Insurance Tips for All of Us

By Jeremy Pasternak

CAOC “Forum” – June 2004

In this issue of Forum, we take a look at something which is nearly omnipresent in our work: insurance. The articles provide strategies to be utilized across the breadth of our interactions with insurance and insurers, from their “secondary” position as providers of indemnity in the underlying tort cases we file, to those occasions when insurance moves to the fore, because of, for instance, the existence of an uninsured motorist, to those instances when insurance companies are our “primary” targets, that is, bad faith or fraud cases against the insurer.

Several of these articles share another common thread, an examination of what steps we might take, or what events we might look towards, to secure our client’s rights – and better secure a positive outcome in a lawsuit – earlier than we might think. As these articles illustrate, “step one” might not be what you thought it was, and might be earlier than you anticipated. I hope these articles encourage you to look creatively at the cases you are or are considering handling, and see that your “timeline,” whether it be the timeline for the case or your prosecution of it, may go back farther than first blush would indicate.

For example, Allison Fairchild describes a first step you might not consider: securing an uninsured motorist payment by taking the defendant’s default, and thereby preempting your clients’ insurers’ inevitable arguments about the value of your case in the coming UM claim. In a related article, Albert Abkarian describes another early strategy to be used in UM/UIM claims: ensuring that in any UM/UIM arbitration, the arbitrator is not made aware of the policy limits, so as to eliminate bias in the size of the award, and to ensure as well as possible any potential bad-faith claim.

In our lead article, Jerry Ramsey and Brian Heffernan address the “first step” which exists whenever insurance is at issue: the marketing and sale of the policy itself. They also explain that it is this first step which is – perhaps unrealized by many – the source of liability for insurers covering homes destroyed in last year’s California fires. As they describe, one of the most significant tragedies that has resulted from last year’s fires in Southern California is the underinsurance of the homes that were destroyed. But this tragedy has not resulted from mere insurance agent error, or insureds’ failures to adequately estimate the value of their own property. Instead, it is the result of a massive consumer fraud, by which insurers, because of their own marketing strategies and desire to get premiums in the door, have systematically underinsured their customers’ homes, and misled insureds regarding the benefits of their policies. The practitioner who fails to look back to this “first step,” misses a significant source of liability.

Terry Coleman provides in his article other strategies for perfecting the bad faith claim as it develops, specifically in the context of health and disability insurance. Douglas K. deVries also addresses disability insurance, specifically in the area of “Own Occupation” policies, and discusses how to respond to emerging defenses to these actions.

Jeffrey Ehrlich’s and Daniel Smith’s articles each address a recent and significant decision from a state supreme court. Jeffrey’s article takes a look at E.M.M.I. v. Zurich Ins. Exchange and finds that the legal standards for interpreting insurance contracts in California are as good as they ever were for insureds. Dan’s article examines the Utah Supreme Court’s recent ruling on Campbell v. State Farm following remand of that case from the U.S. Supreme Court. Although there was little for any of us to like in the U.S. Supreme’s opinion, Dan notes some good language in the Utah court’s holding for those of us who pursue punitive damages in our cases.

There are a lot of solid tips in these pages not only for the insurance-law practitioner, but for all of us who run into insurance as part of our practices (which, sooner or later, does mean all of us). Insurance nearly always becomes a presence in our cases, if it isn’t from the beginning; these tips should help you prepare for it.

Jeremy D. Pasternak has law offices in San Francisco. He is a member of the Forum Editorial Board.


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