Pleading Facts Within Coverage
Recovery from a liability insurance carrier is often the only compensation for a client injured by the negligence of another. As insurance policies only protect against certain risks, the defendant’s conduct must fall within those protected by the insurance policy in order to indemnify the claim. Thus, initially pleading claims within the policy is crucial to recouping any payment from the insurance carrier. In addition, when an insurance carrier appears willing to challenge whether coverage is available, pleading claims within coverage becomes even more vital to preserving any opportunity for indemnity or extra-contractual recovery.
Triggering the Carrier’s Policy Obligations
From the outset of any underlying tort action, pleading facts within the policy and thus triggering the insurer’s duty to defend is crucial. In Missouri, as is the case in nearly every state, an insurer’s duty to defend is generally determined by comparing the language of the insurance policy with the allegations of the petition. By pleading facts within the coverage afforded by the defendant’s insurance policy, plaintiff’s counsel at an early stage can set the stage for binding coverage decisions.
If the insurer fails to accept its coverage obligation and fails to provide a defense, the insurer may be required to indemnify the insured for the entirety of any judgement entered if coverage is in fact present. Columbia Cas. Co. v. HIAR Holding L.L.C., 411 S.W.3d 258 (Mo. banc 2013). Additionally, if the insurer undertakes the defense of its insured without properly issuing a reservation of rights, the insurer will usually be found to have waived any defenses that may be available to avoid its obligations under the policy. Smith v. Maryland Casualty (profiled in the February issue of Bad Faith Update).
Finally, until a timely coverage decision is made, an insurance carrier is under a duty to consider all settlement offers in good faith; a duty stemming from its obligation to potentially indemnify its insureds. An insurance carrier who ignores a settlement offer in the best interests of its insured may very well be acting in bad faith, even if the claim is ultimately not covered, if the carrier is still exercising exclusive control over the negotiations and has not specifically reserved its rights. Such actions on the part of the insurance carrier may entitle the claimant and the insured to extra-contractual benefits.
Preserving the Bad Faith Claim
Triggering the insurer’s policy obligations from the outset of litigation can only benefit an injured claimant and the insured. The insurer is forced to make coverage decisions binding the insurer to a position throughout the litigation. Moreover, an insurer shirking its obligations after the claimant has clearly laid out a theory of recovery covered by the policy bodes well for an insured and claimant attempting to recover extra-contractual liability. Thus to ensure a meaningful recovery, it is of the utmost importance to artfully plead facts in the underlying claim within the indemnity provisions of the policy.
Need Assistance with a Bad Faith Claim?
If you have any questions regarding bad faith insurance claims be sure to visit presleyandpresley.com to learn more about Kirk Presley and his team.