The most frustrating insurance problems are those that could be easily avoided. Policyholders would have a greater chance of prevailing in many insurance cases if they had followed some simple steps before consulting outside counsel. In many cases, following these steps might have avoided the need to consult outside insurance counsel altogether.
As we approach 2010, here are some suggested New Year resolutions for policyholders to keep in the coming year.
Give Notice of Every Claim or Potential Claim to All Possible Responsive Insurance Companies
The advice to provide your insurance company with notice of a claim or, in some instances, potential claims, is present in almost every speech, article, or any other form of presentation given by any insurance coverage lawyers who work for policyholders. Yet clients routinely present us with situations in which notice was delayed and the insurance company is using that delay as an excuse to deny coverage.
Yes, there are circumstances that legally excuse late notice. Yes, the insurance company might have to prove that the delay caused it prejudice in many jurisdictions. Yes, you might be able to argue that the insurance waived the right to require notice for various reasons.
But there is no reason to put yourself in a position to have to make these arguments. If you are presented with a claim or a potential claim, give notice to any and all insurance companies that might have a responsive policy.
Do Not Settle an Underlying Claim Without Consulting your Insurance Company
Do not let your worry that your insurance company might not approve a potential settlement keep you from asking for that approval. The insurance company might very well might refuse to grant its approval, but you are almost always in a better position if you settle after the insurance company refused its approval than if you settle without having given the insurance company the opportunity to say no, or yes.
Most policies and most states will require that an insurance company justify its refusal to approve a settlement, on the grounds that such consent cannot be unreasonably withheld.
In some circumstances, particularly where the insurance company believes it has a strong defense to coverage, you might be able to get it to state that although it does not approve of the settlement and refuses to contribute, it nevertheless will agree not to raise the defense of non-approval during any future coverage dispute.
It is particularly damaging to make both of the mistakes discussed above in conjunction: never settle an underlying claim before giving notice to all potentially responsive insurance policies.
Read Your Policies
When you buy a new policy from a new insurance company — read the policy it sends you. When you renew a policy with the same insurance company — read the policy it sends you. A new or renewed policy will not always contain either the coverage that you were promised, that you expected, or that you had the year before.
Yes, you might have a claim against your brokers if they did not obtain the coverage you requested. Yes, some states will excuse the failure to read a renewal policy and hold the insurance company to the coverage in the original policy if reductions in coverage are not prominently disclosed. But again, there is no reason to put yourself in a position where you have to rely on these arguments. Rarely are judges impressed by policyholder complaints about why they were surprised, upon submitting a claim, to discover what is in, or not in, their policy.
Further, if your insurance company takes an extreme position about the meaning of certain policy language, you are also in a better position to argue that the policy is ambiguous or even incomprehensible if you can credibly testify that you reviewed the policy when it arrived, and you had no reason to expect that the policy would be applied in the way that the insurance company is advocating.
Conclusion
These unforced errors arise repeatedly. Indeed, if these rules were followed much more than they are now, then there would be less work available for coverage. attorneys. Want to reduce your legal bills? Read every policy you buy, and follow the procedures it requires.