Hunton & Williams LLP attorneys Mike Levine and Matt McLellan, along with Tim Monahan of Lockton Companies, LLC., presented to a group of risk managers and insurance professionals on Wednesday evening, February 17th, about strategies and pitfalls in the claim presentation process. The event was well-attended and the audience was lively with questions for the presenters. A copy of the PowerPoint can be downloaded here. Key points discussed with the group include:
Late Notice – Failure to provide timely notice of an accident, claim or suit can have devastating consequences on an insurance claim. This issue frequently arises when policyholders feel they are unjustly accused or that the claim against them is “winnable.” Or, policyholders initially fail to appreciate the magnitude of the claim and believe they can resolve the matter without insurer involvement. In each instance, the policyholder may delay in providing notice to its insurer. Such a mistake is understandable in some cases, but it can be fatal to securing coverage. When at all possible, therefore, policyholders should provide notice under any and all potentially applicable policies or obtain the advice of qualified coverage counsel to advise them on whether notice is necessary.
Panel Counsel vs. Personal Counsel – Another important issue concerns who chooses defense counsel. Often policyholders want to use their own appointed counsel – someone they believe is qualified or may be familiar with their business. Insurers, on the other hand, have a financial incentive to assign counsel of their own choosing; counsel who work on a “volume” basis and for a considerably lower hourly rate. These “panel counsel” are often familiar with the billing practices and standards of the insurer, but they often are not versed in the policyholder’s business or the specific area of law that will be involved in the defense. The group discussed how reservation of rights and other conflicts of interest can decide this issue.
Policy Renewals – Finally, Mike and Matt provided examples illustrating why policyholders should take the renewal process seriously and consider a wide-range of issues to ensure they obtain appropriate coverage. The discussion underscored the import of reviewing potential risks or hazards that may not be covered under the current policies and working with qualified brokers and counsel to negotiate endorsements or changes that bring these additional risks within the scope of coverage. In addition, policyholders need to consider thoroughly any questions on a renewal application asking whether there are potential claims or risks the policyholder is aware of. This may be only one question on a renewal application, but failure to identify any known risks can eviscerate coverage down the line.