And more than you think…
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For millennia the legal system has been pretty much the same. Someone has a complaint, they hire a lawyer, and you get sued. You hire another lawyer, the lawyers exchange endless paperwork, and occasionally they go to court. Eventually there’s an agreement, or the court decides. Either way, you know about it and get your “Day in Court”. Not so anymore.
The Georgia Supreme Court recently ruled in GEICO Indemnity Co. v. Whiteside, Case No. S21Q0227 (Ga. April 19, 2021). They held that GEICO was still liable for a bad faith claim even though they had not been served a legal notice, the insured had not notified them of a pending lawsuit and, they were liable beyond the policy limits of $30,000 to a whopping $2,916.204 default judgment.
Let’s unpack the ramifications of this. Your client is sued and you don’t know about it. You can’t enter any defenses and you’re liable for an unlimited amount. Will enterprising plaintiff law firms start looking through old judgements where insurers weren’t noticed and start applying for new ones? Only time will tell. One thing is for certain. This will not go unnoticed by the Plaintiff Bar and insurers now face the urgent need to know if their insureds are being sued. Which brings up the question of How?
There are thousands of courts operating on different levels and they’re not connected. “It’s such a mess, you’d think it was a government operation”, quips Premonition.ai co-founder, Toby Unwin. Premonition is the world’s largest litigation intelligence database boasting more coverage than LexisNexis™, Thomson Reuters™ and Bloomberg™ combined. Its Vigil™ product has been seeing a spike of interest from insurers who can upload a list of insureds and receive real time notifications when they are involved in litigation. Knowing about a lawsuit gives them the ability to do something about it.
As GEICO found to their detriment in the Whiteside ruling, what you don’t know can hurt, a lot. There’s potential liability from unknown open lawsuits and possibility of judgements from past ones. All of this makes for a litigation nightmare. Then there are now new difficulties in calculating the amount of reserves needed to meet future claims. Hitting a moving target is difficult when claims are unknown. Insurers are now looking to close the knowledge gap. LMA is following this development closely so please contact our offices if we can help with further information about why knowing is better than not!
LMA Newsletter of 6-14-21
