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The Importance of Notifying Insurance When You’ve Been Sued

It’s the one document no one wants to receive: a notification that you’ve been sued. Although it may be the most worrying, tense and generally shocking feeling one can have, it is important to know what first steps to take and the best way to go about them. Foremost, you’ll want to notify your lawyer. This seems obvious; the next step may not be: notify your insurance company. In addition to avoiding the potential for further legal action against you, the insurance company may quickly become your best friend.


Why does insurance have to be notified?

If you are served with a summons and complaint (a lawsuit) there are certain actions that you must take to ensure your interests are protected. Foremost among these is that you notify your insurance company. Failure to immediately notify your insurance agency or insurance company of the lawsuit may result in the forfeiture of your rights under the policy. In most cases, the insurance company will require that the lawsuit papers are promptly forwarded to them to preserve any insurance coverage.  

Insurance is purchased for a reason and you don’t want to relinquish the benefits it provides. Depending on the nature of the lawsuit, you may be covered under insurance that will pay for both the cost of your defense, as well as any judgement that you may owe at the end of the suit. If your insurance company is immediately notified of the lawsuit and your coverage is preserved, it will save you big in the long run.   


Your lawyer can be your voice     

As stated above, getting your insurance company involved immediately is vital to ensuring your protection in the event of a lawsuit against you. Equally as important is the communication that you have with the insurance company regarding the suit. Prior to notifying your insurance company, inform your lawyer of the situation. Your attorney knows the legal process and how to best communicate with the insurance company so that your interests are protected.

While insurance companies may provide financial protection, it is important to remember that they are businesses themselves. Like any other business, they are seeking to turn a profit. Depending on the insurance policy, an insurance company may have a duty to defend you in the event of a lawsuit. Naturally, however, insurance companies would like to avoid having to pay out in any claim. An attorney can work with the insurance company to help ensure that you are adequately covered when you should be, or if coverage is denied, negotiate a position most favorable to you.    

Depending on the nature of the claim and your response, the other party will also get their insurance company involved. Your lawyer can also represent your interests when in discussion with the other insurance company.   


Moral of the story

Receiving a notification of a lawsuit or complaint is probably one of the worse documents you can receive. However, if handled correctly, you and your business may be adequately protected. All notices and complaints must be forwarded immediately to your insurance agent or insurance company. This may be critically important in determining whether or not you are covered by insurance. Also remember that your lawyer can act as the intermediary between you and your insurance company. Having adequate representation can also help ensure you are protected to the greatest extent possible by insurance. 

Should you have any questions or you would like to discuss this issue in further detail, please do not hesitate to contact us to schedule a free consultation.

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