts: Contingent Business Interruption Coverage

By Victoria Pynchon

Conflict exists. It is a neutral state in which one person believes that his needs or desires cannot be satisfied at the same time as his fellows. 

This belief system -- that, for instance, there's not enough food in the world to feed everyone -- is not reality.  It is a belief system based on the way in which we allocate resources.  This is such a strong belief system that most people would simply call it a fact.  

Conflict is the field in which zero sum games are routinely played out.  You know a zero sum game.  It's a game in which my loss is your gain and my gain is your loss.  I win, you lose.  People are starving because there isn't enough food to go around.  It's a zero sum world.

We exist in conflict.   We're in a daily battle for resources we firmly believe to be scarce.  How dangerous is this belief in scarcity?  I'll give you just one example.  We kill at least one person every year for asserting his right to a parking place another person believes to be theirs. (For a parking lot hypothetical tracing the eruption of a conflict into a dispute, see the first chapter of my upcoming book A is for Asshole, the ABC's of Conflict Resolution here).

Most people think that ADR professionals believe that all conflicts are bad.  Quite the contrary, ADR professionals understand that many conflicts must ripen into disputes in order for the society to operate more justly.  Most of us are lawyers, after all, and we're dedicated to the rule of law and the principle of justice.

The mere existence of conflicting interests (there isn't enough food to feed everyone) does not cause conflict. 

What causes conflict is our perception of "relative deprivation."  I'm not getting fed because my next door neighbor is.  I was not promoted because my co-worker was.  I didn't gain admission to my chosen University because 'less qualified' students were admitted under affirmative action guidelines.  K-Mart suffered crippling market share losses because its competitors, Wal-Mart and Target, engaged in unfair competitive activities (purely hypothetically).   

The 'loser' in each of these examples is experiencing what social psychologists call perceived relative deprivation.  It is the relation between one's own loss as compared with someone else's gain that turns the otherwise 'inert' state of deprivation into an active, sometimes violent, dispute. 

Listen to author, mediator, teaching and scholar Ken Cloke on conflict.  "Conflict," he writes,

is the sound made by the cracks in a system, the manifestation of contradictory forces existing in a single space.  Many . . . conflicts represent the points of weakness in a organizational [or political or commercial] system.

To "make room" for those "contradictory forces" we often must raise a ruckus or ask for something we never believed we might be entitled to.

Which takes me (at long last) to Scott Godes' recent post on contingent business interruption coverage. 

Huh?

Listen.  Your interests are at -- at best -- in perceived conflict with those of your insurance carrier.  That's why the entire field of bad faith insurance law was developed.  Corporations once had a cozy, apparently non-conflictual relationship with their carriers because no one questioned the carriers when they said a claim wasn't covered.  That was before catastrophic losses caused Fortune 500 corporations to call creative attorneys and specialties like environmental insurance coverage law were created. 

Today, Dickstein Shapiro partner Scott Godes creates a quiet and quite restrained ruckus by raising a  conflict to the level of a dispute -- by way of his post Ensuring Contingent Business Interruption Coverage.

Today, Insurance Law360 published a piece that I wrote regarding contingent business interruption coverage.  Are you wondering what is contingent business interruption insurance, and whether your business needs it?  I gave an overview of the coverage in the article:

First, an overview of contingent business interruption coverage. 'Regular business-interruption insurance replaces profits lost as a result of physical damage to the insured's plant or other equipment; contingent business-interruption coverage goes further, protecting the insured against the consequences of suppliers' problems.' Archer Daniels Midland Co. v. Hartford Fire Ins. Co., 243 F.3d 369, 371 (7th Cir. 2001) ('Archer v. Hartford').

For full post click here.

Convoluted I know; welcome to my stream of consciousness.

Full post as published by Settle It Now Negotiation Blog on April 09, 2009 (boomark / email).