Insurance Coverage Tips from a Young Lawyer and an Old(er) Lawyer

By Robert V. Closson & 
Christopher T. Hicks

Hirsch Closson APLC

 

Almost every attorney in civil practice in California will find it necessary to consider insurance issues. My client is a defendant–will liability insurance pay defense costs? My client is a plaintiff–will an insolvent defendant’s liability policy cover a judgment? My client suffered a loss to real or personal property–will its property insurance cover the loss? A few attorneys will specialize in that area, but most will address the issues only as they arise or as necessary. However, California has an enormous and complex body of statutory and case law addressing nuances of coverage under many different areas of insurance. How do you get the information and expertise you need for your practice from the wealth of information available? This article provides comments and suggestions from two different perspectives.

Insurance policies are often an untapped or under-utilized resource in the legal arena, the existence of which can—and often does—significantly decrease your client’s liability exposure and increase the likelihood of successful resolution.  While the insurer’s obligations to its insured and certain third parties will necessarily depend on the precise policy language, a California insurer generally owes a duty to (1) defend the insured (i.e., pay the costs of defense) in a lawsuit brought by a third party alleging covered damages, (2) indemnify the insured for damages it becomes legally obligated to pay as a result of covered claims, and (3) act fairly and in good faith in discharging such obligations.  While attorneys routinely consider insurance for cases involving auto collisions or fire damage where insurance is clearly at issue, there are countless other instances where insurance could—and should—be considered, and the failure of an attorney to timely do so may unnecessarily forfeit the use of an invaluable asset and expose the client to additional risk.

The Young Lawyer:

I am sure this will come as no surprise, but when I dreamt about becoming an attorney, no part of that dream involved insurance.  In fact, until I started practicing in insurance coverage, my familiarity and experience with the subject—as well as my desire to gain familiarity or experience with same—was, at best, minimal. Now, having been exposed to California’s legal framework relative to insurance and witnessing first-hand the interplay between insurance and civil litigation, I cannot over-emphasize the importance of every civil attorney having, at minimum, a basic understanding of both insurance policies and insurance law. 

While California arguably has the most robust and nuanced body of law in this area, there are abundant resources available to answer whatever questions may arise, or to assist in connecting you with someone skilled in the area to provide guidance or direction. As a younger attorney with relatively limited experience in this area, it became essential to identify which of the available resources provides the most relevant and reliable information, and to incorporate such resources into everyday practice in order to bolster and further develop my understanding of this complex and ever-evolving area of law. 

  • Learn the Basics – Insurance issues can arise before, during or after litigation, and a failure to timely identify and address same may preclude or limit coverage otherwise available to protect or compensate the client.  Rather than approach insurance issues reactively, learn and understand the basic principles of insurance policies and insurance law so that insurance issues can be anticipated, or at least addressed early on, in each case.  A good first step is to review a comprehensive treatise to initially familiarize yourself with the basics, and to thereafter consult additional resources and/or seek assistance from an experienced or knowledgeable professional in the area as needed.
  • Familiarize Yourself with the Available Resources – My go-to resource for anything insurance-related is the California Practice Guide: Insurance Litigation (The Rutter Group). There are numerous other resources, including: (1) Couch on Insurance, 3rd edition; (2) the Matthew Bender Practice Guide: California Insurance Coverage and Litigation; (3) the California Department of Insurance website; and (4) the San Diego County Bar Association section on Insurance / Bad Faith.
  • Read California Decisions – Every morning I read through any new California decisions concerning insurance on Law360.com.  Seeing how the court applies the law reinforces my understanding of the applicable legal framework and provides insight as to how specific policy provisions or other issues will be interpreted and/or addressed.  Over time it becomes easier to identify common issues and anticipate how to overcome or avoid same in my own cases. 
  • Ask Questions – Anticipating and understanding insurance issues early in a case is often of paramount importance, so finding an individual with experience or knowledge in a particular area of insurance and establishing an open line of communication will be helpful in securing the necessary guidance or direction to adequately anticipate and address insurance issues as they arise. 
  • Keep Learning – Insurance law is ever-evolving, so our knowledge and understanding of it must continuously evolve as well. 

The Old(er) Lawyer:

While things have undoubtedly changed, some of the old ways still have value.

  • Learn the Basics – There are basic principles of insurance policy interpretation which apply to all types of insurance. Learn the basic principles of “bad faith” and claim handling standards.  Read a treatise or attend a seminar on California law on those basics.
  • Network – Find a specialist or mentor who has knowledge in the area of insurance which arises most often in your practice and ask general questions. Return the favor with referrals or other assistance.
  • Be Honest with Yourself – It will take some time to acquire the expertise you need in an area of insurance. If an issue comes up and you do not know the answer, do the work and find out. You can be circumspect about the extent of your knowledge with opposing counsel, but know your own limitations.
  • Think Ahead – Identify insurance issues early in a case. Doing so helps to avoid delay or time related insurance issues, and also allows you to learn what you need to know before you find yourself discussing issues with an insurance representative, mediator or opposing party.
  • Don’t Believe Everything You Hear – Remember that other parties are advocating their interests and may not share your perspective on the meaning of policy language or the law. If something unexpected arises, note the basis for the argument and respond after you have addressed the issue with your client. Remember to get the entire policy and analyze the issue in the context of the policy has a whole.
  • Old Reliable Resources Can Still Be the Best – There are a wealth of treatises, practice guides and seminar materials available on nuances of insurance. Find the ones that work best for you by trial and error or through your networking efforts. You can’t go wrong with the California Practice Guide – Insurance Litigation (The Rutter Group).

Insurance issues arguably arise throughout the course of every civil attorney’s career, and thus a basic understanding of insurance law and/or the ability to utilize relevant and reliable resources to develop such an understanding is something every civil attorney should possess.  Irrespective of your chosen practice area, it is essential to develop your own knowledge and skill in the area, and to ferret out the best resources available to ensure you have the ability to efficiently and effectively anticipate and address insurance issues.  While an in-depth analysis of insurance policies and insurance issues are outside the scope of this article, merely being cognizant of insurance issues and having resources readily available to help address same if and/or when needed could ultimately mean the difference between victory and defeat.

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