I've told this story before because it illustrates one of themost hazardous adjuster mistakes: undisclosed principalship.

I was assigned a claim from an out-of-state insurer to handle anaccident for one of their insureds, whom I will call Mrs. Detroit.My assignment sheet said the name of the insurance company wasMEEMIC. I was new and had never heard of the “Meemic,” so I calledMrs. Detroit and drove out to meet her.

I knocked on the door and this nice lady opened it. I said, “Howdo you do? I'm Ken Brownlee and I represent your insurance company,the Meemic.”

“The Meemic?” she replied. “I've never heard of it!”

“But aren't you Mrs. Detroit? It says right here on myassignment sheet, the M-E-E-M-I-C, the Meemic Insurance Company,” Ireplied, showing her my assignment sheet.

“That's not the 'Meemic,' you dumb oaf. That is the MichiganEducators & Employers Mutual Insurance Company. I'm a teacher,and that's my insurer. Young man, do you mean to tell me thatyou're standing on my doorstep telling me you represent myinsurance company, and you don't even know the name of it?” Well,as the ads for Mounds and Almond Joy candy bars used to say, “Somedays you feel like a nut, and some days you don't!”

One policy, many insureds

I have seen hundreds of errors where adjusters mistakenly didnot know who they represented.

This is especially true in commercial policies where not onlythe named insured but their employees, their additionally insuredclients or vendors, their own principals and others may also berepresented by the policy, even if they are not shown as a “personinsured” in the policy.

In a commercial “wrap-up” construction project, the primaryinsurer may represent scores of different organizations. (Suchpolicies are often misnamed “owner-controlled policies,” which onlypartially includes Owners & Contractors Protective Liabilitycoverage.)

Not only may the adjuster for a primary insurer represent manydifferent parties, but that primary adjuster may also berepresenting co-insurers and excess or umbrella insurers (shouldthe loss exceed the basic policy's limits), as well as any affectedreinsurers. The issue of who is insured lies at the heart ofthousands of lawsuits against insurance companies or in declaratoryrelief actions filed by insurers.

Determining who is insured

An adjuster's primary responsibility upon receiving anassignment is to find out who is insured. This is part of thecoverage investigation and it is crucial, for unless the adjusterknows whose interests are being represented in the claim, anynumber of conflicts of interest could arise between thoseparties.

Take construction site accidents where the employee of onesubcontractor negligently injures the employee of anothersub-subcontractor, who hires Goe, Phytum & Wynn or some otherplaintiff firm and files suit against everybody: The owner, thedeveloper, the general contractor, the suppliers, all thesubcontractors and the subcontractor that retained thesub-subcontractor, and the negligent employee in a state that stillhas joint and several liability.

The adjuster must “go and find out” who is represented by theinsurer and who is not. If the insurer assigns defense counsel whofiles an answer that does not include one of the insured parties,and that insured is found in default for failing to file a timelyanswer, the case is lost before it begins. Misery may love company,but not in cases where there is failure to represent an insuredentity; that is prima facie bad faith.

So, whom do you represent? It is a questionthat must be answered in every claim. Generally the answer is easy;but it can also be surprising, and it must be disclosed to allconcerned parties.

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