All posts by Mark Miller

Top Ten Insurance Recovery Issues For Corporate Policyholders

More now, than any other time that we can remember, policyholders in corporate insurance recovery cases seem to be getting it wrong.  Policyholders are losing corporate insurance recovery cases that they deserve to win.  As we study insurance coverage decisions, we cannot help but notice the cause of the problem:  policyholders are either being given bad advice, or they are making critical preventable mistakes.   This is the reason why we developed this Top Ten List of Insurance Issues for Non-Insurance Lawyers. 

First, a little background into the problem.  Lawyers are critically important to corporate policyholders, both with respect to advising on claims, but also with respect to reviewing coverage.  Lawyers, whether in house, or at an outside law firm, are some of the first to become aware of potential claims.   Ever evolving insurance coverage case law, a complex statutory overlay governing insurer conduct, and incomprehensible insurance jargon, can make it difficult for lawyers to obtain straightforward answers to insurance problems.  Fortunately, a little knowledge goes a long way towards preventing corporate policyholder missteps. 

As history has shown, it is not all that easy to obtain accurate advice on corporate insurance issues.  As most partners at large prestigious law firms know, insurance ties with the legal industry are are vast and complex.  Arrangements between law firms and insurance carriers to control corporate insurance claims are widespread.  Most large law firms represent insurance carriers in some capacity, and rules of engagement with insurers are often adopted to keep insurance company business, and to minimize law firm financial backlash from insurers when they pursue corporate insurance claims.  These rules of engagement may include, among other things, a prohibition on filing bad faith lawsuits, limitations on discovery against insurers, and an understanding, that if things get rough, strings will be pulled to pull off the attack dogs.

Non-insurance lawyers looking into insurance claims should also be aware that insurance brokers face similar challenges.  Any good insurance broker will admit that they are walking a find line when it comes to providing advice on corporate insurance claims.  Insurance brokers are typically paid by insurers, and, in many instances, they are financially rewarded based on losses paid on their accounts.  They make more if their client-policyholders do not make claims.  As a result, their first reaction may be not to tender a claim, or to try and convince a policyholder that a claim is not covered.  If a policyholder persists, the next step that brokers use to manage the claims process is to involve their in-house claims advocacy group.   These in-house claims advocacy groups serve the purpose of managing client expectations by helping them align policyholder client beliefs with insurer demands.  Communications with broker claims advocacy lawyers, however, are likely not privileged, and given their goal of compromising claims, they oftentimes create smoking gun documents that can seriously harm a policyholder’s coverage position.

Non-insurance lawyers should should take these considerations into account.  Many a policyholder has been persuaded by an insurance company lawyer or insurance broker to compromise a claim, or worse yet, to drop a claim that an insurer is passionate about denying.  Independent accurate claims advice is difficult to find.

Top Ten Insurance Recovery Issues For Corporate Policyholders

Our top ten list of insurance recovery topics for non-insurance lawyers includes:

  1.  Notice,
  2.  Defense Costs,
  3.  Government Investigations,
  4. Independent Investigations,
  5. Cyber/Intellectual Property Claims,
  6. D&O Insurance Terms and Conditions,
  7. Post-Merger Acquisition Claims,
  8. Rescission,
  9. Criminal Activities, and
  10. Privilege.

1.  Notice

Insurance policy notice provisions are often treacherous for policyholders, but with proper analysis, coverage can be preserved.

2.  Defense Costs

The second issue in our continuing analysis of the top ten insurance issues for non-insurance lawyers is the full recovery of defense costs.  Insurance carriers make it difficult for policyholders to get a fair read on coverage.

3.  Governmental Investigations

More often than not, governmental investigations are covered.

4.  Independent Investigations

Insurance Recovery Issues For Corporate Policyholders

The fourth topic in our list of Top Insurance Issues for Non-Insurance Lawyers is coverage for so-called voluntary or independent investigations.

5.  Cyber and Intellectual Property (IP) Claims

Insurance Recovery Issues For Corporate Policyholders

In this video, we address an oftentimes overlooked area of coverage, that is, coverage for cyber and intellectual property claims under general liability insurance policies.  Don’t overlook “advertising injury” coverage provided in general liability insurance policies.

6.  D&O Insurance Policy Terms and Conditions

Sophisticated organizations routinely engage outside counsel to review their Directors and Officers liability insurance policies.  If done correctly, it can result in vastly superior coverage.  But, relying on standard forms and pre-drafted policy enhancements can be a recipe for disaster.

7.  Post-Merger/Acquisition Claims

Corporate acquisitions and spin-offs are common.  Most people involved in corporate acquisitions are aware of the concept of tail coverage, but certain things need to be done to a tail policy if an acquiring organization intends to pursue coverage.

 

8.  Rescission of Insurance Policies

In the last ten years, there has been an explosion of rescission claims by insurers.  More and more, insurers are asserting rescission as an additional reason for denial of coverage.  In reality, rescission is a drastic remedy that has no place in insurance law.

9.  Insurance Coverage For Criminal Activities

Many non-insurance lawyers assume that criminal activities are not covered by insurance; in fact, the exact opposite is true.

10.  Privilege

In our final installment of the Top Ten Insurance Issues For Non-Insurance Lawyers we address the issue of privilege.  Case law addressing insurance broker communications has not ended well for policyholders, but steps can be taken to minimize adverse results.

Questions About Corporate Insurance Recovery

Over the years, insurance recovery law has become highly specialized.  The nuances of insurance law may fall outside the scope of in-house or outside counsel expertise.  Knowing what questions to ask can go a long way towards identifying  key insurance issues and preventing needless insurance-related mistakes

We hope that this series was helpful.  If you have any questions about these or any other corporate insurance coverage issues, please feel free to contact us.

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Business Checklist To Maximize Hurricane Insurance

When a business suffers damage from a major hurricane or storm, most or all of its losses should be covered by traditional property insurance.  Although this kind of Hurricane Insurance is pervasive, navigating claims can be exceedingly difficult.  And, given the advice the insurance industry gives about property insurance,  it is no surprise that many policyholders are conditioned to minimize  rather than maximize coverage.  To maximize insurance coverage, businesses need to take certain steps.

Business Checklist for Hurricane Insurance

Hurricane insurance is part of most traditional “All Risk” property insurance policies

A Hurricane Insurance Checklist for Business

After a hurricane or storm, businesses should take the following steps:

1.  Give Notice to Applicable Insurance Companies.  A business should provide immediate notice to its insurance carriers.  In a worst case scenario, the lack of notice could result in losing all coverage. Coverage counsel can help you decide which policies may provide coverage so that proper notice can be sent.

2.  Mitigate Loss; Preserve Evidence.  Serious storm damage needs to be cleaned up immediately for both business and insurance reasons.  For a business, it needs to get back to work.  From an insurance perspective, a policyholder needs to mitigate its loss or risk. Ideally, the quick cleanup actions and immediate repairs will be coordinated with the insurance adjuster, as the insurance carrier is obligated to pay for those immediate repair costs.  Sometimes, however, a business must act before the adjuster is available or willing to view the damage.  In that situation, the business should preserve evidence through photographs and videos.

3.  Keep a Record of Communications with the Insurer.  Keeping a written record of communications with the insurance adjuster is important for two reasons.  First, it will help you keep track of what both policyholder and the insurer need to do and make sure each side is on the same page.  Second, it will make it harder for an adjuster to abandon an oral commitment made, which sometimes happens when that commitment ends up costing the insurer more than anticipated.

4.  Fully Assess Damage and Hire Needed Experts.  Although damage from a storm may seem obvious, there may be a lot more damage than is initially apparent.  In order to maximize coverage, a business should make sure it assess all physical damage and lost business income it has suffered.  That full assessment often means that a business must hire experts to help with the claim, including engineers, accountants, and coverage lawyers.  Most or all of these expert services are covered under the insurance policy as well.

5.  Don’t Miss Deadlines.  Insurance policies contain numerous time deadlines that can be traps for businesses.  For example, most policies contain a specific deadline, such as 60 days, to submit a sworn proof of loss to the insurer.  If a business misses that deadline, it may lose coverage.  Coverage counsel can help keep track of deadlines and obtain extensions as needed.

6.  Request Partial Payments and Advances as Needed.  Often, a business needs insurance funds for cleanup and repair before the insurer has made a final determination on the claim.  In those situations, a business can obtain a partial payment or advance on its insurance claim.  However, to avoid potential traps in these situations, such as when an insurer may seek a broader release than the scope of its payment, coverage counsel should be consulted.

7.  Don’t Accept Less Coverage Than You’re Entitled.  Full or partial denials of coverage should not cause a business to give up on its coverage.  Without well-reasoned push back from policyholders, significant insurance proceeds are left at the table.  Consult with experienced coverage counsel, and don’t accept no for an answer.

Maximizing Hurricane Insurance Coverage

Property insurance claims are difficult to manage.  While Insurance industry jargon and insurance industry custom and practice have evolved towards minimizing coverage, the law and policy language typically favor a maximization of coverage.  In the end, the most important part of any claim is to conduct a legal analysis of coverage.

For more on this topic, please see Property Insurance – The Value of a Second Look; What 17th Century Piracy Teaches Us About Property Insurance; Five Things You Need To Know About Property Insurance Part 1 (The Property Insurance Claims) Minefield), Part 2 (Presentation of the Claim), Part 3 (Insurance Company Accountants), Part 4 (Most Claims Settle), Part 5 (Know the Law); History’s Best Property Insurance Decisions (Fountain Powerboat); The Real Value of Property Insurance (Covering Business Income Loss).

When Should You Sue Your Insurance Carrier – An FCPA Investigation Case Study

Insurance carriers litigate for a living, and are oftentimes planning a proactive lawsuit before a policyholder even hires coverage counsel.  Nonetheless, businesses with large insurance claims are typically skeptical of suing insurance carriers.

This video addresses a concrete example of how to use litigation to maximize claim value.  Here, a lawsuit was filed, and within weeks the insurance carrier was talking settlement.  To learn more, please watch the video.

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Insurance Recovery Law: History’s Best Decisions: The Brillhart Decision

 

The next case in our series Insurance Recovery Law: History’s Best Decisions turns back the clock to 1942 for the Brillhart decision.  Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942).  Although decided in 1942, Brillhart is extremely valuable today..

Nowadays, corporate policyholders are facing an all-to-common scenario.  When a business tenders a claim, an insurance carrier should evaluate the claim, and provide a defense.  Many insurers have abandoned this approach for a more adversarial route.  With those insurers, rather than providing a defense, they sue seeking a declaration of no coverage.  Their strategy is to sue when the corporate policyholder is weakest, and that time is typically just after the corporate policyholder has been sued in an underlying lawsuit.  Favorite forum for these insurers, Federal Court.

If the rash of insurer-filed declaratory judgment lawsuits are the epidemic, Brillhart is the cure.  In reality, insurance coverage lawsuits have no business in federal court, and Brillhart sets the standard for the doctrine of abstention, which provides a mechanism for dismissing insurance company filed federal Court declaratory judgment actions.

In today’s video, Mark Miller explains how this often overlooked doctrine can be used to help policyholders.

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Insurance Recovery Law: History’s Best Decisions: The Penford Case

 

Our next case in our series “Insurance Recovery Law: History’s Best Decisions” is the Penford case from 2011.  See Penford Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 662 F.3d 497 (8th Cir. 2011).   Although this case had a tragic outcome, it illustrates what not to do in the corporate insurance arena. 

In Penford, after years of litigation, the insurance broker lost the case.  If case was a one-off situation, one could understand a mistake being made.  We highlight this case, however, because the way Penford and its broker handled this claim, is similar to the way that many claims are handled today.  

The problems in Penford are raised whenever an insurance broker attempts to act as a claims advocate.  Watch the video to understand what happened, and to devise a plan that properly utilizes insurance broker expertise and contacts to settle a claim. 

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D&O Insurance Coverage for Government Investigations

 

This video addresses a real life situation were a D&O insurance carrier agreed to pay for defense of an investigation, but attempted to pay for only half of the defense costs incurred.  As is typical for these kinds of governmental investigations, both the SEC and DOJ were involved.  One agency issued a subpoena triggering coverage, and the other agency monitored the situation.  The D&O insurance carrier alleged that there were two investigations, and offered to pay only half of the costs incurred. 

Please watch the video to learn more about how to defeat this common argument.

D&O Insurance Coverage for Government Investigations

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Reversing Insurance Claim Denials Part 3: Negotiating a Resolution

 

 

In our final installment of this series addressing best practices that businesses can employ to reverse business insurance claims, Mark Miller addresses strategies that can be employed to negotiate a favorable settlement.  At every step, insurance carriers pass the ball back to the policyholder, hoping that the policyholder will go away.  Insurance claims adjusters, with a slew of insurance company lawyers behind the scenes, drive the process, and are often unwilling to change their position unless they see both corporate and professional risk.  A policyholders prime objective, therefore, is to create risk for the insurance carrier and the individuals involved in the claims adjustment process.  If done in a highly professional manner, the insurance carrier will make it known that they want to settle.  If done improperly, a mess is about to ensue.

To learn more about the process, and how to successfully walk the line, watch the video.

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Reversing Insurance Claim Denials Part 2: Credibly Analyze Claim Denial Letters

 

 

In Part 2 of this series on businesses and legal strategies that can be employed to reverse insurance claim denials, we address strategies for responding to insurance claim denial letters.  In this video Mark Miller explains that the next step in dealing with a denied business insurance claim is to credibly analyze the insurance carrier’s denial letter, taking apart, and responding to, each and every argument raised. 

When responding, there is one additional strategic step that policyholders should take.  Watch the video to learn about more about the process, and best practices for reversing a claim.

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Reversing Insurance Claim Denials Part 1: Don’t Believe Claim Denial Letters

 

 

Today we start a three part series addressing the best strategies that policyholders can use to reverse business insurance claims denials.  In this post, Miller Friel co-founding partner Mark Miller explains that the first, and perhaps the most important step, is to understand that the overwhelming majority of claim denial letters are false.  The video addresses the primary purposes of claim denial letters, and a more sinister trick that lies within claim denial letters that needs to be heeded to preserve coverage. 

 

Watch the video to learn more.

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Property Insurance Claims: The Value of a Second Look.

 

 

Property insurance claims can be extremely complex, and things are not always as they are portrayed by the insurance industry.  In this video, Mark Miller gives a perfect example of how property insurance claims can benefit from a second look by an insurance recovery lawyer.  This story is a real life example where a quick review of claim documents by an insurance recovery lawyer resulted in several million dollars of value to the client.

 To hear Mark’s story, watch the video.

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