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Insurance Companies Use Their Own Inefficiency to Evade Obligations

Posted on behalf of RizkLaw on Jan 26, 2014 in Insurance Issues

Imagine telling the IRS that you can’t file your return because you can’t locate your records, and expecting the IRS to relieve you of your tax obligations. Most people wouldn’t even consider using that excuse; yet insurance companies are presenting the same argument to avoid producing records in insurance coverage disputes.

Other Insurance Information Valuable in Coverage Disputes

Some of the most valuable information, called “other insurance information,” a policyholder can gather concerns an insurance company’s handling of similar claims previously submitted by other policyholders. “Other insurance information” may reveal different key provisions and conduct in comparable policies, which would indicate the insurance company’s bad faith conduct in its treatment of a current policyholder.

Insurance Company Resistance to Producing Records

Insurance companies often strongly resist producing “other insurance information,” arguing that producing it would be burdensome and costly. A policyholder should flatly reject this argument. Courts across the country have held that a cumbersome recordkeeping system does not relieve an insurance company of its obligation to produce information. The fact that the company keeps its records in different locations or that there are too many records to gather does not excuse it from its obligations.

Permitting insurance companies to produce only those records they can easily search for in the record keeping system they designed themselves would allow them to produce only what they choose to provide, rather than what is relevant. As one court ruling stated: "You can’t just throw everything in a big box and say we can’t find it."

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