The duty to defend and indemnify a policyholder is an important promise an insurer agrees to in an insurance policy. Though coverage may be clear cut in many claims, others may require additional analysis to determine coverage applicability. When one adjuster handles both the defense and coverage aspects of a claim where coverage is disputed, it can call into question the decisions and ultimately the handling of the file.

Executive Summary

While there aren't many bad faith cases that address the issue, splitting defense and coverage files is a best practice for insurers, experts explain.

While there is no regulation requiring the splitting of files, according to industry experts splitting is a best practice and for the most part an industry standard. They advise that the defense adjuster shouldn’t address coverage in any way and the coverage adjuster shouldn’t participate in the defense of the underlying claim.

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