The State Bar of Texas, Insurance Law Section, published an article in a Journal it publishes which gives a perspective from the eyes of an insurance company lawyer defending lawsuits filed against the insurance company for denying claims. It is good to know how they look at these matters. Here is part of what the article tells us about what the insurance lawyer does or should do when he first receives a file.
When the insurance lawyer first gets the file his first job is to make sure you have all of the relevant documents. He should carefully review the policy to confirm he has the complete copy, including all endorsements, in effect on the date of loss. He should also have a complete copy of the insurance carrier’s claims file, which generally consists of some sort of claims diary or journal documenting the actions taken during the claim as well as claims correspondence, estimates, evaluations, and the like. It should be a comprehensive guide to the “who, what, when, where, and how” over the life of the claim. He will want to determine whether the files of any independent adjusters who evaluated the claim have been incorporated into the client’s file or if he will need to get them separately. He should also ask the client how they retain communications like emails and text messages between adjusters and insureds or vendors; he doesn’t want to see that rude or inappropriate text message for the first time at the deposition of the adjuster.
Now he needs to evaluate the case. Insurance litigation often turns on what happened when, so a timeline can be extremely helpful in answering some important questions. How much time transpired between the date of the claimed loss and the report to the client? When were acknowledgements and requests for information sent to the insured? What payments were made and when? Since the adjuster usually has little or no independent memory of the claim, you are starting behind, while the claimant likely remembers much of the claim in great detail. Having a clear timeline of events early on will help to figure out potential weaknesses in the case. For instance, were there large gaps in time when the insured was waiting on a response to start repairs? Did the insured get a timely denial letter? Did the denial go out before the claim was even investigated? Are there inconsistencies in dates of inspections or documents that are apparent from the claim file that would undermine the adjuster’s credibility? Remember, it is easy for jurors to become angry at adjusters they perceive as overly bureaucratic or rude, even if they complied with the legal requirements for claims handling. The attorney needs to be on the lookout for any behavior that will make it easier for jurors to side with the claimant if there is a question about credibility or damages. Next, he needs to make sure that he doesn’t inadvertently produce privileged documents in the claim file. Flag and remove those documents up front, so he is prepared when discovery starts and he can avoid drafting a privilege log at the last minute. The same reasoning applies to documents that he might have received that are not related to the claim file. Underwriting documents, including documents regarding reserves, may or may not be relevant in the case, but odds are they won’t be responsive to the same kind of discovery requests as claim file documents. After the attorney is sure he has all the needed documents from the claim file, it is time to have a discussion with the client about the case. The attorney needs to diplomatically point out any legal and factual weaknesses or potential issues before they arise during litigation. The attorney may also be requested or required to prepare a litigation budget at this point. Many carriers have templates the attorney is required to use, but it is often difficult to foresee the various litigation tasks and expenses that may arrive in even the most garden-variety case. The best advice on this task—and throughout the handling of the case—is to maintain good client communication throughout the process. Insurance carriers, like any other client, don’t like surprises.
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