Q I have civil lawsuits filed against me relating to a car accident. Part of the case accuses me of negligence and other intentional wrongdoing. The insurance company sent me a “reservation of rights” letter and told me that I was entitled to my own attorney. Can you explain this process?
A Your insurance policy covers liability for certain acts, such as negligent behavior. However, if you acted intentionally or without motive, your conduct may well be excluded from coverage. If someone drives under the influence and is at fault in an accident, for example, the insurance company can defend them in civil proceedings, but only for covered claims, not the DUI. The insurance company “reserves its rights”, which may include circumstances where the insurer may stop defending you (depending on what it will learn later) or will not pay all or part of your liability. When this happens, the insurance company has a conflict of interest with you. At that point, you can hire a lawyer yourself, so there are two lawyers — yours and the lawyer hired by the insurer. Your lawyer may seek payment of his fees, at least to some extent, from the insurer. This is often called the “Cumis council” (from the name of a California Case).
Since this type of situation has unique aspects, it is best to consult your own lawyer. The lawyer hired by the insurance company may be able to provide you with advice, but keep in mind that their payment comes from the insurance company, which impacts the advice they can give you. provide.
Q Is the insurance company allowed to settle a case even if I don’t want to?
A Some insurance policies, such as those that provide professional liability coverage, contain a provision requiring the policyholder’s written consent to a settlement. This provision is usually absent from liability policies. Conclusion: Your insurer can settle the claim, even if you don’t want to, but the insurer must act in good faith. The insurance company should not expose you to personal exposure.
Conversely, if you want to settle but the carrier does not, the carrier is under no obligation to resolve the issue. One option then is that you could take up the defense yourself.
Ron Sokol has practiced as a lawyer for over 35 years and has also served on several occasions as a judge pro tem, mediator and arbitrator. It is important to keep in mind that this column presents a summary of the law and should not be treated or taken as legal advice, much less a substitute for genuine consultation with a qualified professional.
