Early reporting, insured cooperation and thorough investigation aid claims handling when dealing with catastrophic or complex injuries or damages, according to four experienced lawyers who spoke as part of a panel during the American Bar Association’s mid-year conference on insurance coverage litigation held in Phoenix, Ariz.
The panelists were careful to note the discussion was based on their opinions and may not reflect their firms’ position.
The format followed a checklist of items needed to conduct a thorough coverage, liability and settlement analysis.
No matter the type of claim, Caryn Bellus, a shareholder at the Fla.-based firm of Kubicki Draper, stressed the necessity of securing the site where the loss occurred, as well as promptly initiating a scene investigation.
John Reitwiesner, vice president and head of casualty claims with StarStone Insurance, said it was important to obtain key facts, including the date and location of the loss, the parties involved and any insured correspondence relating to the matter.
It’s never too soon for the insured to report a claim, said Teresa Milano, assistant vice president of Claims at StarStone. In the case of an insured reporting a loss, the panel stressed the importance of determining what the insured is seeking. Is it defense or indemnity, the ability to select their own counsel or the consent to settle?
Reitwiesner, who mainly deals with excess casualty, said he’s seen a rise in initial claim notices coming directly from plaintiff attorneys, especially in Florida. The insured may not even be aware of the claim. He cited an example where he received a copy of the check for the underlying policy limit with a letter demanding the excess policy limit.
During the initial investigation, an assigned attorney may contact the insured, obtain supporting documentation, review and respond to time demands and evaluate internal measures, such as litigation holds. Other relevant documentation might include the insurance policy and underwriting file, personnel records and social media accounts. In addition, the attorney will determine if an expert is needed and will interview the claimant. Reitwiesner likes using local counsel to obtain witness statements rather than independent adjusters or investigators, stating that they tend to be more thorough.
Defense counsel can evaluate comparative fault and identify collateral sources, added Milano.
Other Coverage and When to Hire Coverage Counsel
The timing for retaining coverage counsel depends on the coverage issue and whether there is enough information available to obtain an opinion. Because plaintiff attorneys are becoming savvier, coverage counsel will be necessary more often than not, Reitwiesner said.
According to Milano, other factors that may impact the decision to hire coverage counsel include whether a policy is new or a renewal, the scope of the provided documentation, the preliminary coverage analysis and the jurisdiction.
Coverage analysis helps a carrier identify holes or pitfalls in a policy. For example, it’s important to evaluate whether an insurer is primary, excess or co-primary, she said.
“I always look to see if this claim can fall somewhere else,” said Milano.
If there is the potential for shared coverage or the opportunity to tender the matter, she places potential carriers on notice and includes the other insurance language within coverage letters.
According to Gary Gassman, ABA’s Tort Trial & Insurance Practice diversity officer and a partner in the Chicago office of Cozen O’Connor, the insured doesn’t always know all the available coverage they have.
If there is a retention limit, Milano stressed the importance of communicating that expenses will reduce that amount. She emphasized the importance of negotiating reasonable rates, as well as considering damages throughout the life a claim.
Bellus added that once there is a coverage attorney on board, the file should be split internally to ensure there is no conflict of interest.
With respect to the counsel hired to defend the case, an early evaluation is sought.
“I’m hiring you to get to the point,” said Reitwiesner.
Milano said she wants a budget within 30 days and the counsel’s gut reaction to the case.
“I’m not asking you to set everything in stone,” she added.
According to Bellus, an early and honest assessment of the liability exposure and analysis of the case is welcome.
Important elements include whether media coverage will expose an insured to reputational risk or the possibility the case could anger the jury.
Milano added that she likes to see a breakdown of the covered cause of action and exposure. She added that it’s important to consider defense costs and case evolution when weighing the pros and cons of settlement versus trial. She also recommended evaluating coverage as new information is received.
“No claim gets better or cheaper,” she said.
Because severity in cases is increasing, it’s important to evaluate how coverage affects liability, said Reitwiesner, who added that “excess is the new primary.”
In some cases, early mediation can be beneficial by providing the defense an opportunity to access discovery early, preview trial arguments, control cost and exposure, save defense costs and minimize publicity. Bellus has seen benefits of early mediation in trucking injury cases, in particular.
Panelists emphasized the importance of educating the mediator on the case and coverage.
Insufficient discovery and a claimant that’s still treating can detract from the benefits of an early mediation, Milano said.
In terms of settlement obligations, Bellus said that in Florida, a demand is irrelevant. If the insurer has all the facts it should move forward with settlement. She added that the best way to handle a time-sensitive demand is with an immediate response.
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