What happens when your insurance company refuses to defend you?

June 24, 2015

by Kevin Cornish, Esq.

Individuals and businesses purchase insurance to protect themselves and their assets: automobile insurance to protect them in the event of an accident involving a motor vehicle; homeowners insurance to protect their house and property; commercial general liability insurance to protect their businesses; professional liability insurance to protect professional business activities.

Each of these types of insurance generally protects the insured in the event a lawsuit or legal claim is filed or asserted against them.  Often, insureds expect that if a claim is filed against them, their insurance company will step up and defend the person or business.

When an insurance company denies coverageInsurance policies offer two types of protection: defense and indemnification.  An insurance company’s duty to defend requires that the insurance company defend the insured if a legal claim is asserted against the insured and the allegations “may potentially come within the policy’s coverage,”  Sphere Drake, P.L.C. v. 101 Variety, Inc., 35 F. Supp. 2d 421, 426 (E.D. Pa. 1999). (emphasis added).   The duty to defend exists even if the “claims against the insured [are] groundless, false, or fraudulent.”

On the other hand, the duty to indemnify is narrower.  It requires that the insurer pay for any losses for which the insured is found liable.  An insurer has a duty to indemnify “only where the insured is held liable for a claim actually covered by the policy. Whole Enchilada, Inc. v. Travelers Prop. Cas. Co. of Am., 581 F.Supp.2d 677, 694-95 (W.D. Pa. 2008).

Insureds are sometimes faced with situations in which a legal claim is asserted against them, but their insurance company denies coverage and refuses to defend them.  This leaves insured wondering what to do and where to turn.  Individuals or businesses could face significant expense to defend against the alleged claims.  This is especially difficult when the insured has been paying premiums expecting that their insurance company would protect them in the event of a lawsuit.

In these cases, its important to understand that just because the insurance company asserts that the policy does not provide coverage does not necessarily make it true.

When an insurance company denies coverage, the insured can defend the claim itself or file a declaratory judgment action against the insurance company.  In a declaratory judgment action, the insured asks the court to review the insurance policy and the claims asserted and determine if the insurance company is required to defend the insured.  Many times, the court determines that the insurance company is wrong and that the insurance company is required to defend the insured.

Similarly, insureds can also face difficult and confusing situations when their insurance company initially agrees to defend them, but then files its own declaratory judgment action asking the court to rule that the insurer is not required to continue defending the insured.  If the court agrees with the insurer’s position, then the insurer would stop defending the claim.  Therefore, the insured has a strong interest in defending the claim to ensure that the insurance policy provides coverage.

Finally, there is a potential that an insurance company’s failure to defend an insured constitutes bad faith.  In such a situation, an insured may be able to recover their attorneys’ fees from the insurer.

Any time an insurance company does not agree to provide coverage under an insurance policy, it is important for an attorney to review the insured’s legal rights and options.

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The information above is general: we recommend that you consult an attorney regarding your specific circumstances. The content of this information is not meant to be considered as legal advice or a substitute for legal representation.

Co-Parenting through Vacation Season

Advice for Single Parents Seeking a Stress-Free Summer by Melissa M. Boyd, Esq.June 11, 2015I developed this post as one in a series to help parents and their attorneys plan for the slew of legal co-parenting complications the summer brings. Without the structure of school, even the tightest co-parenting plans are challenged.Whether an uncoupling was friendly or not, it takes a concentrated effort to find what works for each couple to co-parent successfully. Though every situation is different, and there is no recipe to guarantee positive family outcomes, this is practical advice for how to handle the legal aspects of these commonly faced issues…Child CustodyArranging a vacation is often a task that, well, causes most to need a vacation. For separated, divorced or single parents, planning a vacation for themselves and their children can be grueling.Typically single parents have a custody agreement which serves as a parenting plan. However, attorneys may have been vague concerning vacations. Or, parents may not have their agreements finalized yet.Unfortunately, co-parenting issues stemming from vacations typically present themselves at the last minute, when the vacation is already planned yet is being communicated to the other parent for the first time.To help, we’ve tied vacation planning to these familiar “Five W’s”:
  • Who
When making vacation plans, it’s important that parents communicate early and often. This avoids any last minute quarreling over changes. Some families start this process as early as March.While communication between parents is crucial, kids should be left out of the arranging.  The kids don’t need to know which parent made special requests, which made unnecessary denials, or who spent more money. They just need to know that their parents worked hard for them so that they can enjoy their summers.
  • What
When thinking about what type of vacation to take, each parent should try to put themselves in the other’s shoes.  If one would be uncomfortable with a particular activity or accommodation, they shouldn’t do anything similar when it’s their turn for a trip.All vacation provisions and plans should be agreed upon and put in writing as soon as possible to avoid conflict. Parents should also be held responsible to share detailed vacation itineraries. It must be a provision that the non-attending parent is provided with all details around accommodation, travel times and activities so they feel at ease.Another hugely important element of choosing a vacation is cost. Parents must be realistic financially when it comes to vacation selection. Parents may have half the resources they had pre-split, and regardless of what the children may be accustomed to, or what the other parent can afford, they need to choose a vacation that is within their means.Considering finances is also motivation to keep vacation planning peaceful – when parents disagree they may spend significant funds paying attorneys or mediators.
  • When
Attorneys have the opportunity to prevent disputes by setting clear parameters in the parenting plan or custody agreement.Every family is different and every divorce has its own unique spot on the amicable to nasty scale. Each plan should be customized but clear to avoid any possible confusion down the road. Some plans can be very specific and include pre-determined dates, such as Mom gets the third week in June, and Dad gets the third week in July.  Others may just state that each parent gets one week and dates must be finalized and communicated by a certain date.Parents should do their best to stick to the schedule. If for any reason they wish to deviate, or don’t have the plan outlined yet, respectful conversations should begin as soon as possible.
  • Where
Everyone enjoys dreaming about where they may go on their next vacation. For divorced and single parents, it’s important to be informed before the mind starts to wander.If you have the means to travel outside of the country for vacation, there are specific rules regarding passports for children of divorce. Both parents must give consent before a passport is used for any child under the age of 16 unless one parent was granted sole custody- then only the custodial parent’s signature is required.  It is possible to get a passport without the signature of both parents but only when it is needed for the child’s health or a special family circumstance – not a vacation.Parents who cannot get their former spouse’s support will have to contact an attorney. The most common course of action is to petition for the court to order the ex the sign the application.  Parents who are on the opposing end should also reach out to their lawyer after refusing to sign. Real fears about abduction should be communicated to attorneys and to the Court.
  • Why
The best piece of advice I can give when vacation planning gets stressful is to remember the reason for vacationing in the first place. Vacations are meant to bring families closer together – not farther apart. Parents should be considerate, thoughtful and respectful, with a children-first mentality. Attorneys should have the same children-first mentality in order to guide families toward the best possible outcomes.View related blog posts here

Divorce, Threats and Social Media: Lessons From The Elonis Case

June 2, 2015By Melissa M. Boyd, Esq. “There’s one way to love you but a thousand ways to kill you.”Supreme Court buildingIf your wife left you, and you wrote that post on Facebook, would it be construed as a threat? Certainly some people would see it that way, but the US Supreme Court has ruled that that type of social media post is not enough to get you convicted under federal threat statutes; yesterday (June 1) the Court overruled the conviction of Pennsylvanian Anthony  Douglas Elonis.Elonis posted that message above, along with other violent messages, to his Facebook page after his wife left him, and was subsequently convicted of threatening her and sentenced to 44 months in prison. Elonis claims that he was not threatening his wife, but simply writing rap lyrics that were not representative of his true feelings, and his lawyer argued that the lyrics should be protected under the right to freedom of speech.The Court said the government needed to do more than prove that a reasonable person would find the postings threatening in order to convict Elonis.  The Court did not squarely address the First Amendment issues raised by Elonis in trying to protect the threats imbedded in rap lyrics.  The question is one of intent:  Did Elonis mean what he posted or was he reckless in posting the choice content?However, there is still a cautionary tale in this story: Just because Elonis’ conviction was overturned doesn’t mean he hasn’t paid a price for his social media posts. When people are in difficult marital or personal relationships, anger is not an unusual emotion. However, it’s best to not immediately vent your anger on social media.So, as angry or frustrated as you may be, zip it when it comes to venting on social media about your ex, ex’s ex, mother/father of your child, in laws, etc. Maybe you won’t be convicted, but you could be the subject of a Protection from Abuse (PFA) order if you are blogging or posting about your ex in what could be perceived as a threatening way.  And if there is other evidence of your threatening behavior toward an ex or other family member, that additional evidence of a social media post, whether it’s rap lyrics or just plain ol’ words, could tip the scales in favor of a PFA against you.As they said in movie The Social Network, the Internet is written in ink. What you post will never completely go away, and it can come back to haunt you.The information above is general: we recommend that you consult an attorney regarding your specific circumstances. The content of this information is not meant to be considered as legal advice or a substitute for legal representation.Visit Melissa M. Boyd’s attorney profile.Visit High Swartz’s family law practice page.