By Charlie Wilmerding, Founder & CEO
When you experience an insurable loss and think you need legal counsel to help you through the claims process, your first reaction is likely to be to call a trusted attorney. In most other circumstances, this would make sense. But not when it comes to insurance. In fact, calling your own attorney first could be very much the wrong move—one that can cost you five or more figures in unexpected bills.
Why? Because under some policies, it’s the insurance company, not you, who gets to choose who represents you. If you work with unapproved counsel, you could jeopardize your insurance coverage or be left paying out-of-pocket for legal expenses. (It’s like a health insurer refusing to pay for out-of-network health care.)
The $100,000 fine-print oversight.
Here’s a case in point. After suffering a cyber breach, a policyholder called their trusted law firm. While working with their attorneys to navigate through the situation, they incurred around $100,000 in legal expenses. A few weeks later, they contacted their cyber insurance carrier. Only then did they discover that their policy required them to use the carrier’s panel counsel of choice and would not reimburse them for the legal expenses they had already incurred. The policyholder was left to pay that $100,000 legal bill out of pocket.
This kind of hazard has only increased in recent years. In the past, insurers gave policyholders a measure of leniency to choose attorneys outside their pre-approved list—if the insured was willing to pay the difference between pre-approved rates and their attorneys’ billing rate. Now, however, fewer and fewer insurers are allowing the insured to select their own counsel, even if they’re willing to cover the price difference.
They are also quite strict when it comes to deductibles. Any legal expenses you incur will not count towards your deductible until you have reported the claim to the carrier.
It is important to note that how a carrier will respond to a claim depends on the carrier and the details of the policy. For example, some will let you select your own counsel to represent you; others will not.
Your partner in preparation.
Knowing exactly what to do before a claim arises has become ever more vital. This is one reason why Altus Partners created a Claims Advocacy Group many years ago—to inform and advise our clients of their coverage and rights.
While traditional brokers focus on selling their clients insurance and leave it to the client to deal directly with their insurer when filing a claim, the Claims Advocacy Group provides a level of service far beyond what most other brokers offer.
Composed of former insurance coverage attorneys and experienced support, this team at Altus Partners works with our clients to inform and explain the claims-related provisions in their policies from the beginning. If there is a particular law firm a client wants to choose to defend them in the event of a claim, we can help get it approved by their carrier before a loss occurs. (Once a claim is made, carriers are less likely to approve a non-panel law firm.)
Above all, whether Altus Partners or someone else is your insurance broker, and you have a claim or are anticipating making one, it’s critical to notify your broker as soon as possible.
What only Altus Partners can offer you.
Altus Partners was founded as the only 100% commission-free corporate broker in the United States. We still are. Because we succeed not by how much we sell you, but by how well we serve you, we are uniquely equipped to provide the objective advice and unwavering advocacy you need to manage risk as affordably and efficiently as possible.
If you have questions about your right to counsel in the event of a claim, or any other aspect of your insurance and risk management needs, please feel free to contact us. Or call us at 610-526-9130.