Decoding the Mishmash of Mixed Coverage Claims
Have you ever felt your head spin when one claim includes both covered and uncovered elements?
By Eric Gilkey
CLM’s Insurance Coverage Committee addressed the ins and outs of this complex world in a recent webinar.
Craig Freeberg, an attorney with Swift, Currie, McGhee & Hiers, LLP. He focuses on complex third-party coverage issues.
Deborah Kenney, director of claims operational excellence for the Motorists Insurance Group. She leads a team of claims professionals focused on continuous improvement, innovation, quality assurance, learning, and education.
“Craig and I put together a four-step process to help take some of the confusion out of handling these mixed coverage claims. The first step is determining if there is a duty to defend. Step two is to clarify coverage positions for all claims involved. Third step is using various tools to avoid bad faith, and step four is about applying strategies for resolution.”
“I had a manager tell me once that he had a [claims professional] on a bad-faith claim testify that he did not read the complaint when doing the coverage analysis. You do not want to find yourself in that situation.”
“In a reservation of rights letter, you clearly want to state which claims are covered and which are not, and you also want to use policy language when applicable. Consider ‘catch all’ language, especially if you have an ongoing investigation, but not all states support this language. Be sure to check.”
“In Georgia, carriers are not allowed to both deny a claim outright and attempt to reserve the right to assert future coverage defenses later on down the road. It’s very clear what you can and cannot do.”
When determining a duty to defend, Freeberg says it’s important to know your jurisdiction. Is it a four-corners/eight corners jurisdiction or an extrinsic evidence jurisdiction? Also, he says to remember that the duty to defend is broader than the duty to indemnify.
“If your claim is particularly complex, you might consider having coverage counsel participate in your communications to make sure you aren’t waiving coverage defenses and putting yourself in a bad faith situation.”
“Even if you are operating in a state in which there is no cumis counsel requirement, there may be a requirement for you to advise an insurer to advise their insured about their right to hire their own counsel.”