Previously published in Anderson Kill's Policyholder Advisor newsletter (Volume 18 Number 6) November/December 2009.
The most frustrating insurance problems are those that could be easily avoided. Policyholders would have a greater chance of prevailing in many insurance cases if they had followed some simple steps before consulting outside counsel. In many cases, following these steps might have avoided the need to consult outside insurance counsel altogether.
As we approach 2010, here are some suggested New Year resolutions for policyholders to keep in the coming year.
Give Notice of Every Claim or Potential Claim
to All Possible Responsive Insurance Companies
The advice to provide your insurance company with notice of a claim or, in some instances, potential claims, is present in almost every speech, article, or any other form of presentation given by any insurance coverage lawyers who work for policyholders. Yet clients routinely present us with situations in which notice was delayed and the insurance company is using that delay as an excuse to deny coverage.
Yes, there are circumstances that legally excuse late notice. Yes, the insurance company might have to prove that the delay caused it prejudice in many jurisdictions.
Yes, you might be able to argue that the insurance waived the right to require notice for various reasons.
But there is no reason to put yourself in a position to have to make these arguments. If you are presented with a claim or a potential claim, give notice to any and all insurance companies that might have a responsive policy.
Do Not Settle an Underlying Claim Without Consulting your Insurance Company
Do not let your worry that your insurance company might not approve a potential settlement keep you from asking for that approval. The insurance company might very well might refuse to grant its approval, but you are almost always in a better position if you settle after the insurance company refused its approval than if you settle without having given the insurance company the opportunity to say no, or yes.
Most policies and most states will require that an insurance company justify its refusal to approve a settlement, on the grounds that such consent cannot be unreasonably withheld.
In some circumstances, particularly where the insurance company believes it has a strong defense to coverage, you might be able to get it to state that although it does not approve of the settlement and refuses to contribute, it nevertheless will agree not to raise the defense of non-approval during any future coverage dispute.
It is particularly damaging to make both of the mistakes discussed above in conjunction: never settle an underlying claim before giving notice to all potentially responsive insurance policies.
Read Your Policies
When you buy a new policy from a new insurance company – read the policy it sends you. When you renew a policy with the same insurance company – read the policy it sends you. A new or renewed policy will not always contain either the coverage that you were promised, that you expected, or that you had the year before.
Yes, you might have a claim against your brokers if they did not obtain the coverage you requested. Yes, some states will excuse the failure to read a renewal policy and hold the insurance company to the coverage in the original policy if reductions in coverage are not prominently disclosed. But again, there is no reason to put yourself in a position where you have to rely on these arguments. Rarely are judges impressed by policyholder complaints about why they were surprised, upon submitting a claim, to discover what is in, or not in, their policy.
Further, if your insurance company takes an extreme position about the meaning of certain policy language, you are also in a better position to argue that the policy is ambiguous or even incomprehensible if you can credibly testify that you reviewed the policy when it arrived, and you had no reason to expect that the policy would be applied in the way that the insurance company is advocating.
These unforced errors arise repeatedly. Indeed, if these rules were followed much more than they are now, then there would be less work available for coverage. attorneys. Want to reduce your legal bills? Read every policy you buy, and follow the procedures it requires.
Mark Garbowski is a senior shareholder and member of Anderson Kill's insurance recovery group, with particular experience in professional liability insurance, directors and officers (D&O) insurance, fidelity and crime-loss policies, Internet and hi-tech liability insurance issues.
About Anderson Kill & Olick, P.C.
Anderson Kill & Olick, P.C. practices law in the areas of Insurance Recovery, Anti-Counterfeiting, Bankruptcy, Commercial Litigation, Corporate & Securities, Employment & Labor Law, Real Estate & Construction, Tax, and Trusts & Estates. Best-known for its work in insurance recovery, the firm represents policyholders only in insurance coverage disputes, with no ties to insurance companies and no conflicts of interest. Clients include Fortune 1000 companies, small and medium-sized businesses, governmental entities, and nonprofits as well as personal estates. Based in New York City, the firm also has offices in Greenwich, CT, Newark, NJ, Philadelphia, PA, Ventura, CA and Washington, DC. For companies seeking to do business internationally, Anderson Kill, through its membership in Interleges, a consortium of similar law firms in some 20 countries, assures the same high quality of service throughout the world that it provides itself here in the United States.
Anderson Kill represents policyholders only in insurance coverage disputes, with no ties to insurance companies, no conflicts of interest, and no compromises in it's devotion to policyholder interests alone.
The information appearing in this article does not constitute legal advice or opinion. Such advice and opinion are provided by the firm only upon engagement with respect to specific factual situations