Liability insurance policies give the insurance company exclusive control over litigation in claims against its insureds (an "insured" is the person who bought the policy). With this control, conflicts of interest may develop between the insurance company and the insured. In that case, the insurance company may have to provide and pay for independent counsel for each insured.
When Do Conflicts Of Interest Arise?Some common situations where a conflict of interest arises which may require the insurance company to provide and pay for independent counsel include: - The suit filed against the insured contains allegations which are potentially both within and outside policy coverage, in which case the insurance company will reserve its rights. The insurance company will defend to remove the suit from coverage, meaning they will defend so that the suit is not covered by the policy. The insured, however, will defend on any grounds to win the suit.
- The suit filed against the insured seeks damages in excess of the policy limits. In such a situation, the insured wants to settle at or within policy limits. The insurance company knows that the policy limit is its maximum payout and is indifferent to any amount over the limits. However, the insurance company may have a duty to settle within policy limits.
- The insured alleges misconduct by the insurance company in handling the defense. Some courts say that if general animosity between the insurance company and the insured rises to a level where it produces a conflict of interest, the insurance company will be obligated to pay for independent counsel for its insured.
Do I Need An Attorney To Deal With My Insurance Company?If you believe you have a conflict of interest with your insurance company, an attorney can help you get independent counsel and have the insurance company pay for it. |
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