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INSuRANCE LAW

insurer has the right to independently investigate of the potential collateral effects on any other specific basis, its overall guidance can be
and pay the third-party claim based on the claims for non-covered losses or personal injury summarized by a series of common-sense
insurer’s own independent investigation. Ohio the insured may have. practices by both claimant and insurer:
Adm.Code 3901-1-07(C)(14). Further, the Act also instructs that if a property • Treat all those involved with the claim
If coverage is denied based on an insurance loss sustained by a non-negligent party is process as you would want to be treated;
policy term, condition, or exclusion, the insurer covered by multiple insurers who cannot agree • Keep all those involved informed and
should reference the specific language on which on priority of coverage, then the insurers should respond promptly, even if it is only to advise
the coverage denial is based. See, e.g., Ohio Adm. cover the loss in equal shares within a reasonable of the need for additional time;
Code 3901-1-07(C)(1)(b). Ohio Adm.Code time and then litigate (or arbitrate pursuant to • Share information and advise of the options,
3901-1-54(G)(2) further states this requirement inter-company arbitration) apportionment and deadlines, coverages, and exclusions; and
and mandates that the insurer document the basis priority of coverage. Ohio Adm.Code 3901-1- • It will benefit neither claimant, nor
for the denial in its file: “No insurer shall deny a 54(G)(7). Using the same example, a homeowner insurer, to withhold information, ignore
claim on the grounds of a specific policy provision, covered under multiple primary, excess, and communications, or attempt to lure or lull
condition, or exclusion unless reference to such umbrella policies for a house fire by insurers, who the other to violate the Act.
provision, condition, or exclusion is included cannot agree on priority of coverage, would be
in the denial. The claim file of the insurer shall paid the claim in equal shares. Then the insurers
contain documentation of the denial . . ..” would resolve the issue of priority and primacy Richard C.O. Rezie of Gallagher
As to insureds, claims should be left open of coverage amongst themselves. Further, Sharp LLP has been practicing law
without final settlement or release unless payment for a loss under one coverage which is since 1999. He started his career as
the policy limits are exhausted or there is a not disputed should not be withheld based on a law clerk for William G. Batchelder
compromise settlement of a dispute between an ongoing dispute as to the availability of other on the Ohio Court of Appeals for the
the insurer and insured as to “coverage and the coverage. Ohio Adm.Code 3901-1-54(G)(8). For Ninth Appellate District. He joined Gallagher Sharp
amount payable under the insurance contract.” instance, payment of medical payments coverage in 2001 and is now the Manager of its Appellate
Ohio Adm.Code 3901-1-54(E)(5). Thus, insureds under an auto policy should not be withheld Practice Group. He has been a CMBA member
are generally not required to sign a release of the solely because of an ongoing dispute as to the since 2012. He can be reached at (216) 522-1097
insurer unless there is a documented dispute availability or amount due under the uninsured/ or rrezie@gallaghersharp.com. Follow him on
regarding the amount or availability of coverage. underinsured motorist coverage provisions. Twitter @gallaghersharp.
The same general provision applies to third Finally, the Act provides guidelines for the
parties to the extent partial payment is made timing of payment of first- and third-party
for a claim. Ohio Adm.Code 3901-1-54(E)(6). claims. As to third-party claimants, payment Christopher C. Razek of Gallagher
Thus, insurers should not issue partial payment should generally be made within 5 days after Sharp LLP graduated from The Ohio
checks to third-party claimants with release the settlement and release is fully executed. State University Moritz College of
language. Rather, a separate release is advisable if Ohio Adm.Code 2301-1-07(C)(16). As Law in May of 2018 and was admitted
settlement or full and final payment has occurred. to first-party claimants, an insurer should to practice law in Ohio in November
The Act also provides guidance where a claim generally tender payment within 10 days of 2018. Joining Gallagher Sharp as a law clerk
presents issues of liability by a third party for the after acceptance of a claim if the amount of during his third year of law school, he is now an
loss or when multiple insurers are covering the the claim is determined and is not in dispute, Associate in the firm’s Insurance, Transportation,
same loss. First-party claims should generally unless otherwise agreed or required by law. and General Litigation Practice Groups. He has
be resolved without regard to “whether the Ohio Adm.Code 3901-1-54(G)(6). been a CMBA member since 2016. He can be reached
responsibility for payment should be assumed by Overall, although the full Act should be at (216) 522-1593 or crazek@gallaghersharp.com.
others.” Ohio Adm.Code 3901-1-54(G)(3). Thus, regularly reviewed on a case-by-case, fact- Follow him on Twitter @gallaghersharp.
first-party claims should generally be resolved
with the insured and should not be delayed
while a claim for liability is pursued against a
third party. An example would be a home fire
loss where the fire was caused by the defective
product of a third party. The insurer would
generally first pay the insured’s loss within the
terms of coverage and then pursue its subrogated
right of reimbursement against any third party
liable for the loss. If the insured has incurred a
deductible, the insurer should generally seek
that amount as part of its subrogation action
and then share any subrogation recovery with
its insured on a proportional basis. Ohio Adm.
Code 3901-1-54(H)(10). In doing so, the insurer
and its counsel should always remain cognizant
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