Policyholder Pulse
When you’re buying a new car, you rely on a good salesperson to impress you with all of its features and gadgets. But when it’s time for maintenance, or when something goes wrong, you don’t go back to that salesperson to look at the problem. You find a trustworthy mechanic. At insurance renewal time, it may seem like you’re just buying a new set of policies, and that your broker is the only person you need to find out what’s available on the market. But policy renewal is also part of scheduled maintenance for your company’s risk management program. A policyholder-side insurance coverage attorney is the mechanic that can help you make sure it runs right.
Hiring a coverage attorney to review the terms of your current and proposed policies is a great way to optimize coverage under your insurance program because they know what happens “when the rubber hits the road.” Coverage attorneys stay abreast of outcomes in insurance coverage litigation nationwide to understand how various courts interpret policies and what language is most advantageous to policyholders. When insurance companies release their “new model” insurance forms, you can bet that some of those language changes come from their attorneys reacting to court decisions the insurance companies don’t like. That’s why an advance review by policyholder-side coverage attorneys can be crucial. They can often determine the reason behind the insurance companies’ changes, and what language works for the coverage you expect under your policies.
Here are a few prime examples of provisions whose legal ramifications are important to understand:
- The policy’s requirements for giving notice of a claim, and how courts interpret those requirements;
- For defense reimbursement policies, how the policy allocates covered and uncovered defense costs;
- Whether, and to what extent, costs associated with government investigations and subpoenas are covered;
- What conditions apply to recovery of lost profits and other damages from interruption of business;
- Whether the policy language for cyber fraud coverage has been interpreted to cover only hacking, or includes phishing and email spoofing schemes.
Another important benefit of using an attorney in the policy renewal process is the creation of attorney-client privilege. Courts consistently find that broker files are not protected from discovery in litigation. Attorneys are in the business of providing legal advice, while brokers aren’t able to do that. Being able to get confidential advice on sensitive corporate issues prior to negotiating your policy using your broker can be invaluable if a dispute arises and you end up in litigation with your insurance carrier. You may be able to avoid having something turn up in discovery that the insurance company can use to distort your position when purchasing the policy, or in an attempt to rescind your coverage.
Experienced coverage attorneys have significant market knowledge from numerous policy reviews and close relationships with brokers. An attorney review of policies can enhance your broker relationship. It doesn’t show distrust in your broker. The best brokers understand the value of having attorneys take a “second look,” and often recommend such a review to their clients. Brokers and attorneys approach the policy from different backgrounds of professional training and licensing. While one is conversant in the latest insurance company products and language offerings, the other keeps current with the latest coverage litigation outcomes. It’s a best practice to get a 360-degree view of what the policy is and how it will work for you. Adding a legal review to your policy renewal process will leverage market and litigation experience from both angles to enhance your policies with state-of-the-art terms and wordings.
A good coverage attorney can also prioritize policy improvements, recognizing that all changes may not be made in a single renewal, but only incrementally over the course of a program. Some terms in a policy may be of critical concern and should be dealt with immediately, while others may be premature for the insurance market at the time, or are “cabin air filter” terms of lower importance that can be brought up with the carrier in later renewals.
Don’t get stuck with a lemon! Make sure your insurance program works the way you need it to by having experienced coverage attorneys periodically review the terms. Pillsbury’s Insurance Recovery and Advisory attorneys review insurance policies across the spectrum of coverage lines, and work regularly with major brokers to help policyholders get the most mileage out of their insurance program.