How to get insurance co to provide legal representation?

[pstern]

What is the name of your state? California

My wife is being sued because the quad (off road vehicle) she had bought
for her son, my stepson (and had registered in her name) was involved in
an accident while being operated by her son. He's 23 years old.

Off road vehicles are clearly excluded in our HO policy but my insurance
company has implied that they may be willing to provide legal representation
while denying any financial obligation in the event of a decision against my
wife. I'd like to know how I might go about encouraging them to provide that
service.

While it looks like the Negligence case against us is not very strong and appears to be limited to a state mandated maximum of $15K, it's likely to cost us twice that in attorney fees.

Any ideas on things I might say to our insurance company to sway them?

Thanks,

Peter Stern

 

[I AM ALWAYS LIABLE]

My response:

It's not that they said they wouldn't afford your wife and stepson representation in the event of a lawsuit. This is called a "reservation of rights". They said they may not afford monetary coverage because, while they're representing your family, the insurance company is also studying the policy to determine if coverage can be afforded in your family's situation under the policy. The insurance company has a duty to defend whenever there's a question of coverage.

Click on this link if you have further questions:

http://www.insurance.ca.gov/


IAAL

 

[pstern]

How to get insurance co to provice legal representation

Thanks I am always liable for your response.

While it is true that they didn't say "they wouldn't afford my wife and stepson representation in the event of a lawsuit" they did say (and directed me to
the appropriate area in my policy) that they were under no obligation to do
so as off road vehicle are excluded in no uncertain terms.

The implication was that they might out of the goodness of their hearts
represent us (this is on track to go to a full Superior Court jury trial) but
are just as likely (maybe more so) not to. I'm awaiting a response this week.

 

[I AM ALWAYS LIABLE]

Thanks I am always liable for your response.

While it is true that they didn't say "they wouldn't afford my wife and stepson representation in the event of a lawsuit" they did say (and directed me to
the appropriate area in my policy) that they were under no obligation to do
so as off road vehicle are excluded in no uncertain terms.

The implication was that they might out of the goodness of their hearts
represent us (this is on track to go to a full Superior Court jury trial) but
are just as likely (maybe more so) not to. I'm awaiting a response this week.

My response:

Then your answer is clear. If ATV's are specifically "excluded" from your policy, then it's as if your stepson was driving without insurance, and no representation or coverage will be afforded to your family. You are right, that your wife's exposure is limited to $15,000.00 because your stepson was a "permissive user" of the vehicle. However, your stepson's liability is limitless.

To defend a claim on a "reservation of rights" basis, the insurer may notify its insured that it will furnish a defense to the injured party's suit against the insured; but, at the same time, it reserves the right to refuse to indemnify the insured against any judgment on the ground that the claim was not covered under the policy, and to withdraw its defense upon the same ground.

Such a reservation serves various functions:

Prevents waiver of coverage defenses:
The insurer meets its obligation to furnish a defense without waiving its right to assert coverage defenses against the insured at a later time. [Blue Ridge Ins. Co. v. Jacobsen (2001) 25 Cal.4th 489, 497, 106 Cal.Rptr.2d 535, 540]

"(I)f the insurer adequately reserves its right to assert the noncoverage defense later, it will not be bound by the judgment. If the injured party prevails, that party or the insured will assert his claim against the insurer. At this time the insurer can raise the noncoverage defenses previously reserved." [Blue Ridge Ins. Co. v. Jacobsen, supra, 25 Cal.4th at 497, 106 Cal.Rptr.2d at 540]

Sounds like there's a "second mortgage" in your near future, and a Bankruptcy for your stepson in his.

IAAL