CLM’s Extra-Contractual Committee recently held a webinar entitled, “Common Pitfalls of Extra-Contractual Risk Exposure: Recent Trends in Claims and Solutions,” which focused on good-faith claims handling aspects and how carriers can be positive, proactive, and solution-oriented. Below are a few takeaways from the presentation.
Heather Gutkes, Litigation Management Analytics Manager, American Family Insurance
Sanaz Alempour, Partner, Cole, Scott & Kissane, P.A.
“This obligation to act in good faith is really something that arises out of the carrier’s right to control the defense, to settle the case, and to act early on.”
“Part of the elements of good-faith claims handling include keeping the insured informed of your efforts of a potential excess exposure, any settlement opportunities that may come about, [and] all demands that are received—both financial demands and non-financial demands. The important concept here is a diligent and thorough investigation, attempting to find coverage where coverage may exist.”
“If a case warrants settlement, the best approach is to seek ways to achieve and document the settlement, rather than looking for technical obstacles to the settlement, because the goal here is to reach terms to try and get this matter resolved….”
“Once you’ve reached the place where a settlement has been met—at least in principle—you want to work on the release. Keep the release terms as simple as possible. It’s great practice, when speaking with the plaintiff, plaintiff’s counsel, or claimant counsel if it’s pre-suit, to just talk about the terms.”
“If we’re proposing terms, make sure you’re advising that they are negotiable…not asking it so black and white, so that, once a settlement is reached, it’s the settlement agreement and the terms of the release that can often blow up a settlement.”
“If that facts warrant a tender of the limits, do not wait for a demand. You don’t need to wait for a demand if this is an at-fault accident by your insured that results in a death or serious disfigurement.”
“We’re failing to clearly communicate what the issues are, what we are seeking out information-wise; we’re also failing sometimes to collect the most critical information from the outset. This might include something as simple as the police report.”
“As we’ve been saying for some time, communication is king—clarity and transparent communications, including all of your claims file documentation. It doesn’t help if we go back and put things in after the fact. That’s not going to cure any bad-faith actions that come through.”