Insurance touches all of us every day, usually without us even giving it a second thought. A gecko educates us about the ease of obtaining it, and “Flo” has become the most popular spokesperson on the airwaves. Yet, notwithstanding the ubiquitous presence of insurance in almost every aspect of nearly every transaction, most of us do not identify — let alone focus — on its application to a particular event or its availability as a resource. The failure to do so may be costly if the otherwise careful practitioner inadvertently jeopardizes the client’s potential right to recover insurance proceeds. Such failures are particularly critical, because most of us recognize that it will only be there through effective and experienced advocacy.
Insurance coverage is implicated in nearly every claim made by or against a client. Often however, attorneys are so focused on the task at hand, they routinely fail to recognize that coverage may exist under a policy or assume that the claim is excluded or do not even appreciate that there may be coverage for a particular claim or event. From the outset, you should identify and obtain copies of all insurance policies that may be applicable to the claim. Although this step appears rudimentary, failing to recognize the existence of an insurance policy and possible insurance coverage at the outset of your representation could be detrimental to your client’s legal rights and financial entitlements. Because clients generally do not have full and complete copies of their policies, because identification of a full and complete copy of all policies is often times not readily discernable, and because an accurate determination of the applicable coverages is dependent on an analysis of a full and complete copy of the policy and all endorsements, even acquiring the policy is often fraught with complications.
Moreover, in addition to indemnification for a claim, many new policy forms, such as cyber-liability policies, now provide coverage for the cost of investigating allegations against the insured, including the costs of experts and forensic review. These expenses, however, are often covered only if the insurance company is given prompt notice before these costs are incurred. Consequently, making the correct determination based on the appropriate analysis from the outset will be outcome determinative for your client.
In addition, all insurance policies have conditions or duties imposing certain obligations regarding notice of a claim. Once again, the failure to appreciate and properly advise your client as to these conditions and requirements will jeopardize your client’s right to coverage. A delayed or late noticed claim will at a minimum impact the administration and resolution of your client’s claim and at worse will give the insurance company a legal basis for outright denial of your claim. In the context of property insurance, the reasons for the delayed notice generally do not matter and can create an automatic presumption of prejudice in favor of the insurance company. The burden then shifts to an insured to overcome that prejudice. By failing to review and understand the time constraints within an insurance policy, you may not recognize limitations that restrict reporting of the claim. In fact, the policy may impose time limitations that are different from those conventionally assumed based on the applicable statutes of limitations yet are fully enforceable nevertheless. The failure to recognize these limitations and to timely advise your client appropriately may result in a denial of coverage where your client was otherwise entitled to indemnification or a defense.
Interpreting an insurance policy in and of itself can be as daunting as trying to learn a new language. The syntax and meaning of the terms of art in insurance policies have developed over dozens of years resulting in a prose that is poetic to the skilled reader and poison to the inexperienced novice. Under Florida law, insurance contracts must be construed in accordance with the plain language of the policy. If the relevant policy language is susceptible to more than one reasonable interpretation, one providing coverage and the other limiting coverage, the insurance policy is considered ambiguous. These and other rules of construction may militate in favor of coverage where other similar rules dictate otherwise. Success for your client is rarely dependent on identifying clear coverage provisions but rather recognizing ambiguities that are only apparent from proficient study and analysis.
For example, the policy may exclude coverage for a direct loss as a result of a construction defect. But the policy will likely provide coverage for the ensuing damage that occurred as a result of the construction defect. This subtle distinction means that the policy may not cover damage for the defect itself but will cover the resulting damage. Failing to understand this distinction based on a plain reading of the policy and based on a common understanding of the coverage provisions and exclusions would lead to the incorrect and costly assumption that the policy’s exclusion for construction defects is the end of the story.
Failing to appreciate the symmetry and interplay between and among coverage provisions, limitations, and exclusions will severely disadvantage your client and prejudice the client’s entitlement to seek coverage for a loss or procure a defense for a claim. Accordingly, both the astute property owner and careful lawyer who provides good counsel should recognize the value of engaging an experienced and knowledgeable insurance counsel from the outset to address the present and potential insurance issues.
Michael J. Higer is a partner and Gina Clausen Lozier is an associate on Berger Singerman’s Dispute Resolution Team, where they focus on insurance Litigation.
By Michael J. Higer and Gina Clausen Lozier
1450 Brickell Ave., SUITE 1900
Miami, FL 33131
South Florida Legal Guide 2016 Edition