There is no secret that today we live in a more litigious society. More injured parties are opting to retain attorneys instead of dealing direct with the insurance adjuster. Injury and property damage claims that were once resolved between the injured party and the insurance company are now going into litigation. A business owner needs to be aware that any loss that occurs has the potential to end up in litigation and there are steps they can take to prepare.

• Investigate all losses as soon as they occur. Do not wait until a claim is made. Secure statements from those involved to include the claimant, witnesses, insured employees. The information is always more accurate if documented at the scene of a loss. Photograph the loss scene to document the condition of the site. Note weather conditions on the date of loss such as ice/snow, sunny/dry etc.

• Keep in mind that just about anything written down is discoverable in litigation. The investigation should include only the facts. Do not include opinions. You do not want to make any admissions of liability or comment on severity in your investigation.

• Take possession of any evidence and keep it in a secured place. Disposing of evidence can jeopardize your defense.

• Report the claim to your insurance carrier so they can assist with the investigation and securing evidence. Claimants have 1 to 3 years, depending on the jurisdiction, to make a claim. Some plaintiff attorneys initiate claims by way of a Writ of Summons just before the statute of limitations is about to run. It is difficult to investigate a claim 2 or 3 years later. It is best to have your carrier on notice and holding the investigation and evidence should a claim be made or suit filed.

• Many business owners want to use their own attorneys to defend claims. Most carriers have designated defense firms that are vetted and provide discounted rates. Your carrier is going to want to utilize their panel counsel. If you desire to have your own attorney assigned to cases in litigation, it is best to make these arrangements at the time you purchase the policy from the carrier and have the attorney written into the policy. Some carriers will allow your choice of attorney to handle cases as long as they adhere to the carrier’s litigation guidelines, including fees.

In today’s automated world, it is very easy for attorneys to prepare suit papers and file litigation. The cost of defending a claim can oftentimes be more expensive than the claim itself. While we are seeing more cases in litigation, only a small number of cases ever go to trial. Most claims resolve on a compromise bases once all the factual information is secured through discovery. Carriers and attorneys utilize mediation, arbitration and pre-trial conferences to negotiate settlements. A business owner who takes steps to prepare for litigation at the time of the loss will posture the claim for the best possible defense or resolution.

Please email me or call with questions regarding preparation for litigation.

Please note that the information contained in this posting is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company’s needs. This post should be reviewed by your legal counsel or tax consultant before use.