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The practice of insurance law brings with it a host of privilege issues that affect insurance lawyers “on both sides of the ‘v.’” Regardless of who you represent and in what capacity you represent them, privilege issues are sure to affect your practice.
The insurance relationship is generally an amicable, symbiotic relationship. The insured purchases insurance to shift its potential risk and the insurer accepts that risk in hopes of making a profit. After the insured files a claim, the insurer and insured work together to evaluate the claim as efficiently as possible. Sharing information, even privileged, confidential information, is essential to this process. Insurers need sufficient information to evaluate the claim, and it is in insureds’ best interests to provide insurers with the information they need. Indeed, insurance policies usually require insureds to cooperate with insurers’ investigation and provide requested information.
The claims process also involves many players outside the insurer-insured relationship. Evaluating a claim might require communication with brokers, agents, claims adjusters, engineers, experts, defense counsel, and third-party claimants, to name a few. The free flow of information between the various players is likewise essential to proper claims handling.
Issues often arise when a party attempts to discover this highly-confidential information. This is especially true in the liability insurance context, when a third-party claimant seeks to discover information the insured has shared with its insurer regarding the underlying lawsuit. Privilege issues also arise in coverage disputes when one party seeks to discover documents created when evaluating or investigating a claim. It is therefore in insureds’ and insurers’ best interests to understand how to maintain the free information flow without creating privilege issues in the future.
Excerpted from presentation to The University of Texas School of Law 15th Annual Insurance Law Institute, October 14-15, 2010, Austin, Texas. To read the full paper click on the PDF linked below.
PDF - Attorney_Client_Issues_Insurance.pdf