DC BAR Non-profit Insurance Webinars

Transcription

1 PRESENTATION TITLE DC BAR Non-profit Insurance Webinars Webinar 3 Filing An Insurance Claim Date: January 12, 2011 Presented by: Erica Dominitz and Carl Salisbury, Kilpatrick Townsend LLP Tecla Pinto, Wells Fargo

2 Introduction Regina Hopkins, District of Columbia Bar Pro Bono Program: Purpose, Schedule and Format of Webinars Introduction of Presenters Tecla Pinto, Wells Fargo Erica Dominitz, Kilpatrick Townsend LLP Carl Salisbury, Kilpatrick Townsend LLP The information contained in this Webinar is not intended as legal advice or as an opinion on specific facts. For more information about these issues, please contact the presenters of this Webinar or your existing firm or corporate contact. The invitation to contact the presenters is not to be construed as a solicitation for legal or other work. Any new attorney/client or broker/client relationship will be confirmed in writing. You can also contact Kilpatrick Townsend LLP or Wells Fargo through their respective web sites at and 2

3 Overview of Webinar Series November 17, 2010 Understanding Insurance December 15, 2010 Buying Insurance January 12, 2011 Filing an Insurance Claim February 16, 2011 Loss Prevention and Mitigation 3

4 Today s Topics: Filing an Insurance Claim Risk Management and Insurance Overview Navigating the Claims Process Immediate Concerns Mechanics of Pursuing Coverage Property Policies Liability Policies Dispute Resolution 4

5 Filing an Insurance Claim Risk Management and Insurance Overview 5

6 Broker Selection Explore Broker s Support Services Claims & Loss Control Explore Broker s Partnership with Insurance Markets Establish Claim Reporting Guidelines Establish Claim Handling Services with Insurance Carrier 6

7 Basic Claim Principles Do not admit liability or make any offers to pay Do not delay or withhold reporting an accident or loss as you may jeopardize your coverage Conduct your own investigation immediately following the loss Retain copies of all documentation for your records Report Potential claims with directive to Insurer to conduct only an insured investigation 7

8 Auto Claims Provide a Claim Kit with basic directives for your drivers to follow: -do not admit liability -Police Report all accidents -take photos of scene/vehicles/damages -driver incident report to be completed -witness identity/forms Do not share your internal documents with third parties Report injuries to your employees to your Work Comp insurer 8

9 General Liability Claims Do not admit liability or commit to make any payments Offer medical attention as warranted and if possible, have injured party complete an incident report Inspect area or condition and note any defects or contributing factors Take photos or video of the area/condition as soon as possible after the accident, document the date, time, name of person taking photos and retain for your records. Retain any product or evidence relevant to the incident. Immediately tag and store in a protected place until contact is made with your insurance adjuster. Identify witnesses and if possible have them complete a witness form even if they did not see the incident occur. Retain any surveillance videos that may have captured the incident 9

10 Property Claims Pre-Loss: Photo or video document the conditions of your premises as often as necessary. Secure restoration/adjuster vendor information to have available immediately following a loss. Assign employees their roles and tasks in the recovery process. 10

11 Property Claims Post Loss: Fully Document Your Loss - take photos/videos of damages before beginning repairs - do NOT discard broken or damages items until your insurance adjuster completes an inspection Mitigate your Loss (policy condition) - make temporary, emergency repairs to reduce further damage to your property - keep copies of all receipts for the costs incurred - keep a log/record of employees time for work hours related to the loss - address water damage immediately to avoid mold Consult with your Broker - review policy limits, deductibles/retentions, coverage extensions, terms and conditions as related to your loss Business Interruption Claims - immediately involve your CFO or Accountant Public Adjusters Yes or No? 11

12 Workers Compensation Do NOT delay in reporting injuries of your employees. Statutory requirements regarding claim reporting may adversely affect you as an employer. Report all claims directly to the insurance company Advise your Broker of any serious claims fatalities, burns, dismemberments etc. Maintain OSHA logs If a claim is suspect, insert alleges in claim description (ex: employee alleges he injured ) Train supervisors and managers on importance of timely reporting of WC claims Identify, document and protect any product or information that may allow your insurance carrier to subrogate the claim payments Establish a culture on injured employees and WC claims address poor performers and repeat claimants 12

13 Directors & Officers, Employment Practices Liability, Professional Liability NOTE: This coverage is usually written on a CLAIMS MADE form. It is imperative to report all claims as soon as you are aware of the claim. If you become aware of any incident that may give rise to a claim it must be promptly reported. Failure to do so can jeopardize your coverage under the policy. Gather all records and files related to the incident. If Bodily Injury and/or Property Damage are alleged, report the claim under your General Liability policy also. Investigate and provide a summary of all related events. Include the names of all persons that may have knowledge related to the claim. Immediately report any matter that requests documents or information, especially any EEOC or other types of Administrative filings. Before retaining legal counsel, review your policy or consult with your Broker. Most insurance companies require you to use an attorney from their panel list and may not pay for the attorney you hire unless you have negotiated an agreement when the policy was purchased. Many EPLI policies provide free access to Labor Law attorneys for any pre-claim guidance you may require. 13

14 Filing an Insurance Claim NAVIGATING THE CLAIMS PROCESS 14

15 Filing an Insurance Claim IMMEDIATE CONCERNS OF GENERAL APPLICABILITY 15

16 Filing an Insurance Claim: Immediate Concerns Collect and review all potentially applicable policies immediately Check policy deadlines and requirements Privilege concerns Compile and preserve documents relating to your loss 16

17 Immediate Concerns: Locate and Review Your Policies Locating and reviewing all potentially applicable insurance policies is the first step to pursuing insurance coverage. 17

18 Immediate Concerns: Policy Deadlines and Requirements Insurance policies often contain deadlines and requirements that need to be satisfied in order to access or preserve coverage for your claim. These deadlines and requirements can be traps for the unwary failure to comply can jeopardize your coverage. Notice Policies generally have specific provisions regarding when you must give notice. Failure to provide timely notice can jeopardize your coverage. Mitigation of Damages 18

19 Immediate Concerns: Privilege Concerns You should be aware of privilege concerns that may arise during the claim process, during which you are likely to communicate with and provide documents and information to employees and to various third parties (e.g., brokers, insurance companies, consultants). Be mindful that many of your communications may be disclosed if there is a lawsuit relating to your loss or claim. This includes the following forms of communication: s Voic s/VOIP Letters Conversations It is best to limit communications to objective facts and to avoid speculation and legal conclusions. 19

20 Immediate Concerns: Collection and Preservation of Documents Proving Your Loss: Collect and preserve documents that reflect, describe, and quantify your loss in order to support your claim. Examples include pictures, videos, witness statements, invoices, and inventories. Preserving Documents for Actual or Potential Litigation: You also may have an obligation to preserve documents relating to your loss if you have been sued or contemplate the possibility of litigation. Cooperation Clause Obligations: These clauses typically require the policyholder to cooperate with the insurance company in connection with the investigation of your claim. Sample cooperation clause: The insured agrees to provide the Company with all information, assistance and cooperation which the Underwriter reasonably requests and agrees... [to] do nothing that may prejudice the Company s position or its potential rights of recovery. Ask the insurance company to sign a confidentiality agreement if the information and documents you provide are sensitive or confidential. Failure to comply with reasonable requests for documents and other information can jeopardize your coverage. 20

21 Filing a Claim THE MECHANICS OF PURSUING COVERAGE UNDER PROPERTY AND LIABILITY POLICIES 21

22 Filing a Claim: The Mechanics of Pursuing Coverage Difference Between Property and Liability Policies: Property policies: protect against direct physical loss or damage to property, and often also cover loss resulting from interruptions to your business caused by property damage. Liability Policies: protect against your liability for losses that others claim to suffer, even if such claims are baseless. 22

23 The Mechanics of Pursuing Coverage PURSUING COVERAGE UNDER PROPERTY POLICIES 23

24 The Mechanics of Pursuing Coverage: Property Policies Working with the property insurance adjustor 24

25 The Mechanics of Pursuing Coverage: Property Policies Proof of Loss Property policies generally require the policyholder to submit a signed and sworn proof of loss within a specified time period often as soon as 60 or 90 days after the loss. Policies usually require the proof of loss to include, among other things: The time and origin of the loss; The Insured s interest in the property; and The actual cash value and the replacement cost value of each item. Failure to comply could jeopardize your coverage. 25

26 The Mechanics of Pursuing Coverage: Property Policies Information Gathering Cooperation Clause Obligations: These clauses typically require the policyholder to provide the insurance company with documents and other information regarding the nature and scope of your loss. Before turning over confidential and sensitive information, consider asking the insurance company to sign a confidentiality agreement. Sample cooperation clause: The insured agrees to provide the Company with all information, assistance and cooperation which the Underwriter reasonably requests and agrees... [to] do nothing that may prejudice the Company s position or its potential rights of recovery. Examination Under Oath ( EUO ): Property policies typically include a provision allowing the insurance company to require the policyholder to submit to an EUO. An EUO is usually less formal than a deposition. Sample EUO clause: The Insured will as often as may be reasonably required submit to examinations under oath by any person designated by the Company and sign the written records of examinations. 26

27 The Mechanics of Pursuing Coverage: Property Policies Coverage for Loss Adjustment Expenses Property policies often cover expenses the policyholder incurs proving its loss in the adjustment process. Covered expenses typically include fees paid to accountants, architects, and engineers, as well as the cost of using the policyholder s own employees, to provide or certify information pertaining to the policyholder s loss. Property policies typically do not cover fees paid to attorneys, public adjusters, loss appraisers, or to loss consultants who consult on coverage issues or negotiate claims. Sample Loss Adjustment Expenses clause: This Policy covers the actual costs incurred by the Insured, of reasonable fees payable to the Insured s accountants, architects, auditors, engineers, or other professionals and the cost of using the Insured s employees, for producing and certifying any particulars or details contained in the Insured s books or documents, or such other proofs, information or evidence required by the Insurer, resulting from insured loss payable under this Policy for which the Insurer has accepted liability. Coverage will not include the fees and costs of attorneys, public adjusters and loss appraisers... nor the fees or costs of loss consultants who provide consultation on coverage or negotiate claims. 27

28 The Mechanics of Pursuing Coverage: Property Policies Valuation Issues Actual Cash Value (ACV): Replacement cost minus depreciation Replacement Cost Value (RCV): The cost to repair or replace the damaged or destroyed property (no deduction for depreciation) Example: Can replace 50-year-old office furniture with brand new furniture (although it generally must be of like kind and quality) The policyholder usually must actually repair or replace the damaged property in order to recover on an RCV basis. Some policies require that the repair or replacement take place within 2 years of the date of the loss. Some policies allow recovery on an RCV basis even if the policyholder does not repair or replace the damaged or destroyed property if the insurance proceeds are spent, within 2 years of the loss, on capital expenditures planned after the loss. 28

29 The Mechanics of Pursuing Coverage: Property Policies Getting Payments Before the Final Settlement of Your Claim Advance Payments If you have sustained a large loss and need cash up front to help fund necessary repairs of damaged property, consider asking your insurance carrier to make an advance payment. Partial Payments Even if you and your insurance company have not reached a final agreement on the total amount of your covered loss, consider requesting partial payments for portions of your claim that are not in dispute -- throughout the course of the adjustment process. Typically, the policyholder submits a partial proof of loss for amounts that are not in dispute. Policies typically state that payment will be made within a specified number of days typically 30 after acceptance of the proof of loss. 29

30 The Mechanics of Pursuing Coverage PURSUING COVERAGE UNDER LIABILITY POLICIES 30

31 The Mechanics of Pursuing Coverage: Liability Policies Five Services You Get With Liability Coverage: 1. Loss Control 2. Investigation of Claims 3. A Duty to Defend 4. A Duty to Indemnify 5. Costs of Mitigating Damages 31

32 The Mechanics of Pursuing Coverage: Liability Policies Fulfilling the Duty to Defend Panel Counsel: Who s Your Lawyer 32

33 The Mechanics of Pursuing Coverage: Liability Policies Consent to Payments Voluntary Payments: If there is no court order or judgment requiring you to pay money to the plaintiff in the underlying case, before making any payments, you should be sure you get the insurance company s consent. Consent to Settlements: Likewise, be sure to get your insurance company s consent before entering into any settlements in the underlying case against you. Generally, an insurance company cannot unreasonably withhold consent to a settlement. You may be able to recover from your insurance company an amount greater than your policy s limits if your insurance company refuses a reasonable settlement that is within the policy s limits and a judgment subsequently is issued against you for more than the policy s limits. 33

34 Filing an Insurance Claim DISPUTE RESOLUTION: WHAT HAPPENS WHEN THINGS GO BAD 34

35 Dispute Resolution Where should I file a claim? When should I file a claim? What state s law applies to my claim? What should I do if the insurance company engages in misconduct? 35

36 Dispute Resolution: Where? Choice of Forum Clause Specifies that any suits arising out of the insurance policy shall be litigated before a particular court or in a particular jurisdiction. Note: Some policies also include a Service of Suit clause, which designates a particular individual or law firm that will accept, on behalf of the insurance company, service of a summons and complaint. Arbitration Clause Parties may be required to arbitrate, rather than litigate, their disputes. Appraisal Clause Many property policies include an appraisal clause, which provides that if the insurer and policyholder disagree on the value of the loss (as opposed to disagreements about coverage issues), either may demand that the dispute be resolved through an appraisal process. The appraisers selected by both the policyholder and insurer must undergo a neutral process to determine the value of the policyholder s claim. 36

37 Dispute Resolution: When? Suit Limitations Clause A suit limitations clause specifies the time period within which a lawsuit regarding a dispute under the policy must be filed. It essentially purports to contractually alter the otherwise applicable statute of limitations. The contractual limitations period typically is shorter than the otherwise applicable statute of limitations. It often is as short as 1 year from the date of the loss. A contractual limitations period is not enforceable in all jurisdictions, but many do uphold these provisions. If it appears that your claim will not be fully resolved within the limitations period, consider requesting an extension of the deadline or a tolling agreement; if the insurance company does not agree to either, you should consider filing a lawsuit to protect your interests. 37

38 Dispute Resolution: What law? Choice of Law Clause Policies sometimes contain a provision specifying which state s law will apply to the interpretation of the policy or to disputes under the policy. These provisions allow for greater certainty from the start, and also allow parties to avoid spending a lot of time and money litigating this issue. 38

39 Dispute Resolution: Bad Faith BAD FAITH 39

40 Dispute Resolution: Bad Faith Bad Faith If you believe that your insurance company has mistreated you, you may be able to sue the insurance company for bad faith. While the specific requirements vary state to state, generally the insurance company s conduct must be egregious for the policyholder to win a bad faith claim. In a bad faith action, you may be able to recover attorneys fees and punitive damages. Examples of bad faith: Insurance company shredded documents Insurance company knew your claim was covered, but denied it anyway 40

41 Filing an Insurance Claim Questions? 41