Insurance Defense

Insurance Defense

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Contact our firm today to schedule a consultation with an insurance defense attorney who will respond aggressively to secure a timely, cost-effective conclusion to serious legal problems.

Overview


In general, insurance defense includes the representation of insureds in defense of lawsuits arising out of an accident or occurrence covered under the insured’s policy and pursuant to the insurer’s duty to defend. However, many insurance defense practitioners also advise and represent insurance carriers in matters involving claims handling, in the defense of litigation or both. Contact Sanders & Parks in Phoenix, AZ, to schedule a consultation with an attorney to discuss how our insurance defense practice can help you.


Law of insurance

Insurance law encompasses common law as well as statutes and administrative regulations at the federal, state and local levels. This includes a variety of federal and state laws and regulations in other substantive areas of the law, such as tax and securities, which affect the insurance industry. In determining what law governs in a particular situation, local counsel’s knowledge of the relevant substantive law, including legislative intent, can be invaluable.

Regulation of the insurance industry

A majority of state legislatures have established insurance boards or commissions to assist in the enforcement and creation of policies and rules for the insurance industry. Because the authority and types of insurance matters over which state insurance boards have jurisdiction can vary dramatically from state to state, it is important to seek the advice of local counsel familiar with a particular board or commission.

Ever-growing types of insurance policies

As the types of insurance policies available to consumers continue to grow, local counsel with experience and knowledge of specialized areas of insurance law are becoming increasingly important in insurance litigation.

Insurer’s right to control the defense

An insurer’s right/duty to control the defense is critical to an economical and efficient defense or settlement. A key component of the right to control the defense is the right to appoint defense counsel. An experienced insurance defense attorney can work with an insurer to create a plan to handle the case in accordance with the insurer’s legal and economic strategies, including assistance in making decisions regarding settlement.

Speak to an insurance lawyer

Insurance defense attorneys who have experience and knowledge of specialized areas of the law, the law of a particular jurisdiction, or both, are important to the development of an economical and efficient defense strategy. To speak to an attorney about the insurance defense practice at Sanders & Parks in Phoenix, AZ, contact us to schedule a consultation.

Importance of Local Defense Counsel in Motor Vehicle Accident Cases


The jurisdiction in which a motor vehicle accident lawsuit will be filed is a critical factor in developing a successful defense strategy. Because of local defense counsel’s experience in a particular field, type of litigation or jurisdiction, he or she is in an excellent position to evaluate liability and develop an effective defense strategy.


Biases of the trier of fact

Local counsel is in an excellent position to consider the potential biases of the trier of fact in developing a defense strategy. Race, religion, age and other traditional biases may be relevant concerns depending on the identity of the trier of fact. Local counsel who is familiar with community attitudes, jury verdicts and arbitration awards in the jurisdiction in which the lawsuit will be filed can use that knowledge to improve the credibility of the defendant, the insurer and witnesses in the eyes of the trier of fact.

Liability defenses

The available defenses to liability can vary dramatically by jurisdiction.

  • Comparative fault. Comparative fault rules vary by jurisdiction. Defense counsel who has an understanding of the comparative fault rules of the jurisdiction in which the lawsuit will be filed can result in a significant reduction of the damages to which a plaintiff is entitled. Defense counsel who has knowledge of the applicable comparative fault rules can identify key issues with respect to liability to be resolved in the case, including the extent to which factors such as the plaintiff’s inattention, vehicle condition or violation of speeding, seat belt or other traffic laws amounts to comparative negligence. Additionally, local defense counsel’s understanding of the relevant comparative fault rules may help to minimize the defendant’s share of liability by uncovering facts that prove the comparative fault of other drivers involved in the accident.
  • Assumption of risk. The extent to which the plaintiff’s assumption of risk can minimize the defendant’s liability varies by jurisdiction. However, in some jurisdictions assumption of risk may constitute a complete defense against liability. Defense counsel who is familiar with the assumption of risk defense in the jurisdiction in which the lawsuit will be filed can help to ensure that the defense is properly asserted.
  • Seat belt laws. Many jurisdictions have enacted statutes requiring drivers and passengers to use seat belts, children of a certain age to be placed in child safety seats or both. Depending on the jurisdiction, violation of seat belt laws may amount to comparative negligence.

Speak to an insurance lawyer

Counsel who is knowledgeable of the defenses to liability available in a particular jurisdiction is important to the development of an effective defense strategy in motor vehicle accident cases. Contact Sanders & Parks in Phoenix, AZ, to schedule a consultation with an insurance defense attorney at our firm to discuss how we can assist in the handling of a lawsuit filed against one of your insureds.

Declaratory Judgment Actions in Insurance Coverage Cases


Because there are many advantages to resolving insurance coverage cases as early as possible, a majority of insurance coverage cases are disposed of through declaratory judgment actions. Courts in different states and even courts within the same state may handle declaratory judgment actions differently; therefore, hiring local counsel who is knowledgeable of the local rules and practices of the courts in which the motion will be filed is often critical to the early and successful resolution of insurance coverage disputes.


The importance of resolving insurance coverage cases as quickly as possible

From the insurer’s perspective, there are many advantages to obtaining a declaration of no coverage as early and as quickly as possible. Advantages to a quick declaration of no coverage include:

  • Reduced attorney fees. A significant reason for seeking a quick resolution is its potential to reduce the insurer’s legal costs by reducing attorney fees incurred in bringing the declaratory judgment lawsuit. Additionally, in situations where the insurer is defending under a reservation of rights, a declaration of no coverage may eliminate the insurer’s obligation to investigate or defend the underlying case. Local counsel who is familiar with local motion practice and experienced in handling summary judgment motions in insurance coverage cases can be critical to obtaining a quick and economical resolution to insurance coverage disputes.
  • Minimal discovery. Another advantage to an early and quick resolution through summary judgment is the reduction in time allowed for discovery. As the period for discovery increases, so does the chance that evidence will be discovered that creates ambiguity concerning coverage.
  • Strategic advantage. Where the insured’s counsel is not experienced or knowledgeable in insurance coverage declaratory judgment actions, an early and quick declaration of no coverage helps to ensure that insured’s counsel does not have additional time in which to gain the necessary knowledge to develop a strategy.

The importance of local counsel in declaratory judgment actions

Because the standards and procedures governing declaratory judgment actions vary widely from jurisdiction to jurisdiction, from district to district and even from judge to judge, local counsel with specific knowledge of local practice, specific motions or both is particularly important in motion practice. Local counsel’s assistance can be critical to:

  • Planning strategy and making strategic decisions. Local counsel’s knowledge of local courts and judges, local motion practice, local rules, and local customs can be invaluable when considering whether to file a declaratory judgment lawsuit.
  • Saving time and reducing costs. Because the standards and procedures governing declaratory judgment actions vary so widely, local counsel’s knowledge of the standards and procedures governing a particular motion is often critical to realizing the advantages of seeking a declaratory judgment such as reduced attorney fees, minimal discovery, and strategic advantage.
  • Obtaining credibility. Counsel who is known by judges, who is known by opposing counsel, and who knows the courts, the judges, and other attorneys often gives the insurer credibility it could not otherwise achieve.

Speak to an insurance lawyer

The primary goals of declaratory judgment actions are to minimize danger of loss, to provide a remedy to the insurer instead of waiting for the insured to take initiative, to avoid multiple suits, and to achieve a speedy and more economical resolution. Contact Sanders & Parks in Phoenix, AZ, to schedule a consultation with an attorney at our firm to discuss how we can assist you in effectively utilizing declaratory judgment lawsuits to resolve your insurance coverage disputes.

Subrogation


Subrogation is an important tool used by insurance companies to recover claims outlays. Because subrogation principles can involve unique issues and vary dramatically by state, local counsel who is familiar with the subrogation laws of the relevant jurisdiction is often critical to the successful prosecution of subrogation actions.


The importance of identifying the source of an insurer’s subrogation rights varies by jurisdiction

Some jurisdictions make a distinction between legal or equitable subrogation that arises by operation of law and conventional subrogation that arises by contract or by an express act of the parties. Accordingly, in some jurisdictions, “an insurer is not necessarily entitled to subrogation as a matter of legal right but may, in fact, be denied subrogation under the terms of its contract.” Couch on Insurance, Third Edition, § 222:20. Local counsel can assist in determining the extent to which a policy’s subrogation clause reaffirms, waives, makes conditional or otherwise affects an insurer’s subrogation rights.

Local counsel who is familiar with the subrogation laws of the relevant jurisdiction is even more important when a conflict between conventional and legal subrogation arises. Depending on the jurisdiction, principles of equitable subrogation or conventional subrogation may govern when conflict exists. In such situations, local counsel can provide valuable assistance in formulating strategy and prosecuting a subrogation action.

Subrogation rights may be created by state statute

Because an insurer’s subrogation rights may be created by, impaired by or forbidden by state law, the assistance of local defense counsel who understands the substantive law of insurance subrogation in a particular jurisdiction can be critical to an insurer’s recovery of claims outlays.

Subrogation rights created by contract may be affected by local law

The treatment of subrogation clauses in insurance contracts varies by jurisdiction. Depending on the jurisdiction in which a subrogation action is prosecuted, a subrogation clause may be treated as restating subrogation rights available under common law, modifying subrogation rights available under common law or as impermissible overreaching by the insurer. Local counsel who is familiar with the treatment of subrogation clauses in a particular jurisdiction can provide valuable assistance in formulating strategy for the recovery of outlays through subrogation.

The requirements for subrogation plaintiffs vary by jurisdiction

The test for determining who is entitled to prosecute a subrogation action, including the circumstances under which a subrogee or subrogor may prosecute the action in its own name, varies by jurisdiction. Local counsel who is familiar with the requirements for subrogation plaintiffs in a particular jurisdiction can help in determining who is entitled to prosecute a subrogation action.

State law can affect intervention by an insurer

An insurer may generally intervene in a lawsuit brought by an insured to protect its subrogation rights. Local counsel can work quickly to make sure the insured intervenes before it is too late and to formulate a strategy, including the extent to which, if any, the jurisdiction’s equitable distribution laws may affect its recovery.

The remedy of reimbursement may be available in some jurisdictions

Reimbursement allows an insurer to recover from an insured who has recovered from a third party. Some jurisdictions recognize reimbursement clauses while other jurisdictions treat reimbursement clauses as violative of the so-called “anti-subrogation rule” preventing subrogation against the insurer’s own insured. Local counsel can help to identify the status of the anti-subrogation rule in a particular jurisdiction.

Speak to an insurance lawyer

Because an insurer’s right to subrogation can vary dramatically by state, local counsel who is familiar with the subrogation laws of the relevant jurisdiction is often critical to the successful prosecution of subrogation actions. Contact Sanders & Parks in Phoenix, AZ, to schedule a consultation to discuss how an attorney from our firm can assist in the planning and prosecution of insurance subrogation actions.

Ethical Issues and Conflicts of Interest in Insurance Defense


Local defense counsel can often provide valuable insight into local law and practice to avoid or appropriately handle conflicts of interest and ethical concerns. Avoiding or appropriately handling conflicts can result in numerous benefits to the insurer, including retention of its right to control the defense and avoidance of bad faith claims.


Ethical issues and the duty to defend

In many jurisdictions, and at least to the extent that the interests of the insured and the insurer are the same, an attorney hired by the insurer to defend the insured represents both the insured and the insurer. However, courts vary on whether dual representation is ever possible, and local counsel who is familiar with local law and practice regarding dual representation can help to avoid potential conflicts of interest.

Because of the “tripartite relationship” between the insurer, the insured, and counsel hired to defend the insured, questions as to the client’s identity and situations in which dual representation may be inconsistent with counsel’s ethical obligations are common. Similarly, in situations where a coverage dispute arises or where policy limits are insufficient to protect the insurer against potential exposure, dual representation becomes impossible.

Strategies for handling conflicts of interest

Local defense counsel who is familiar with the types of conflicts that arise in duty to defend cases and who is knowledgeable of local ethics rules and practice can be critical to avoiding conflicts that affect the insurer’s right and duty to control the defense.

If the interests of the insurer and the insured diverge, an attorney must determine if dual representation of clients with conflicting interests is permissible under American Bar Association Model Rule of Professional Conduct 1.7 (“Model Rule 1.7”) and/or other applicable state and local ethics rules.

Because courts vary on whether dual representation is possible where conflicts of interest arise, local defense counsel who is experienced with state and local ethics rules can often provide valuable insight into how a particular conflict will be treated by local courts and help to plan a strategy to avoid or appropriately handle ethical concerns.

Experienced defense counsel can also take steps to avoid potential conflicts of interest by facilitating a clear agreement at the start of litigation regarding the scope of his or her representation. For example, based on local counsel’s knowledge of local laws and practice regarding dual representation, he or she may be able to limit his or her representation to avoid situations in which conflicts between the insured and insurer that cannot be cured by informed consent may arise.

Independent counsel doctrine

Local counsel who is familiar with the laws of the jurisdiction in which the case is pending can identify situations where the insured is likely to be entitled to independent counsel. By notifying the insured of its right to independent counsel as early as possible, future conflicts and costly delays can often be avoided. Similarly, local defense counsel who is not hired as duty to defend counsel may be able to advise an insurer on ways to avoid application of the independent counsel doctrine, such as waiving certain coverage defenses, and enable the insurer to retain its right to control the defense.

Speak to an insurance lawyer

Contact Sanders & Parks in Phoenix, AZ, to schedule a consultation to discuss how an attorney from our firm can assist in avoiding or appropriately handling conflicts of interest and ethical concerns that arise in the context of insurance defense.

Resource Links

American Bar Association, Tort Trial and Insurance Practice Section (TIPS)
ABA Tort Trial and Insurance Practice Section (TIPS) is recognized as the source of knowledge and leadership on trial practice and critical issues of justice that involve tort and insurance law.

McCarran-Ferguson Act
This website, maintained by the Legal Information Institute (LII) at Cornell University Law School, contains the full text of the McCarran-Ferguson Act (15 USC §§ 1011 et seq.) as codified in Title 15 of the United States Code.

State Insurance Statutes
This website contains and alphabetical listing of links to state insurance statutes.

Insurance Law Digest Tables (PDF)
The Law Digest Tables are produced and made available online in PDF format by A.M. Best Company, Inc. The Tables contain brief summaries of insurance laws for use by insurance claims departments, attorneys and other interested parties. Subjects covered include automobiles, negligence, limitation of time for commencement of action and financial responsibility law (automobiles). Automobile stoppage charts are also included.

Insurance Law Overview
This website, maintained by the Legal Information Institute (LII) at Cornell University Law School, provides general information about the law of insurance as well as links to federal and state judicial decisions concerning the insurance industry.

American Insurance Association (AIA)
The AIA’s website contains a wealth of information relevant to the regulation of the insurance industry and the law of insurance. Resources include newsletters, insurance industry and government resource links and state insurance industry profiles.

National Conference of Insurance Legislators (NCOIL)
The National Conference of Insurance Legislators (NCOIL) is an organization of state legislators whose main area of public policy concern is insurance legislation and regulation.