When litigating the insurance policy provisions, no one is surprised when an insured’s attorney requests the deposition of an insurer’s corporate representative. Florida Rule of Civil Procedure 1.380 (b)(6) allows a party to request a corporation to designate a corporate representative to testify to specific areas of inquiry, and the insurer must comply. In property insurance litigation, insured’s attorneys generally request an insurer’s representative to testify about the facts of the claim, the insurance policy, the adjusting of the claim and the insurer’s position on the claim.
Although on their face these areas of inquiry seem reasonable, far too often these depositions go awry for a variety of reasons. As a general matter, because the corporate representative’s testimony binds the corporation, an insurer would prefer to have a supervisory claims professional testify, rather than a field adjuster or claims examiner who might not have the same experience with litigation. Thus, an insurer will usually designate a supervisor to answer the questions.
Three main problems arise from the insurer’s need to have a supervisor testify. First, whether through the areas of inquiry themselves or the resulting questioning, insured’s attorneys will often ask questions that invade the work product claim file privilege. Pursuant to Florida law, an insured’s attorney cannot request testimony regarding the insurer’s claims handling processes and procedures. A trial judge once referred to the claims file privilege as “the insurer must testify about the who, what, where, and when, but not the why.” Arguably, there is one caveat. A corporate representative should be able to testify to the facts supporting any coverage denial and any affirmative defenses. As you can imagine, testifying to the defenses while not explaining why is often an extremely difficult task.
The second problem is that the deposition requires the insurer to ride a very fine line between attorney-client privileged communications and necessary testimony. The insurer’s attorney must assist the representative in preparing for the deposition by educating the representative about the claim. Thus, through attorney-client privileged communications, an insurer’s representative’s testimony is born. Although typically these communications would be privileged, the insurer must answer the questions set forth in the areas of inquiry; therefore, this privilege will not serve as a shield to the communications.
The third problem is that the areas of inquiry often ask this supervisory claims professional to testify as a field adjuster, claims examiner, engineer, contractor and lawyer. This is clearly an impossible task; however, if the insurer relied on these professionals and used their findings to issue a coverage position, then questions about defenses might implicate facts gleaned from all these professionals. Although an insurer can defer to these professionals, technically the corporate representative is required to come to the deposition with knowledge of, at a minimum, the facts supporting the affirmative defenses. Thus, once again the representative will have to be very careful to make sure he or she complies with the areas of inquiry while deferring when appropriate. Under no circumstances, however, should a corporate representative be required to testify regarding policy interpretation.
Considering all of these potential red flags, should the insurance company have a voice when litigating the insurance policy provisions? Yes. The corporate representative’s deposition, when handled the correct way, can be the opportunity for the insurer to explain its position. If an insured’s attorney refuses to acknowledge the privileges afforded to an insurer and refuses to reasonably limit the scope of the deposition, then the insurer’s attorney must seek the Court’s involvement to narrow the scope of the deposition. The insurer’s attorney must also promptly and effectively prepare the corporate representative to testify. After the insurer’s attorney has completed the necessary tasks with the insured’s attorney, the insurer, and, potentially, the Court, the corporate representative will give the insurer its voice to explain how and why it properly handled the insured’s claim.
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