When a lawsuit is filed that has claims against an insured which may be covered by an insurance policy, in most instances, the insurer will hire an attorney and provide a defense for the insured.  In some cases, there may be a question as to whether the insurance policy will ultimately provide coverage for the claims. In such instances, an insurance company may defend those claims against its insureds pursuant to, under, a reservation of rights. A reservation of rights allows the insurer to provide legal representation in a lawsuit to its insured while simultaneously reserving the right to use information obtained by legal counsel hired by the insurer to defend the insured to deny coverage to the insured, creating a conflict of interest between the insured and their legal counsel. In 1996, the Mississippi Supreme Court provided a way to limit the impact of this conflict of interest on insureds in Moeller v. American Guaranty and Liability Insurance Company, 707 So.2d 1062 (Miss. 1996).

 

In the Moeller decision, the Mississippi Supreme Court found that if an insurance company chose to represent an insurer in a lawsuit under reservation of rights, that insurer also had the obligation to inform its insured of the right to choose their own legal counsel for representation to be paid for by their insurance company. This independent counsel has commonly become known as Moeller counsel. Moeller counsel guarantees that only the insured’s legal interest are protected since Moeller counsel has no obligation to provide information to the insurance company that could result in the insurer to deny coverage to the policyholder. An active an aggressive defense by Moeller counsel may have a positive impact on the outcome of the case, and on the insurance coverage provided.

 

Webb Sanders & Williams is experienced in representing clients as Moeller counsel cases and make it a priority to ensure your rights are protected. If your insurance company has issued a reservation of rights letter in connection with a lawsuit, consult with our attorneys to find out if choosing Webb Sanders & Williams to act as Moeller counsel would be in your or your company’s best interest.