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No Claims You Make Will be Paid in Your Policy


In your policy it is clearly stated that no claims you make will be paid. You unfortunately plucked for our never pay policy, which if you never claim is very helpful - but, uh, you had to claim - and voila. "

-Mr. Sneaky to Reverend Morrison over letter from insurance company refusing to pay Reverend's claim for damage to his car which was hit by a truck while standing in a garage. Monty Python and the Flying Circus, circa 1971.

This is the last article in the “Never Pay Policy” series. The series deals with the fact that, at least in my small part of the world, many carriers act as if they are selling the proverbial “never pay policy”. When the “never pay” policy turns from joke to reality, many people lose. Policyholders, whether businesses or individuals, are left to the defense and settlement of claims with their own resources. In some cases, the failure of an insurer to perform can lead to bankruptcy or bankruptcy of an insured. Claimants may be faced with the prospect of not receiving compensation for their injuries. Goods damaged or destroyed will not be repaired or replaced.

The previous articles covered some common sense steps policyholders can take to prevent a carrier from acting as if it has sold a Never Pay policy in the event of a claim. Unfortunately, an insured can go through all of these steps and still experience a Never Pay approach. Even carriers who are generally liable may have some adjusters who feel it is their duty to deny as many claims as possible rather than making an objective and reasonable determination of coverage. An insured's experience with any carrier can turn out to be a crap, according to the assigned expert. Some fitters are reasonable. Some are not.

When an insured receives a reservation of rights letter (at least for serious claims) or a denial letter, it is time to consult with a coverage lawyer. In fact, if there is a serious claim, it is even better to consult with the coverage lawyer early on in a claim. Obviously, if a carrier has filed a declaratory judgment action, which is a lawsuit asking a court to determine coverage, the insured will need to hire a coverage attorney to handle the lawsuit.

1. How to find a cover lawyer. It is important that policyholders consult with an attorney experienced in handling insurance coverage matters. It is tempting for many attorneys to take cover cases even if they have very little experience in the field. These lawyers believe that an insurance coverage case is just a variety of contractual claims and therefore there is no reason why they cannot deal with it. I'm not saying a general counsel can't process a coverage claim, but if an insured is paying hundreds of dollars an hour, it usually makes sense to find someone who has experience in the area. .

Know that insurers have legions of lawyers at their disposal. Each carrier has a “board” made up of attorneys from pre-approved law firms to represent the carrier in coverage disputes. In the case of greater or inconvenient risks (for example, those which may be relatively small but which may set a precedent for other claims), the carrier may involve its national or regional coverage advisor. National or regional coverage attorneys typically do little more than represent carriers in coverage matters, and they often come from out of state to work with the insurer's local attorney. In an earlier part of my career I was on one of these teams and while that's not what I do (or want to do) now, the experience has been invaluable. Fortunately, the carrier I represented was one of the good ones.

There is no doubt that the carrier and their attorneys will verify the credentials of an insured's attorneys. If the credentials show the lawyer to be an experienced coverage lawyer, the carrier will likely take an insured's case more seriously. An insured will want to hire a lawyer with extensive experience in representing insurers. Many underwriting lawyers previously represented insurers. Previous experience representing transport

2. A word on attorney fees. In Georgia, the insured should expect to pay the fees of their coverage attorney. Cover attorney's fees are not part of the defense obligation (the obligation to provide an attorney to defend the underlying claim). Even if the insurer sues its own client and the insured wins, legal fees are the exception rather than the rule. This is a loophole in Georgian law that must be addressed by the courts or by the General Assembly of Georgia. The law of other states may differ.

3. Options for dealing with a carrier. The first thing a coverage lawyer will want to do is review the insurance policy and all communications between the insured and the insurer, especially any reservations of rights or denial letters. After this review, the coverage lawyer can advise the insured of the options available. These options may include the following.

a. Negotiation with the insurer. A coverage lawyer can write a formal notice to the carrier asking them to reconsider their position. The request may include additional facts that could affect the determination of coverage or the legal analysis. Sometimes the negotiations are successful.

It should be noted, however, that many adjusters appear to be personally involved in their efforts to decline coverage. Some experts seem unable to be able to examine a claim objectively, especially once a denial has been made. The only hope in such a situation is the involvement of another person. Sometimes a supervisor can take a fresh look at the situation. In some cases, the carrier may choose to hire an external lawyer. An outside lawyer can advise the carrier to take a different approach. While it sometimes works, carrier representatives and their lawyers can be a particularly stubborn lot, so an insured should never rely on an insurer to change their position.

Depending on the nature of the refusal, an insured's lawyer may notify the carrier of a bad faith claim. Under Georgian law, bad faith recourse is limited to a penalty equal to 50 percent of the loss or $ 5,000, whichever is greater, plus the insured's attorney fees to sue. request for coverage. This is in addition to the amounts owed under the policy. However, obtaining a sanction in bad faith requires suing the insurer. Georgia's remedies are, in my opinion, far too limited and virtually call on insurers to act irresponsibly. The law of other states differs.

There is another form of bad faith that can come into play. If a carrier has the ability to settle a liability claim within the limits of the policy and unreasonably fails to do so, the carrier may be held liable for any judgment. which would result even if it exceeds the limits of the policy. If a carrier has an opportunity to settle and fails to do so, then the coverage attorney may warn the carrier that the insured will ask the carrier to pay "excessive judgment" on the policy limits.
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