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Insureds Rights Under Insurer "Litigation Guidelines"

3/18/2009 Blog

A lawsuit is filed, the defendant gives notice to the insurers, and in the meantime engages counsel to start the defense.  Several rounds of coverage opinion letters go back and forth, and finally – the insurer accepts the defense of the lawsuit (usually subject to a reservation of rights).  Meanwhile, defense counsel has been doing his or her job.  So surely, now all is well.  Defense bills incurred before the insurer agreed to defend are submitted for reimbursement. 

But then the insurer’s “litigation guidelines” arrive – explaining just how much of the insured’s defense the carrier will NOT pay for.  These guidelines often include completely unrealistic restrictions on the way the defense must be conducted.  Frequently, the guidelines exclude reimbursement for (and thus can be looked at as an insurer-imposed bar) such things as discussions between members of the defense team working on the case; emails between the defense team; leaving or listening to voicemails; and the attendance of more than one attorney at hearings or meetings, without regard for the requirement of attorneys with specialist knowledge.  Additionally, litigation guidelines regularly impose arbitrary restrictions on legal research; and arbitrary time limits on drafting of pleadings, no matter how complex.  And often, insurers impose these guidelines retroactively – back to the beginning of the case and long before they sent them to either the insured or to defense counsel.

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