September 22, 2019

Book Review: Dennis Wall’s “Litigation and Prevention of Insurer Bad Faith”

Litigation and Prevention of Insurer Bad Faith, Third Edition, by Dennis J. Wall, (2 volumes), West Publishing, 2011, $473.

Whether you are a claims person or an attorney working in the area of insurance coverage, you cannot toil in the vineyard of bad-faith without encountering at some point the name of Dennis Wall. Wall is an Orlando, Florida attorney who specializes in bad faith. He has recently updated and expanded his seminal work, Litigation and Prevention of Insurer Bad Faith. This two volume set is now in its third edition, published by West Publishing Company.  The fact that what was once a single volume has now morphed into two, may be an indication of the burgeoning nature of law and litigation in this particular area of the legal landscape.

Volume 1 subdivides into two parts: Introduction and Background, followed by a lengthy section on Third Party Claims.

Volume 2 tackles First Party Claims, Damages, and wraps up with a Summary and Conclusion.

With regard to third-party claims in volume one, Wall covers:

*  Standards of Conduct toward Insureds

*  Responsibilities of the Insured

*  Insurer defenses against actions by the insured

*  Relations between Primary and Excess Carriers and Reinsurers

*  Actions by Others and Insurer Defenses

*  Discovery from Insurers concerning their handling of third-party claims

In Volume 2, Wall tackles the following aspects of first party claims: standards of insurer conduct, responsibilities of the insured and presenting first party claims, insurers defenses against first party actions by insureds, and discovery from insurers.

Additionally, Wall includes eleven handy Appendices that range from an initial letter from defense counsel to the insured, a sample letter informing insureds of case progress, liability insurers’ guiding principles, and sample jury instructions.

This is the third edition of a book that spans decades.  The first edition debuted in 1985.  Edition number two appeared in 1994.  This latest, expanded, two-volume resource comes 17 years later, so it was due for an update.

Admittedly, this is not the kind of book that anyone will curl up with to read cover-to-cover.  Even the most die-hard insurance and claim geeks will not mistake it for 50 Shades of Gray.  Its target audience and market is lawyers who do bad faith work.  Some adjusters may find the strong dose of legal case citations heavy sledding, their eyes glazing over.  What claims adjusters are looking for is practical guidance on what to do to avoid bad faith pitfalls in claims-handling.  Such lessons can be distilled from Wall’s latest book.

Every claims office should have a copy of Litigation and Prevention of Insurance Bad Faith.  It’s too late now to rename the book, but perhaps it would have made sense to title it, Prevention and Litigation of Insurance Bad Faith.  Elevate prevention above litigationThe more time and effort spent on prevention, the less time and money bled on litigation.  Prevention is often the best cure.  More time spent on one may avert having to spend time (and much money) on the other.

One of the biggest risks that insurers and other claim organizations face these days is bad faith.  One preoccupied or overloaded adjuster mishandling a loss may “uncap” policy limits.  Aggressive claims-handling may spur juries to award punitive damages.  Lay jurors do not feel “warm and fuzzy” toward insurance companies, despite the prevalence of geckos, cavemen or perky Flo on TV commercials.  None of these characters will be hand-holding or adjusting the claim when the rubber meets the road and a policyholder reports a loss.  This is the “moment of truth” when the marketing gloss has receded and insurance buyers start to see the true value (or lack thereof) of their insurance purchase.  Often, they learn — too late — that the “cheap quote” the desired for coverage was cheap for a very specific reason.  In insurance coverage and service — as in other realms — you get what you pay for.

With a tight economy, bad faith risks are unlikely to subside.  Economic stresses may embolden policyholders to be more aggressive in pursuing insurance recoveries.  Financial pressures from shareholders, green eyeshade folks and the corner offices may impel insurers to embrace hard-line policy interpretations and claim-handling practices.  This yeasty mix offers a recipe for bad faith claims and lawsuits.  Dennis Wall’s updated treatise offers a training and practice blueprint for claim operations who not only want to defend themselves but — perhaps more importantly — determine how to stay out of bad faith hot water to begin with.

Insurers themselves are in the business of risk — quantifying it and managing it. Wall’s book can be an indispensable tool for any claims organizations own risk management program that aims to address the perils of bad-faith. In an insurance and risk context, we can say to the claims industry, “Physician, heal thyself.”

A book like this needs to be more than simply credenza decoration. It needs to be frequently used, consulted, thumbed through, reviewed and pulled down from the shelf. If claims staffs read and heed the principles articulated in Litigation and Prevention of Insurance Bad Faith, they will go far toward inoculating themselves from bad-faith “viruses” and position themselves for more effective defense against any such claims which do arise.

 

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