Information Sharing Between Insurers and Policyholders When Claim Uncertainty Exists

The tender of an insurance claim often triggers an immediate, long-lasting tug of war between an insurer and an insurance policyholder (“insured”). At issue is access to information. In response to the tender, the insurer will often request extensive amounts of information and documentation. The insured, however, will face conflicting incentives. On the one hand, if the insurer ultimately agrees that coverage exists, then their interests should align, and information sharing will promote strategic decision-making. If, on the other hand, the insurer later denies coverage, then it could use the information it receives from the insured to defeat coverage in a subsequent declaratory relief action. Moreover, an insured may have legitimate concerns about sharing privileged or confidential information with the insurer, lest the insured later be deemed to have waived protections against disclosure of that information to third parties. Courts have addressed information-sharing disputes between insureds and insurers in a variety of postures. This article discusses these disputes at a high level to glean lessons for both insurers and policyholders.