A Video Explaining the Defense of an Insured by a Liability Insurer

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Use of House Counsel and Requirement that Adjuster & Attorney Work Together to Defend Insured

See full video at https://youtu.be/CuWNdhiW7i8

Challenges to Use of in House Counsel

Defense counsel are sometimes employees of the insurance company. Some attorneys have challenged the use of in-house counsel on the ground that the insurer, as an employer of attorneys, is not licensed to practice law. They claimed that the insurer was engaged in the unauthorized practice of law—a crime. Attorneys in Texas convinced a trial court on the issue but the decision was reversed on appeal.

Attorneys have also raised challenges against house counsel because the employee attorney is alleged to be serving two different masters. As an employee of the insurer (it is alleged) the attorney cannot do justice to both his client, the insured, and his employer, the insurer.

Involvement of the Adjuster

At the moment the suit is assigned for defense the adjuster and the defense attorney must have a clear understanding of the adjuster’s involvement in the preparation of the case for trial. The adjuster must make it absolutely clear that the attorney is required to abide by any guidelines provided by the insurer. If the attorney believes that the guidelines impinge on his or her ethical obligations, he or she will advise the adjuster, and they should work together to modify the guidelines appropriately.

The insurer’s guidelines for case control and billing may change from time to time. The adjuster must keep abreast of such changes made by the insurer’s management and promptly inform the attorney of the changes.


© 2020 – Barry Zalma

Barry 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.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Read last two issues of ZIFL here.

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