Dallas Fort Worth Insurance Lawyer Blog

Knowing how an insurance company looks at lawsuits that result after a claim is denied is valuable.  The State Bar of Texas, Insurance Law Section, publishes a journal called Journal of Insurance Law.  This Journal recently published an article discussing how lawyers who have insurance companies as clients, look at lawsuits that result from a claim being denied.

This third part of the article discusses the depositions of a corporate representative, the adjuster, and looks at experts.

Corporate representative depositions are make-or-break propositions.  Sometimes, that choice is out of the hands of the insurance lawyer and many insurance carriers have identified particular employees for whom giving testimony on behalf of the company is part of their job description.  He or she should also have an unflappable demeanor.  In addition to selecting the right witness, it is important to ensure that the deposition topics are narrowly tailored and stated with “reasonable particularity.”  It is useful to have a conversation with opposing counsel to clarify vague topics and to limit overly broad ones, as both parties have an interest in a shared understanding of the topics at issue and bringing a knowledgeable and well-prepared representative to the deposition.  When deciding whether to involve the court, it is important to familiarize yourself with the case law on both federal and state requirements to protect your client from improper corporate representative deposition notices.  For instance, depending on the jurisdiction, it may be prudent to move for a protective order instead of simply objecting to proposed topics.  Once the deponent is selected, preparation is paramount.  It is prudent to first have fact-gathering meetings.  Since a corporate representative is obligated to present the information that is available to the company, it is useful to outline what information needs to be gathered and by whom.  After those meetings are accomplished, it is then prudent to schedule at least two face-to-face meetings with the deponent.  These sessions should allow for time to practice with mock cross-examination.  This is important for experienced deponents as well as rookies.

Knowing how insurance companies and their attorneys look at denied claims that result in a lawsuit is valuable to the attorney and his client who is suing the insurance company for the denied claim.  The State Bar of Texas is a source for some helpful information.  In particular the Insurance Law Section is a good source because it publishes articles in a publication called Journal of Insurance Law.

A recent article title “A Practical Guide To Defending A First-Party Property Insurance Claim” has good information contained within it.  Part of what it tells us is as follows:

If the plaintiff hasn’t sent a proper notice, an insurance company attorney may want to file a verified answer seeking an abatement until the demand is received.  Although proper notices do not have to be detailed, they do need to comply with all the elements set forth in Chapter 542 of the Texas Insurance Code.  Once the insurance company lawyer is armed with a specific number that the claimant will be seeking, he can better evaluate the potential range of damages the client is facing.

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.