Avoiding a Legal Nightmare

Adjusters could avoid legal headaches by consulting a legal expert at the outset of an environmental claim.

The experts will help an adjuster assess coverage, liability, quantum and to evaluate prospects of subrogation, Cristian Mongeon, vice president and executive general adjuster, Charles Taylor adjusting, told attendees at the OIAA 2008 conference.

Legal counsel can help an adjuster select the expert that can stand the test of time at trial if need be, Mongeon added. In addition, by having counsel from the get-go, an adjuster can work with counsel to ensure that any necessary items or information is obtained during the course of the investigation.

“From a legal perspective, it’s nice to have counsel involved at the beginning,” he added. “They are a good resource to have in anticipation of litigation. They are a good resource to have because they can help you with coverage issues, such as legal opinions on coverage, the jurisprudence, with the interpretation of certain coverage, they can help you track reservation of rights letters, they can also basically help you protect privilege in anticipation of litigation down the track whether on the first party for coverage or whether on the third party claim.

“Two heads are better than one — especially when one is going to stand in front of the judge and say ‘here’s our case’,” Mongeon said. “From the issue of liability, it’s always good to know whether you’re pooched or not pooched, or to what extent and what the arguments are to defend yourself — it’s nice to have your resource on hand.”

In certain instances, an entire claim can be avoided by securing legal advice from the get-go, as a lawyer might find that the policy does not even cover the claim.

Something as little as a short phone call to a lawyer at the outset of an environmental claim can help to avoid any coverage issues, Eleni Maroudas, associate lawyer, McCague Peacock Borlack McInnis & Lloyd, said.

“If there’s been any opinion expressed by the adjuster or claims examiner that there might be coverage, we’re pretty much sunk at that state, because when we go to court we’re faced with a judge saying ‘well if your own people can’t get it right then we’re into contra proferentem, there’s two interpretations, sorry, can’t help you’,” Maroudas said. “It doesn’t matter if we’ve got the most brilliant arguments and if it’s so patently obvious that the adjuster or the examiner got it wrong, the court will just rely on contra proferentem.”

Even when it seems to be a simple or straight-forward situation, it pays to call a lawyer, because when it comes to law, the one thing you will find is nothing is really common sense — it becomes the least common of all the senses, she added.

“You might take certain things for granted at the outset, but I wouldn’t know how to adjust a loss and I think coverage does become very very specialized and words that we take for granted have a very specific meaning,” Maroudas pointed out. “‘Damages’ — that has a very specific meaning and with respect to environmental claims, some costs are not damage when they are ordered under statute.”

They may not constitute damages, they might be fines, they might be penalties, but they are not compensatory damages, Maroudas noted. Various courts have interpreted these words — and their specific meanings — and nuance has been put on them.

Maroudas cites an example of a case she worked on where she was handed a file — after the claim was examined — where two policies were in place. She was asked to interpret the other insurance clause. Upon further examination of the policy, she found that the wrongful act was outside the retroactive date. The claim could have been denied at the outset, but a simple misunderstanding on the terminology meant this had not occurred.