Challenging Insurers' Efforts to Obtain Insureds' Privileged Communications

Insureds embroiled in litigation with underlying claimants frequently are confronted with demands from their insurers that can place their litigation position at risk. One issue that often arises is whether an insured must and should provide requested privileged materials to its insurer in connection with the insurer's coverage investigation or in coverage litigation. Where the insurer has accepted the insured's defense of litigation and thus its interests appear to be aligned with the insured in a successful resolution of the underlying matter, the insured may have difficulty in refusing to provide certain materials. However, as is often the case, 1) an insurer will reserve rights and then seek all information relevant to the underlying matter, regardless of its privileged status, or 2) deny coverage and seek that information in the context of coverage litigation. Insureds should be aware of possible risks that can be created if they comply with requests for privileged information, and that despite the insurers' claims of a "common interest" or that the privileged information is "at issue," significant case law protects these materials from production.