Insurers must be careful to differentiate duties of counsel from adjuster

Insurers must avoid turning counsel into loss adjusters, which not only wastes money, but risks turning counsel into a witness.
Furthermore, counsel lose objectivity when they are asked to play the role of frontline investigators, Marcus Snowden, partner at Blaney McMurtry, told attendees at the Insurance Law: Winter Update 2009 in Toronto.
He told of a case in which one lawyer began to act in the role of a frontline investigator, resulting in a messy, expensive outcome for the insurer.
A policyholder had certificates of insurance issued for other additional insureds. Defense counsel was told to defend and investigate.
After counsel interviewed all the insured parties, it came to light that the original information supplied to counsel was incorrect. Because of this, there was going to be a legal fight between the policyholders.
“If you have your independent adjuster investigating solely for the named insured you’re going to avoid that scenario,” Snowden said.
Defense counsel was kicked off the file and the file was shipped to Snowden.
He told the client to hire a new lawyer and sent the file pertaining to that lawyer to the new counsel and sent the other part of the file to the additional insured.
“But I shouldn’t have had to do that if we remembered that counsel had a role, but the role isn’t on the frontline until you get us into court or until you get a plea,” he cautioned. “Don’t use us as an investigator, because otherwise you are going to end up wasting good money.”