Expert Commentary

The Lawyer as an Insurance Claims Expert

The common wisdom is that insurance is arcane, difficult to understand, and written using incomprehensible terms only a Supreme Court justice could understand. Common wisdom is rarely wise. It is, at best, common and often wrong.


Claims Practices
May 2007

Although people not involved in the business of insurance consider it to be difficult to understand, it is a simple contractual relationship easier to understand than a common commercial lease. When presenting evidence to a jury about an insurance dispute, a lawyer expert can be of great assistance to the jury. It is the duty of the expert to convince the jury that they can easily understand the contract.

The common wisdom is that that lawyers make terrible witnesses. Contrary to the common wisdom, a lawyer, with knowledge of the law, insurance coverages, and insurance claims handling can be the best possible expert witness a party can call in an insurance coverage or insurance bad faith suit.

Qualification of a Lawyer Expert

A license to practice law does not make one an insurance expert. What is needed is special knowledge, skill, experience, training, or education in insurance and insurance claims handling. The role of a lawyer expert in a bad faith case in California often runs afoul of misconceptions about a decision of the California Court of Appeal, California Shoppers, Inc. v. Royal Globe Ins. Co., 175 Cal. App. 3d 1 (1985). There, the court refused to allow a lawyer expert to testify. It concluded that although the lawyer seeking to testify as an expert witness was "a highly qualified trial attorney," his experience did not mean that he "had any special knowledge, skill, experience, training, or education such as would qualify him as an expert on insurance industry practices." This decision has often been cited, incorrectly, to disqualify witnesses who have not acted as claims handlers to testify as experts in claims cases.

California Shoppers has often been misread to require actual experience handling claims before an expert can testify. That the lawyer expert in California Shoppers had no personal experience as an insurance adjuster was not the reason he was disqualified. A lawyer expert who specializes in providing coverage advice to insurers and who has hands-on experience handling claims before or during the period he or she was a member of the bar meets both the actual as well as the supposed requirements of the California Shoppers court.

Limitations on Testimony

Insurance experts should not testify concerning an interpretation of the law or make conclusions that there is coverage or no coverage for a loss. On the other hand, where the thrust of the expert's testimony was not that there was coverage but that there were questions about coverage that should have caused the insurer to take certain steps to complete a thorough and appropriate investigation, the testimony of a lawyer expert on the legal issues is proper.

Since the expert serves the judge and jury, the expert testimony should never advocate one side or the other. Rather, the lawyer expert's testimony should be limited to topics for which specialized knowledge (as opposed to common sense or moral judgment) is truly necessary. "If the testimony is so limited, there is no chance that the lawyer expert's evaluation might supplant a jury's independent exercise of common sense." [Melton v. Industrial Indemnity Co., 86 Cal. App. 4th 222, 103 Cal. Rptr. 2d 222 (2001).]

The Expert as Teacher

The lawyer expert takes the stand as an educator. He or she is presented to educate the court and the jury about the custom and practices of the insurance industry as they relate to the particular case. The lawyer expert presents the material in a fashion that would be understandable to anyone attending a high school civics class.

The lawyer witness can explain how insurers use the advice of lawyers to help their staff—people who are not trained lawyers—understand the insurance contract and how it should be applied. The expert also explains that if the language is clear and explicit, the insurer client can rely on the contract language to govern its claims handling. [Bank of the West v. Superior Court, 2 Cal. 4th 1254 (1992).]

The lawyer-expert is not used to explain the meaning of plain and clear language in an insurance contract. The expert does assist the jury in the methods to use to understand how insurers, and their counsel, analyze and apply the policy language to specific claims situations. This is important to the insurance lawyer expert since there are many terms used in the insurance industry that have special meaning to insurance professionals that are uncommon in the general public.

When Testimony of Ultimate Facts Is Proper

Testimony in the form of an opinion that is otherwise admissible is not objectionable because it embraces the ultimate issue to be decided by the trier of fact. Addressing this issue, after allowing plaintiff's witnesses to testify that conduct of the defendant was in bad faith, the California Supreme Court said that the jury "could benefit from the opinion of one who, by profession and experience, was peculiarly equipped to evaluate such matters in the context of similar disputes." [Neal v. Farmers Ins. Exch., 21 Cal. 3d 910, 582 P.2d 980, 148 Cal. Rptr. 389 (1978).]

The expert is an essential part of an insurance claims case. The lawyer-expert is presented to help the jury—who may have been led to believe that insurance is more difficult to understand than ancient Sumerian—realize that the essence of insurance and insurance claims handling is simply promises made by one to the other and that the task of the jury is to determine if the promises were kept.

Preparation of the Lawyer-Expert for Testimony

It is improper for an attorney to coach an expert. Counsel should never tell the expert what testimony counsel desires. It is imperative, however, that the expert understands the areas he or she is expected to address at the time of trial.

The trial lawyer must counsel the lawyer expert that the lawyer expert was retained only to serve the jury, not one side or the other. The insurance expert or insurance lawyer expert has an obligation to explain to the jury that insurance is a mutual agreement where the insurer promises to indemnify the insured against potential loss. By stepping into the shoes of the insured, the lawyer-expert can convince the trier of fact that the existence of an insurance policy provides the insured with peace of mind because the loss will be taken care of by an insurer at no additional cost to the insured.

The lawyer expert involved with an insurance case needs to be prepared to educate the trier of fact about how insurance works to protect the person insured, how both the insured and the insurer accept an obligation to deal fairly with each other, and how insureds and insurers read an insurance policy.

The expert can help the jury understand the difference and relationship between definitions, conditions, warranties, exclusions, certificates, and endorsements.

Conclusion

When counsel for the insured or the insurer calls a knowledgeable lawyer-expert to explain insurance and claims handling to the jury, the litigants and the court will find that the jury has available to it information—devoid of emotion and advocacy—that will enable it to thoroughly evaluate the evidence presented at trial. An unbiased lawyer expert whose testimony is limited to the custom and practice of insurers and their lawyers when presented with a complex or difficult claim situation or one where the claim must be denied, will educate the jury so that it can fulfill the duty imposed upon it by the court. The jury—if intelligently and effectively educated—will find it much less difficult to determine if the insurer acted properly or improperly in the claim that is the subject of the suit in which the lawyer-expert testified. Without the assistance of a competent lawyer-expert, the jury and the court will find the task difficult and might be blinded by the incorrect, common wisdom, about the arcane nature of the insurance contract.


Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.

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