Comments
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Ken:
Again, I enjoy your newsletters.
Further to your observations regarding counsel tendered by insurance carriers, there has been a valuable change in Texas.
The Texas Supreme Court has issued a decision by which they recognized the inherent conflict created by liability carriers having the unlimited right to designate the choice of counsel to represent their insureds. In essence, the court held that, if an insurance carrier opts to defend the insured under a reservation of rights (which, as you know, is almost always their choice in the kinds of cases we are talking about), then the insured has a reasonable right to select the counsel who will defend them. The counsel must, of course, comply with reasonable billing practices and the carrier's procedures.
As you are well aware, there is an inevitable tension for a law firm which has dozens or hundreds of cases for a carrier - such firms may do a competent job of defense, but their loyalty will always be to the carrier, first. The supremes simply recognized this reality.
Clients are comforted a great deal by this doctrine, as they no longer have the disconcerting experience of having unfamiliar counsel "dropped" on them to defend their very existence; and as a practical matter, they no longer find themselves being defended by the lowest bidder or the adjuster's best buddy's firm, but rather, are defended by counsel who are committed to the client and to the industry, and who have inherent core knowledge of the industry and its peculiarities, and who know the best experts.
We have also found that many carriers' claims people are unaware of this doctrine (or choose to pretend that it does not exist), until they are reminded of it after the carrier attempts to shove the file over to their go-to defense mill. The benefits of clients' assertion of this right are genuine - they get defended by counsel with whom they are comfortable, and whose competence in the subject matter is enhanced by experience, and the carriers don't have to pay "generic" defense counsel to get up to speed on the client, the subject matter and the industry.
In any event, I thought you might be interested in this bit of information - I am amazed, at times, at how many lawyers are still not aware of this important insured's right, six or seven years after the decision's issuance.
Yours very truly,
Spike Cutler, Esq
Cutler-Smith, PC
Dallas, Texas
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Ken
Bob Keefe brings up a VERY VERY GOOD POINT when he says WE AS AN INDUSTRY..........
This is the main reason that each one of us small and large company alike NEED the benefit of affinity affiliation with an industry association. ((ESA, State alarm associations etc))
Your talents and skills in negotiation and if need be litigation come with a price for service. When we are united we can afford the best.
Unfortunately there are those companies that do NOT JOIN because they know that the association will fight and win benefits for all. One day there might be an issue that threatens the industry as a whole. The association may not have the resources to win that fight. At that time the ones that chose not to affiliate will suffer as will the rest of us.
Everyone that reads this should ask themselves " What have i done for THE INDUSTRY, not just for myself"
Joel Kent
FBN Security Co LLC
Windsor Ct.
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Response
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A few reminders about how to handle a claim or lawsuit.
First, you must notify your insurance carrier. Your broker is not the carrier, and notifying your broker doesn't satisfy the requirement to notify the claims department. Failure to prompty provide notice of a potential claim could result in denial of coverage.
Second, be mindful of your insurance carrier's response. If you've been served with a summons then make sure your carrier provides a defense. An attorney needs to be assigned and put in an answer to the complaint. You will probably receive a coverage letter from the carrier. It will come from the claims department. It will let you know whether the carrier intends to cover the claim, providing both defense [pay the lawyer fees] and indemnity [pay the damages, if any].
As noted above, the carrier has a few options in its coverage letter: it can accept coverage; it can deny coverage; it can accept coverage with a reservation of rights. If coverage is denied, you're on your own. If coverage is accepted without qualification then the carrier will handle everything and only ask for your deductible and your cooperation. But if your carrier agrees to defend under reservation of rights, things can get sticky.
There can be different reasons for the reservation of rights. The claim could exceed your policy limits, so you are advised that you have the right to get your own lawyer at your own expense to guard against the excess claim. The claims department could have doubt regarding your coverage, but decides to handle the defense until it sorts out the coverage issue. There could be non covered claims, such as fraud or intentional wrongdoing, in which event the carrier may decide to handle the breach of contract and negligence claims, but not the fraud claims. You will be advised that you can engage your own counsel to handle the non covered claims at your own expense. This however is not the full explanation of your rights. You may have the right to select counsel of your choice, within reason and your carrier is required to pay the your attorney. So read the coverage letter carefully.
Finally, if you are not happy with the insurance company assigned counsel, complain to the carrier and your broker. Some carrier's will try to accommodate you and let you engage your choice at the carrier's expense. If your carrier flatly rejects your objection to counsel then you can engage counsel at your own expense, and you can take steps to hold your carrier responsible for the outcome of the case if not handled correctly.