An earlier post explains the meaning of a “reservation of rights” letter. As that post explains, if you receive such a letter, the insurance company must allow you to find your own independent Lawyer. That Lawyer will serve as Moeller counsel.
The term “Moeller counsel” comes from the Mississippi Supreme Court case Moeller v. American Guarantee and Liability Insurance Company.
In that case, the insurance company hired a Lawyer to defend its insured. At the same time, the insurance company sent the insured a reservation of rights letter.
The Supreme Court ruled the reservation of rights letters imposed a “special obligation” on the insurance company. This was because the letter created a conflict of interest between the insurance company and the insured.
What is the conflict?
In the Moeller case, the Mississippi Supreme Court gave three examples of this conflict:
First, if the insurance company thinks there will be no coverage, it might not pay the Lawyer to work hard to defend the insured.
Second, if some of the plaintiff’s claims are not covered by the policy, the insurance company might steer the plaintiff’s attention to the non-insured claims.
Third, the Lawyer hired by the insurance company must report on the progress of the case. This creates a risk that the Lawyer might disclose confidential or privileged information that the insurance company could use later to deny coverage.
What does the insurance company have to do about the conflict?
The insurance company must allow the insured to hire an independent Lawyer. This Lawyer will report only to the insured. The insurance company also has to pay the legal fees of the Moeller counsel.
If your insurance company sent you a reservation of rights letter, contact one of our Insurance Lawyers and ask about hiring your own independent lawyer.
Pepper & Odom Law Firm
Ridgeland, MS 39157
Original Content by: Attorney Craig Panter of The Panter Law Firm