Targeted Tender is not a common term for Claims professionals.  This concept, which started with the Illinois Supreme Court, allows  the insured to choose between two or more policies when a claim is tendered.  The situation allowing two or more policies to apply is not uncommon.  This may arise when a contractor has his own coverage and is named as an additional insured on a sub-contractor’s policy.  This may also arise in claims with an exposure over more than one year.  Construction Defect claims, Toxic Tort claims, Asbestos and Environmental claims may all affect more than one policy.

A policyholder’s reason for choosing one policy over another are varied.  The contractor named as an additional insured may want to go under that policy to avoid the loss experience on his own policy.  If there is a choice among policies over several years, one of them may not be subject to a deductible or may not be retrospectively rated.  When the policyholder chooses one of several policies, there is the risk that he/she may need to involve other policies and there may be a late notice problem.

Another problem arises with horizontal exhaustion.   This doctrine, adopted by some states, requires that all primary policies be exhausted before going to any policy at the next level.  To understand the history of targeted tender and why the Illinois Supreme Court made it possible read the articles by Terrence Madden, A Clash of Coverage Doctrines.