You've notified your insurer of a claim on behalf of your company. Now what?
You have a duty to cooperate with your insurance company after providing it with notice of a claim or potential claim. In fact, the duty to cooperate is usually expressly set forth in the “Conditions” section of Company General Liability ("CGL") policies. For example, most CGL policies require the insured to:
- Provide copies of all correspondence, demands, or court papers;
- Authorize the insurer to obtain records;
- Cooperate in the investigation and resolution of any claims or lawsuits;
- Assist in enforcing the insurer’s rights against others; and
- Not make any payments or assume any obligations without the insurance company’s consent.
The duty to cooperate usually is not controversial, but occasionally the insured must walk a fine line. On the one hand, failure to cooperate can provide the insurer with a defense to coverage. On the other hand, you must be careful to not allow the insurance company to use the duty to cooperate as a weapon to force you to provide information that may be damaging to you in a coverage dispute.
For example, insurance companies often issue a “Reservation of Rights” letter after receiving notice of a claim. In this letter, the insurance company says that it is “reserving its rights” to deny coverage, depending on how the facts turn out. In that situation, the insured still has to cooperate by providing information and documents necessary to investigate and defend the claim, but the insured is not required to provide privileged information and documents that might be used to defeat or limit coverage (for example, communication with your own lawyer about insurance coverage).
This is another area where it would be helpful to have coverage counsel, who can advise you on exactly what degree of cooperation is necessary to preserve coverage and communicate on your behalf with the lawyers for the insurance company.