Legal Updates for Insurance Agents & Brokers
Avoiding Tortious Interference Claims
When an insurance agent retains a private investigator to investigate the circumstances surrounding an insured’s insurance claim, they typically do not believe that a legal dispute will arise simply based on the investigator’s findings. However, it may arise when the investigator’s findings do not support the insured’s claim or if the investigator accidentally misreports certain information. If the claim is ultimately denied, the insured may bring a legal action against the private investigator for tortious interference with contract.
What is tortious interference with contract, and how can an insurance agent avoid such a legal dispute? First, a tortious interference with contract claim requires several things: “(1) the existence of a contract, (2) the wrongdoer’s knowledge of the contract, (3) the wrongdoer’s intentional procurement of the contract’s breach, (4) lack of justification, and (5) resulting damages.” Long v. Mount Carmel Health Sys., 2017-Ohio-5522, at ¶ 26, 93 N.E.3d 436 (Ohio App. June 27, 2017).
Typically, the first two items are present, thus, the last three items are most scrutinized by a court. In practical terms, the third item requires the private investigator to have intended the insurance claim be denied. Thus, it is important that the insurance agent evaluate whether there is a conflict of interest between the investigator and the insured prior to retaining the investigator. The fourth item centers around whether the private investigator was justified in reporting their findings from their investigation. It is pretty clear that a private investigator has a legitimate business reason to report the findings from their investigation.
The last item requires a showing that the private investigator’s findings caused the claim to be denied. This item can be the most tricky in situations where there are numerous reasons why the insured’s insurance claim was denied. In this scenario, if the investigator’s findings were simply a secondary reason why the claim was denied, then it is important to highlight this in the claim denial letter. If it really played no bearing on the denial of the claim, then it is best to not even mention it.
Also, what if the private investigator misreports a fact that had simply no bearing on the denial of the insured’s claim? The insured will likely make a lot of noise that this is sufficient to support their claim. However, with proper lawyering, a court will be able to conclude this is not a material fact to the insured’s claim.
In fact, Marshall Dennehey was recently involved in a case with analogous facts, and we were able to demonstrate to the court that such a fact was not material to the insured’s claim. The court dismissed the case early in the summary judgment stage.
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