All posts by Mark Miller

Insurance Recovery Law: What 17th Century Piracy Teaches Us About Property Insurance

 

 

What does 17th century piracy teach us about property insurance? Lots.  Although “Sue and Labor” clauses were first used in the 1600’s to deal with the loss of ships to pirates, that language is still in use today, and it is just as valuable now as it was back then.  Here, we address a classic snow removal case in New York, where tens of millions of dollars in snow removal costs were covered, despite the fact that there was no damage to property.  

Watch the video to learn how avoiding pirates relates to railroad switching equipment. 

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Insurance Recovery Law: History’s Best Decisions: Fountain Powerboat

 

 

Today we present the first part of our series, Insurance Recovery Law: History’s Best Decisions. The topic of this video is perhaps the most important business interruption insurance decision of all time, Fountain Powerboat Indus. v Reliance Ins. Co., 19 F Supp 2d 552, (ED NC 2000).  In this case, The Fountain Powerboat company of North Carolina had a work slow down as the result of hurricane Floyd.  They pursued relief under their property insurance policy pursuant to an “ingress egress” provision.  Their insurance carrier denied coverage based on an all to common insurance industry custom and practice — denying coverage because there was no physical damage to insured property.  The Court flatly rejected insurance industry custom and practice in favor of insurance policy language.  

Watch the video find out what happened, and to find out why this is one of the most important insurance recovery law decisions of all time.

Insurance Recovery Law

Miller Friel, PLLC

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Five Things You Need to Know About Property Insurance: 5) The Only Way To Maximize The Value Of Your Claim Is To Understand The Law

 

 

In our final installment of our series Five Things You Need To Know About Property Insurance, Mark Miller addresses the importance of understanding the law.    

The phrase “industry customs and practice” describes what insurance companies do.  These are the normal procedures and practices used in the insurance industry to adjust property claims.  These practices, though, can be markedly different from policy language and the law.  If you ask about an issue, and you hear, “this is just how we do things,” you should be concerned.  Insurance industry custom and practice, more often than not, has nothing to do with policy language or the law interpreting that policy language.  It is also entirely irrelevant in determining what rights are afforded under the insurance policies. 

Watch the video to learn more.

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Five Things You Need to Know About Property Insurance: 4) Most Property Claims Settle

 

 

The fourth thing that policyholders need to understand about property claims, is that most property claims settle.  This is good news, because litigation is expensive.  But, there are steps that you should take to put yourself in the correct position for an advantageous settlement.  Here, the process one goes through to move a claim from inception to settlement is critical to success. Watch the video to learn more.

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Five Things You Need to Know About Property Insurance: 3) Insurance Company Accountants Need To Be Questioned

 

 

Part three of our Five Things You Need To Know About Property Insurance series is: Insurance Company Accountants Need to be Questioned.  Insurance company accountants are unique in the accounting industry.  Far from objective reporters of the numbers, they function as highly competent advocates for insurance companies.  Unlike most accountants, insurance company accountants are not bound by typical cost accounting or public accounting standards.  Although they have certain typical tools they routinely use to minimize claims, they can literally make up and use any approach they want to improperly diminish claim value.  To learn more watch the video.

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Five Things You Need to Know About Property Insurance: 2) Presentation of the Claim is Everything

 

 

Part two of our Five Things You Need To Know About Property Insurance series is: presentation of the claim is everything.   Property insurance policies contain numerous options for coverage.  For each of these options, or coverage grants, different financial parameters attach. When corporations are faced with a complicated property insurance claim, the easiest thing to do is to provide all of the relevant claim information to the insurance carrier, and let them decide whether any given cost is covered under the policy.  This can be a recipe for disaster.  To learn more, watch the video.

For a transcript of the video please see below

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Five Things You Need to Know About Property Insurance: 1) When You Make a Property Insurance Claim, You Are Stepping Into a Minefield

 

 

Today, we start a new series, Five Things You Need To Know About Property Insurance.  In the first installment, we address why making a large property insurance claim is akin to unsuspectingly stepping into a minefield.  Property insurance claims are filled with potential pitfalls that can cripple a policyholder’s chances of recovery.  Yet, many of these pitfalls go unrecognized. 

Watch the video to learn more, and please check back in in the following weeks to see the continuation of this series.

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Five Things You Need to Know About General Liability Insurance: 5) Don’t Fall For The Consent To Settle Trap

 

In our last “Five Things You Need To Know About General Liability Insurance” episode, we address one of the most onerous traps that an insurance company can set for a policyholder – the consent to settle trap.  Many a policyholder has fallen into this trap.  The unfortunate thing for policyholders is that this classic setup oftentimes works, and policyholders are unsuspectingly forfeiting coverage.

The problem is also widely prevalent.  The consent to settle trap is raised in most every piece of litigation that is being defended by an insurance company.  Whenever there is mediation or talk of settlement, policyholders should expect that this trap will be set.

Recognizing the trap is only the first step.  Once the trap is recognized, certain strategies need be applied to achieve full coverage.  To learn more, please watch the video.

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Five Things You Need to Know About General Liability Insurance: 4) Insurance Carriers Will Try to Improperly Limit Their Defense Obligation

 

Nothing in insurance is perhaps more frustrating to policyholders than being “nickeled and dimed” by an insurance carrier on defense of a covered claim.  Today we continue our Five Things You Need To Know About General Liability Insurance series with our fourth installment, where we address common strategies that insurance carriers employ to improperly limit what they will pay for the defense of covered claims.   When an insurance carrier agrees to defend a claim, policyholders rightly expect that the insurer will pay one hundred percent of that defense.  The reasons for this are well justified.  The duty to defend is like an on or off switch.  If the switch is on, the insurer has an obligation to defend, and they must pay for the entirety of the defense.  If, conversely, the switch is off, the insurance carrier has no obligations whatsoever.

Insurance carriers employ a number of tactics to try and avoid paying the full defense bill incurred by policyholders.

A common tactic that insurance carriers employ is to try and limit hourly rates paid to attorneys.  Insurers pay their general liability defense lawyers at pre-negotiated rates, which, depending on the specialty, tend to be far below market rates paid by policyholders.  Law firms that handle general liability defense work, in turn, set up their associate pay structures to profitably handle the large volumes of work delivered to them by the insurance carrier.  These practices can deliver excellent services for a slip and fall case, and their rates may be reasonable for that kind of work.  When the underlying claim is either complex, or high dollar, a defense cost issue may arise.

The way this comes about is the insurance carrier says, “$800 is an unreasonable hourly rate, as we only pay our defense lawyers $250 an hour.”  For many specialties, $800 per hour is reasonable, and this tactic, if left unchecked, can result in a substantial undeserved discount for the insurer.

Another tactic is for the insurance carrier to say, “well, your policy covers two out of the ten counts against you, so we are going to pay one fifth of the total bill.” Again, if permitted by the policyholder, this represents a huge savings to the insurance carrier.

In most instances, these tactics are improper and avoidable.  If the policyholder has the right to select counsel due to a conflict of interest, the “unreasonable fees” argument is invalid.  Similarly, the “we’ll pay twenty percent” of the defense argument is illegal in most jurisdictions.

Insurance companies are great at controlling costs, but their desire to pay less oftentimes puts policyholders at risk.  This is why common law bad faith was created by the courts, and why virtually every jurisdiction has insurance claims practices statutes regulating insurance company conduct.

Please watch the video to see some of the strategies that we use to effectively counter these and other insurance company defense limiting tactics.

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Five Things You Need to Know About General Liability Insurance: 3) The Right to Select Your Own Counsel


In part three of our series “Five Things You Need To Know About General Liability Insurance” we address whether a policyholder, or the insurance carrier, has the right to select defense counsel. With high dollar claims, this can be a critical issue for policyholders.

The initial question policyholders should ask, is whether the underlying litigation is important enough to justify hiring defense counsel of a policyholder’s own choosing. Although litigation may be annoying, it is not always significant. Insurers typically do a great job at defending low-dollar slip and fall cases,. With these kinds of bodily injury claims, there is generally no reason to quibble with an insurer’s selection of defense counsel. Insurers have large numbers of lawyers on call to defend these cases, and, using an insurance company appointed lawyer to defend these kinds of claims may be the best option.

Cases we become involved in as insurance coverage counsel fall into a different category, namely, high-dollar complex litigations that have the ability to significantly impact the company. If a case alleges considerable damages, or centers on complicated legal specialties, a general purpose insurance defense litigator appointed by the insurance carrier may not be the best choice. For these kinds of claims, policyholders should carefully analyze whether they have the right to select counsel.

Here, there is a major divide between insurance industry custom and practice, and what the law provides. Insurers seldom offer a policyholder the right to select counsel. Yet, the law oftentimes mandates that the insurer accept a policyholder’s selection of counsel. Most jurisdictions permit the policyholder to select counsel when there is a conflict between the policyholder and the insurer. Unless the insurer unqualifiedly defends the policyholder, which is exceedingly rare, there is likely a conflict. The most common example of this is the typical reservation of rights letter, the kind that insurers send on most every claim they encounter. As a general rule, these letters state that the insurer will defend, up and until defense counsel finds evidence indicating that coverage need not be provided. There in lies the conflict. The insurer is paying defense counsel, and defense counsel is beholden to the insurance carrier for future business. Defense counsel knows that, if they find evidence supporting an insurance carrier’s position for denial of coverage, that the insurance carrier would want them to divulge that information to them. This is a classic conflict of interest that the law has long since recognized, and this conflict is the very reason that policyholders should be permitted to select defense counsel for the vast majority of claims.

If you have any questions, please feel free to contact us.

Select Your Own Counsel

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