Today Brian Friel talks more about the role of brokers in the corporate insurance process, asking this critical question: are conversations with insurance brokers privileged? Corporate policyholders deservedly believe that conversations with insurance brokers are privileged, just like conversations with lawyers. But, certain courts have held that insurance brokers break the chain of privilege between lawyers and clients, which can jeopardize the payment of legitimate claims. If you have sensitive conversations with your broker and they are deposed, corporate policyholders open themselves up to unnecessary problems. Brokers are essential to corporate policyholders in many ways, but acting as a viable alternative to focused legal representation is not one of them.
Watch the video to learn more about insurance brokers and privilege.
Managing partner Brian Friel continues his series The Ten Biggest Mistakes Made By Corporate Insurance Policyholders is the common mistake of relying too much on the advice of insurance brokers during claims denials.
We have a great deal of respect for insurance brokers. But, they should not be put in the difficult position of offering legal advice on claims. Although Insurance broker expertise is extremely valuable to policyholders when settling claims. To maximize the value of claims, is important to understand two things about insurance brokers. First insurance brokers are not lawyers. Insurance brokers know how insurance professionals treat claims, but they cannot offer the most important thing that policyholders need to know about claims, namely, how courts interpret insurance policies. Second, the important relationships insurance brokers have with insurance carriers can often be leveraged. An integrated approach, involving legal claims analysis and broker knowledge of insurance claims professionals affords the best results. Watch the video to learn more about how these important points can be used by corporate policyholders to maximize the value of insurance claims.
In today’s video, Managing Partner Brian Friel continues his series on the Ten Biggest Mistakes Made By Corporate Insurance Policyholders with number six, not understanding that an insurer’s duty to defend is incredibly broad. In practice, it is highly unusual for an insurance carrier to acknowledge the broad and all-encompassing nature of this duty. The duty to defend requires an insurance companies to defend the entirety of a lawsuit for the duration of the lawsuit. What is more, an insurance company is required to defend the entire lawsuit even if only some of the claims are potentially covered. Just one count that may be potentially covered triggers defense of the entire lawsuit. Allocation between so called covered and non-covered claims is not permitted. Moreover, insurance carriers are not permitted to claw back defense costs paid if it is later determined that the claim was not in fact covered. Insurance coverage for defense costs is often times the most important insurance asset in a corporation’s insurance program.
Duty To Defend Case Examples
Several examples of how insurance carriers try to improperly limit their duty to defend illustrates the problem and the solution. Here, Brian addresses cases in which insurance companies, despite their initial denials of coverage, had a duty to defend, and, as a result, were responsible for paying one hundred percent of defense costs associated with the claim. Unfortunately, insurance carriers seldom reach this conclusion on their own. Knowing the law is a corporate policyholder’s best defense to improper claim denials.
Watch the video to learn more about the duty to defend and why misunderstanding that duty is one of the Ten Biggest Mistakes Made by Corporate Insurance Policyholders.
In this video, Brian Friel finishes his discussion on the importance of challenging insurance billing guidelines and how insurance carriers attempt to discount corporate policyholder defense costs payments. This video picks up where the prior video addressing how insurance carriers impose unreasonable billing rate caps on lawyers left off. There are many tricks of the insurance trade used by insurance carriers to lower their payment obligations, such as making certain line item deletions on billing entries for the failure to comply with unilaterally imposed insurance billing guidelines. In practice, after applying these lower attorney rates and rejecting billing entries for the failure to comply with insurance billing guidelines, it is not uncommon for corporate policyholders find themselves getting reimbursed only 15%-25% of their legitimate defense costs incurred.
Maximizing Insurance By Challenging Insurance Billing Guidelines
Policyholders are not obligated to accept severe discounts on defense cost, but many accept such deductions. Billing guidelines are generally not enforceable and should be challenged. They are not part of the insurance policy and, in many situations, billing guidelines place defense counsel in an ethical dilemma by making it impossible for them to zealously defend a matter.
Watch our video to learn why billing guidelines are improper, and how corporate policyholders should address billing guideline challenges.
Brian Friel continues his roundup of The Ten Biggest Mistakes Made By Corporate Insurance Policyholders with point number five, the importance of challenging insurance billing rates. Far too often policyholders rely on insurance litigation billing guidelines and accepting whatever reimbursement an insurance carrier is willing to provide. The norm is for insurance carriers to apply a heavy discount to submitted legal bills. There are many ways they do this, and most of them are improper. In this video, Brian addresses best practices for challenging insurance billing rates, a problem that is present with most any liability insurance claim.
Challenging Insurance Billing Rates
One of the ways that insurance carriers attempt to limit their exposure is by arbitrarily limiting hourly rates that they are willing to pay for defense attorneys. Typically, insurance carriers cap hourly rates at a level that is far below market rates available to, and paid by, policyholders. Corporate policyholder are then left to make up the difference between unreasonably low reimbursement rates proposed by an insurance carrier, and the actual rate that policyholders pay for attorneys. This delta increases with complex litigation, where hourly rates are higher, and where cases take longer to resolve.
There is a solution to this problem. Watch the video to learn more about the importance of challenging insurance billing rates, and best practices for resolving disputed billing rates.
In today’s post Brian continues his discussion on the The Ten Biggest Mistakes Made By Corporate Insurance Policyholders, addressing the issue of relying on a certificate of insurance. Certificates of insurance are used in a myriad of situations to extend the interests under a liability insurance policy to a third-party. However, there are many shortfalls to relying on a certificate of insurance alone to transfer that interest.
Can You Rely On a Certificate of Insurance?
The problem is that a certificate of insurance, alone, is not always effective in transferring risk under an insurance policy. See Risk Transfer Nightmares. There is, however, a solution to this problem. Watch the video to learn more.
In part three of our series: The Ten Biggest Mistakes Made By Corporate Insurance Policyholders, Brian Friel addresses a common policyholder mistake: believing insurance claim denial letters.
Properly Evaluating Insurance Claim Denial Letters
The central issue that Brian Friel addresses is what policyholders should do to evaluate a claim denial letter. But first, it is important to understand why so many claim denial letters are written and sent to corporate policyholders. The insurance business model is based on maximizing premiums and minimizing claims. The minimization of claims is done, in part, through the use of claim denial letters. Accordingly, claim denial letters are written for the purpose of convincing corporate policyholders that they should not pursue a claim. As a result, these claim denial letters are expertly drafted by outside insurance company legal counsel. They contain policy language and sometimes case law quotations. Many a policyholder has received such a letter and concluded that a claim is not worth pursuing. Based on this, insurance companies know that the strategy of sending claim denial letters works.
For a number of legal reasons, it is also considered “best practice” for an insurance company to deny any claim that they believe has the possibility of not being covered.
Claim denial letters are more often than not incorrect. Insurance carriers focus on what might potentially cause a claim to be excluded from coverage, and ignore obvious allegations bringing a claim within coverage under the policy. Claim denial letters often misstate the law and facts supporting coverage. Insurers invariably distort or ignore parts of the policy which support coverage, and conveniently overlook key facts supporting coverage. Legally, insurance carriers lose sight of the fact that there is a legal presumption of coverage for claim, and that all reasonable doubts must be decided in favor of coverage.
Fighting Insurance Claim Denial Letters
Improper insurance claim denial letters can be fought and reversed. Claim denial letters should be countered by a letter from insurance recovery counsel providing a thorough analysis of the facts and law supporting coverage. Policy language must be compared to the facts and allegations, and case law must be presented in a way that objectively lets the insurance carrier know that they made the wrong decision. Done correctly, the insurer will then open dialogue with respect to settlement. Watch the video to learn more.
The Coverage Trap: Lack of Consent
Today, managing partner Brian Friel continues his series: The Ten Biggest Mistakes Made By Corporate Insurance Policyholders, addressing various consent and duty to cooperate issues that can arise with insurance claims. The coverage trap here is that policyholders may not tell their insurance carriers that they have hired outside counsel to defend the underlying lawsuit or that they have reached a settlement with the underlying plaintiff. This is a situation where the policy clearly covers the claim, but because of a policyholder’s failure to keep its insurer apprised of litigation developments, an insurer may refuse to pay some or all of the defense costs or settlement.
Tips on Maximizing Coverage
What we have seen over the years is that some companies and some defense counsel are not focusing enough on insurance, even in situations where notice is timely submitted and the insurance carriers have accepted coverage. Forgetting to inform your insurer of defense counsel invoices or an upcoming settlement meeting is like the functional equivalent of fumbling the football at the 5 yard line. You can still make a touchdown, but your claim is more difficult to make than it needs to be. In today’s video, Brian discusses how to avoid unforced errors. Watch the video to learn more.
The Late Notice Trap
In this post, Brian Friel wraps up his discussion of late notice in our series, The Ten Biggest Mistakes Made By Corporate Insurance Policyholders. The past two videos not only underscored the complexities and the importance of providing timely notice, but also addressed how insurers use the “notice trap” to deny coverage for corporate insurance claims.
Pre-Notice Defense Costs
In this video, Brian discusses an additional example illustrating how late notice ties into insurance coverage for pre-notice defense costs. In practice, insurance carriers treat pre-notice defense costs as uncovered, even if they are, in fact, covered. Failure to provide early notice, not only permits an insurance carrier to raise late notice as a defense, but it also provides the insurer with an opening to further discount amounts they will pay.
Brian closes the video with a helpful series of tips for corporate policyholders relating to notice. Watch the video to learn specifically what he recommends.
Today, managing partner Brian Friel continues his series: The Ten Biggest Mistakes Made By Corporate Insurance Policyholders. In this video, Brian continues with examples about why late notice can be a vexing problem for corporate policyholders. As discussed in Part 1: Late Notice, providing proper notice can be one of the most complex insurance issues that corporate policyholder’s face.
The Late Notice Trap
In today’s post, Brian give two examples of what he calls the “notice trap,” where insurers rely on highly technical language in their policies and aggressive arguments to deny insurance claims.
False Claims Act (FCA) / Whistleblower Insurance Coverage
In the first example, we address the unique challenges faced with False Claims Act (FCA) Whistleblower actions. Procedurally, these kinds of claims present notice challenges because, when the files a legal complaint against a company, it is done in secret. Corporations are typically unaware that a complaint has even been filed, since the Government’s complaint is initially filed under seal. Thus, corporate policyholders may not even be aware that the case is being pursued. Then, when a corporate policyholder later becomes aware of the lawsuit, insurance companies frequently argue that it is too late to pursue coverage, because notice was not provided when the initial complaint was filed under seal.
Default Judgment Late Notice
In the second example, Brian explains how an inaccurate legal filing by a tort plaintiff resulting in the entry of a default judgment can put insurance coverage in jeopardy.
These examples seem frustrating and nonsensical, because they are, but they highlight the complexity of notice and the importance of understanding insurance policies and insurance companies when pursuing insurance claims.