Just last week I spoke on a panel that addressed the role of the attorney during the adjustment of the claim. Our presentation focused on how quickly the line can become blurred between an attorney acting in his/her role as counsel, and acting as the claims adjuster for the insurance company. More and more often, we are seeing counsel for the insurer becoming involved earlier and taking a more active role in the claims investigation. The question then becomes, when that happens are the documents created privileged just because a lawyer was involved?

In the insurance context, determining the application of such privileges can be difficult given the very nature of an insurer’s business which includes investigating and evaluating the claim. Therefore, when counsel is retained on behalf of the insurer to investigate and advise on a coverage position, is that business as usual, or privileged? As with most legal issues, the answer will depend the facts of the case and a state’s law.

However, there are a number of courts that have rightly held that documents constituting any part of a factual inquiry into or evaluation of a claim, undertaken to arrive at a claim decision, are produced in the ordinary course of an insurer’s business and not protected by work product immunity.1 Therefore, to determine if it is protected, a court will usually ask: Was the document created because of anticipation or litigation, and was litigation reasonably anticipated.2

The Harper case provides a great example. There, the insurer took the position that it reasonably anticipated litigation as of the date of loss, because there was a claim the insured had committed arson. As such, the insurer argued that all the documents created were protected as work product. The court concluded that a finding that the fire was “arson” was not enough, in and of itself, to anticipate litigation. The court also concluded that Auto-Owners investigation into the fire was not undertaken and used solely to prepare for litigation, but rather that it was under a duty to conduct an investigation as part of its regular business. Ultimately, the court in Harper concluded that the documents prepared prior to the date the insurer denied the claim were not protected and those prepared after the denial were presumed to have been produced in reasonable anticipation of litigation.

If documents are being withheld on a claim of work product, it is imperative to review the nature of the document and the purported purpose for the creation of the document to determine if it is protected, or is merely a document created in the ordinary course of business.
1 Harper v. Auto-Owners Ins. Co., 138 F.R.D. 655 (S.D. Ind. 1991); St. Paul Reinsurance Co. Ltd. v. Commercial Financial Corp., 197 F.R.D. 620, 636 (N.D. Iowa 2000).
2 Harper, 138 F.R.D. at 659.