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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