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Who protects you from your insurance carrier
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So you finally have a claim against you. It's injury and property damage sustained in a fire loss; it's a claim for personal injury arising out of a failed PERS unit; it's a massive burglary loss; it's damages caused by an environmental alarm system that failed to detect a gas leak. etc. It's for a lot of money; more than your insurance policy limits. Or, it may be within policy limits but you get the kind of letter from your carrier that I discuss below - putting you in the same boat without a paddle.
When you get a claim you must notify your carrier promptly. Don't be casual about it because there are two kinds of carriers. One that looks to take immediate action to protect it's and your interest, and the other, who moves fast to protect itself, leaving you stuck if possible. And if you think you're going to get any help from your broker, forget it. They deal with the underwriting side, not the claims side.
So the carrier gets notice of the claim. It has several options.
- it can accept the claim and take immediate action to protect you
- it can accept part of the claim but reserve its rights to disclaim against some or all of the claim
- it can accept the claim but let you know that the claim exceeds policy limits and you can get your own attorney involved if you like, at your expense
- it can reject the claim refusing to provide any defense or assistance
Certainly if your carrier elects options two through four you need to get your own attorney involved. Arguably even if your carrier accepts full defense and indemnity coverage you may want to have your own counsel to ensure the case is handled properly and efficiently; you want to try and guard against an unnecessary payment of the claim which will certainly come to haunt you when it's added to your "claims run" and your next premium is calculated, assuming the carrier who ran up costs and mishandled the claim is even still willing to insure you.
Getting your own counsel involved can run the gamut of unnecessary to essential. Unnecessary if it's a small manageable claim that even the dumbest insurance company hack attorney can handle. Essential if the carrier has reserved coverage or the claim realistically exceeds policy limits. Then you want to be sure your butt is covered and if you get the feeling that the assigned insurance company attorney may not be working exclusively for you, in your interests and is the best you can hope for in skills and experience, it may be too late.
A potent club you hold over your carrier is your claim of bad faith in handling the claim. Your carrier owes you the best defense and outcome possible. If a claim should be settled and it can be settled within policy limits then it's bad faith to refuse to settle. The penalty for bad faith is that the carrier gets stuck with the damages exceeding policy limits. But you, your attorney, needs to know how to monitor and evaluate a complex defense case. Even competent defense counsel often have their hands tied by claims reps working for the carrier who are sometimes unfamiliar with alarm defense cases and often less than experts in handling the claims side of the defense case.
Get your own counsel involved early, not after your boat starts sinking. And this is not a job for your cousin Vinny. If you need your own counsel give me a call. Though I do represent some of the carriers I am available to assist you with those I don't represent, and they are the ones you need the most help with. If you have claims being handled by Hartford or First Mercury or some of the other carriers I am available to represent you. We don't work or for them so forcing these carriers to do right by you will be our only focus. As I mentioned yesterday, you are not likely to have any problems with your claim if SARRG is your carrier. That carrier understands the claims side and how to handle claims efficiently to favorable conclusion.
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Speaking Engagements
If you would like to schedule a free live video/webinar presentation for your association meeting or event contact Eileen Wagda at 516 747 6700 x 312.
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Alabama Alarm Association. AAA's Fall Meeting and Trade Show - October 21, 2014 from 3 to 5 PM at DoubleTree Hotel 808 South 20th Street Birmingham, AL 35205 for more info contact AAA Executive Director: director@alabamaalarm.org (205) 933-9000