(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.
