Is an insured required to utilize the insurance company’s defense counsel?
In the context of a standard general liability insurance policy, it’s clear that the insurance company has an obligation to indemnify the insured. If a judgment is made against the insured, the insurance company is responsible for covering that cost. However, does this obligation extend to requiring the insured to use the insurance company’s legal defense team? Can the insured hire their own defense attorney and subsequently submit the costs for reimbursement by the insurance company?
I would assume the answer to that last question is no. However, this leads to an intriguing issue: if the insured opts not to use the insurance company’s defense counsel and instead hires their own, and then ends up losing the case, is the insurance company still obligated to indemnify the insured and pay the judgment?
In general, an insured is required to allow the insurance company to provide a defense using its own counsel, especially when the insurance policy includes a duty to defend. This is because the insurance company has the obligation to manage the defense to ensure that the insured’s interests align with the insurer’s, as the insurer will typically cover the costs associated with the defense.
If an insured chooses to hire their own attorney without the insurance company’s approval, they may face challenges recovering those costs. Most standard liability policies contain provisions that stipulate that the insurer has the right to control the defense and select the legal counsel. By not using the insurer’s appointed counsel, the insured could risk undermining the insurance company’s obligations under the policy.
Regarding the indemnification aspect, if the insured does not use the insurance company’s defense counsel and ends up losing the case, there is still a possibility that the insurer would be obligated to indemnify and pay the judgment, as long as the underlying claim is covered by the policy. However, this could depend on the specific terms of the policy, including any clauses about cooperation and following the insurer’s defense process.
Ultimately, if the insured acts against the policy stipulations, it may complicate claims for defense costs and raise issues regarding the insurer’s obligation to indemnify. It’s always advisable for insured parties to consult the specific language of their policy and possibly seek legal counsel to understand their rights and obligations fully.