Claims Litigation: The Adjusters Guide

The insurance litigation process is not for the faint of heart. Think of it as a high-stakes chess match—one wrong move, and you’re facing costly setbacks. But with the right strategy, your team can stay ten steps ahead.

Understand the Litigation Process

Would you walk into a courtroom blindfolded? Of course not. Yet many claims professionals don’t fully understand each stage of litigation until they’re knee-deep in it. Get ahead by training yourself and your fellow adjusters on the ins and outs of the process—who does what, when to escalate, and how to keep airtight documentation.

“If you have in-house counsel, don’t treat them like a 911 call. Pick their brains before issues arise. A quick chat today could prevent a legal headache tomorrow.” VP of SIU

Communication

Good communication isn’t just a soft skill – it ensures that when a claim is heading toward litigation, all stakeholders (adjusters, legal counsel, vendors, and third parties) are looped in and up to speed.

• Keep records of every email, call, and meeting.
• Use tech instead of paperwork to streamline document sharing.

Think of the childhood game “telephone”—where a simple message turns into something completely different by the end. In claims handling, miscommunication works the same way, except instead of a harmless mix-up, it can lead to legal disputes and regulatory fines.

Stay Ahead and Stay Informed

The legal landscape changes fast—kind of like those software updates you ignore until your phone crashes. Don’t get caught off guard. Invest in ongoing training, attend industry webinars, and keep your team updated on court decisions that could impact claims.

If a new ruling changes how courts view liability in property claims, knowing about it before your next litigation battle gives you a strategic edge. Knowledge = power.

The Discovery Phase

The discovery phase is where many cases slow to a crawl. Avoid unnecessary delays by having an evidence management system in place before litigation happens.

• Digitize records for easy retrieval.
• Organize reports, communications, and assessments efficiently.
• Make sure your vendors maintain meticulous records and follow stringent privacy guidelines

Alternative Dispute Resolution

Let’s be real—litigation drains resources fast. Have a clear budget outlining in-house costs, external legal fees, and contingency plans and if you have the option, try an Alternative Dispute Resolution.

Alternative Dispute Resolution encompasses a range of methods for resolving disputes without formal litigation. The most common forms include mediation, arbitration, and negotiation, each offering distinct advantages when it comes to settling claims efficiently. Here’s why using ADR early in the process can be a game-changer:

Cost Savings

ADR is generally more cost-effective than going to trial. According to the American Arbitration Association (AAA), cases that go through arbitration typically cost 30%-50% less than those that proceed to court. With mediation, costs are even lower, as it focuses on collaboration rather than a lengthy legal battle. For insurers, this means reduced defense fees, lower legal expenses, and fewer costs for expert witnesses or court fees.

Cases that go through arbitration typically cost 30%-50% less than those that proceed to court.

American Arbitration Association (AAA)

Time Efficiency

Litigation can stretch on for months or even years, causing delays that escalate costs and create uncertainty. ADR methods, particularly mediation, can often resolve cases in a matter of weeks. Mediation sessions are typically scheduled within 60-90 days, which accelerates the timeline for settlement and allows parties to move forward faster.

Preservation of Relationships

In many claims, especially those involving ongoing business relationships, ADR offers a less adversarial setting than litigation. Mediation in particular promotes communication and cooperation between parties. For insurers, this can help preserve relationships with claimants, policyholders, or third-party vendors, which could be crucial for future business opportunities.

Higher Success Rate

ADR boasts a notably high success rate for early resolutions. Mediation, for example, has a settlement rate of around 70-80%, according to various studies. You don’t have to be a mind reader to know that courtroom drama rarely ends in a win for anyone—but with ADR, you can avoid the suspense. These high success rates are attributed to the fact that ADR emphasizes collaboration over confrontation, providing a structured, supportive environment where both sides are encouraged to find common ground.

A Powerhouse Team

Your claims process is only as strong as the people behind it. That includes your in-house team and the third-party vendors who provide critical assessments. If a claim escalates to litigation, their credibility could make or break your case.

• Partner with experts known for objectivity and thorough documentation.
• IME physicians must be impartial third parties
• Ensure they’re prepared to testify if needed.
• Vet vendors for their ability to provide fact-based expert opinions—because flimsy assessments won’t hold up in court.

Example: If your vendor’s report is even the slightest bit vague, it won’t stand up in court. Work with experts who bring, defensible insights to the table.

Looking for a claims partner who gets it? Submit an assignment and see how Ethos’s suite of services can support your team from assessment through litigation (or hopefully not). When it comes to claims, winning is all about being prepared in the courtroom.

American Arbitration Association (AAA)

American Arbitration Association. American Arbitration Association (AAA). www.adr.org. Accessed 5 Feb. 2025.

The CLM Magazine

“The CLM Magazine.” The CLM, www.theclm.org/Magazine/. Accessed 5 Feb. 2025.