Explaining the Discoverability of Insurance Claims Files
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The Attorney Client Protection and the Insurance Claims File
\\nMany files are discoverable or capable of being discovered. Therefore, before writing any comment in a claim file the adjuster should consider that each comment written will be directed to the \\u201cLadies and gentlemen of the jury.\\u201d If the adjuster is not ready to read the comment aloud to a jury it should not be written in the file.
\\nAnticipation of Litigation
\\nIf an insurance investigation is done in anticipation of litigation, then that investigation file is protected from discovery by the opposing party. However, if the opposing party can demonstrate that it has a substantial need for the information and is unable to obtain the information by other means, it can be discovered. There is no absolute protection. If the investigation has begun without any anticipation of litigation and it subsequently becomes apparent to the investigator that litigation may result, the documents prepared by that investigator from the start of the investigation to the point at which it became apparent litigation might result are discoverable by the opposing party. The important question to determine discoverability is whether something in the claim file was prepared in anticipation of litigation.
\\nThe protection is often called the attorney work product privilege. It is not, however a privilege, but a protection available to the lawyer to keep his or her work from the hands of the opponent.
\\nThe duty to defend is not limited to hiring a lawyer to enter an appearance on behalf of an insured and litigating a suit seeking damages. The duty to defend includes the investigation and collection of evidence to be used in a defense if a claim is made before a suit is filed. The insurer is obligated to conduct a thorough investigation in preparation for the suit and, if done quickly and thoroughly, can result in a settlement before suit is filed.
\\nIn most states an insurer is required to go beyond the face of a complaint and instruct its adjuster to perform a thorough, independent investigation to determine if other facts exist that may give rise to a potential duty to indemnify. [Mullen v. Glens Falls Ins. Co., 73 Cal. App. 3d 163, 140 Cal. Rptr. 605 (1977)]. This means that even if the complaint alleges that the insured planned for weeks to kill the plaintiff, purchased a weapon for the express purpose of using it to kill the plaintiff, hid in the bushes outside the plaintiff\\u2019s house, lay in wait for him to arrive, and then pumped six bullets into his body, causing him grave bodily injury, an insurer may not be able to refuse to defend its insured on the \\u201cintentional act\\u201d exclusion without first conducting a thorough investigation. The investigation could show that the allegations of the complaint are totally false and fraudulent. Perhaps the insured was not even in the city at the time of the shooting, or was free of fault on another basis.
\\n\\xa9 2021 \\u2013 Barry Zalma
\\nBarry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.
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