aEURoeLandfall!aEUR? This simple word scientifically defines that time when a tropical storm or hurricane reaches the coast and begins to travel over land. However, for most coastal residents or even those residing within 100 statutory miles of a coastal region, landfall typically underscores the probability of property damage, business interruption, and prolonged cleanup. aEURoeHurricane triggers state of emergencyaEUR?aEUR|aEURoemandatory evacuations are in effectaEUR?aEUR|aEURoestorms spawn tornados in advance of landfallaEUR?aEUR|aEURoelandfall is imminentaEUR?aEUR"as a nation, we are all too familiar with these phrases. Over the past 10 years our coast lines have been battered by storm after storm. When the winds subside, and evacuation orders lift, residents and business owners begin the frenzied and anxious return journey to their communities, homes, and businesses usually to face flood waters, downed trees, and widespread interruptions to power and public services.

Public and media define landfall as the moment a storm system first contacts land, however, producer agents experience professional landfall some 20aEUR"84 hours prior to that time. Residents and business owners directly affected by these storms accept them as a reality of coastal living and attempt to insure against their economic impact accordingly. Insureds, almost without exception, consult with their producers and agents regarding needed or desired coverage for property, casualty, wind, flood, and business interruption and forward premium payments to their insurance agent. It is the responsibility of the producing agent to seek, secure and bind appropriate coverage on behalf of the insured or timely advise the insured that coverage cannot be obtained. While this sequence of events seems straightforward, in reality it is within that 20aEUR"84-hour window prior to landfall that insureds and prospective insureds focus on their insurance status and insurance needs, and find (along with their producers) that it is often simply too late for the producer to change the course. To complicate matters, most insurance agencies, producing agents and their staff are confronted with the impending reality of their own storm-related damage and resulting business and communication interference.

An impending hurricane or tropical storm creates the aEURoeperfect stormaEUR? environment for possible producer pitfalls, errors, omissions, conflicts with insureds and insurers, and resulting claims, as all look for a mechanism to financially recover. This article aims to assist producer/agents, attorneys, and insurers by identifying potential pitfalls in order to reduce or avoid the litigation predictably rampant in the wake of these storms.

Framework: Public Insurers of Last Resort
Because tropical storms are difficult risks to insure due to frequency, destructive capacity, and financial toll, many states have created public/state aEURoeinsurers of last resortaEUR? to meet the compelling needs of their constituent consumers. Texas (www.twia.org), Louisiana (www.lacitizens.com), Mississippi (www.msplans.com), Alabama (www.aiua.org), Georgia (www.georgiaunderwriting.com), Florida (www.citizensfla.com), South Carolina (www.scwind.com), and North Carolina (www.njua-nciua.org) are all coastal states that maintain publicly established windstorm insurance agencies. These insurers of last resort (most of which are state sanctioned and statutorily protected) present unique challenges for insurance agents and producers due to the multi-faceted regulations they promulgate and the limitations/caps on damages and immunity from suit that most statutorily enjoy.

Most coastal states or lien holders require specific windstorm insurance in addition to property and casualty insurance when the property in question is located within certain high risk regions. Many of these public insurers share the common policy of issuing an insurance moratorium when a tropical storm or hurricane reaches a particular latitude and longitude relative to the coastline of the respective state. Once the aEURoemagic coordinatesaEUR? are reached, insurance activities, including binding of new policies, increases in coverage and even renewals, are frozen until the passage of the storm. Insurance producers are, with respect to their duties and obligations to their insureds or prospective insureds, literally at the mercy of the storm. The moratorium itself presents the first pitfall into which producer/agents find themselves thrown.

aEURc What Is a Moratorium?
Specifically, a moratorium precludes new insurance policies from being bound and prevents modification of existing coverage. Furthermore, existing policies will not be renewed unless the producer follows certain guidelines to achieve the same.

For example, Texas Windstorm Insurance Association (TWIA) is the state-sponsored insurer of last resort in Texas. A moratorium is issued each time a windstorm designated as a hurricane by the United States Weather Bureau is in the Gulf of Mexico or within the boundaries of 80 degrees west longitude and 20 degrees north latitude. Tex. Windstorm Ins. Assoc., Instructions & Guidelines, Binding Exception at 4 (2010); see also, 28 Tex. Admin. Code ? 5.4001. The moratorium is not lifted aEURoeuntil the General Manager determines that the storm no longer threatens property within the designated catastrophe areaaEUR? of TWIA. Id. Other coastal state windstorm insurers issue similar moratoriums. E.g., MWUA Manual of Rules and Procedures at ? III(3)(5) (Long. 80o W and Lat. 20o N); La. Citizens Property Ins. Corp., Plan of Operation at ?13(K); NCJUA/NCIUA Manual of Rules and Procedures at ? V(B) (Long. 65o W and 85o W, and Lat. 20o N and 37o N); Cf. S.C. Wind & Hail Underwriting Assoc., Hurricane Rules Rates and Procedures Manual, Hurricane Restrictions (February 2009) (the moratorium was replaced by a waiting period in 1996).

In Texas, an existing policy can be renewed during a moratorium only if the producer utilizes one of several board-approved methods of delivery. Binding Exception at 4 (2010). Specifically, an existing TWIA policy will be renewed if it is hand-delivered or if it is sent by certified mail, registered mail, or regular mail that contains a hand-cancelled stamp on or before the expiration of the existing policy. Id.; see also, MWUA Manual of Rules and Procedures at ? III(5); cf. S.C. Hurricane Restrictions, at ? I (policies become effective 16 days after the application, photos, and premium are received).

aEURc Why Is a Moratorium a Producer Pitfall?

Hurricane IkeaEUR(TM)s approach and landfall in September 2008 provides a practical lesson in the applicability of moratorium-related pitfalls and the related challenges for agencies and producers. Hurricane Ike struck the Texas coast in the early morning hours of September 13, 2008. Plaintiff did not have windstorm coverage for the damages sustained because the producing agent did not properly renew the existing policy. The policy renewal deadline was midnight on September 11, 2008. TWIA issued a moratorium from September 8 through September 15, 2008. The producer mailed the renewal payment and premium prior to the renewal deadline, however, it was not sent by a TWIA approved method. Binding Exception at 4 (2010). The producer had attended state-sponsored continuing education seminars and been provided written documentation establishing the aEURoeboard approved methodsaEUR? for transmitting renewals during a moratorium. If he had simply stood in line at the United States Post Office and sent the renewal package by certified mail, registered mail, or regular mail with a hand-cancellation he could have avoided litigation. The trial of this case highlights the significance of producer awareness and compliance with relevant administrative procedures promulgated by their applicable state sponsored or public insurer.

In addition to the procedural pitfalls related to existence of state/public insurance agencies of last resort, governmental immunity issues create additional pitfalls for the producer. E.g., La. Citizens Property Ins. Corp., Plan of Operation at ? 22(A); MWUA Manual of Rules and Procedures at ? IX. An insurer may have engaged in bad faith underwriting or claims practices or violated various insurance code provisions, but plaintiffs rarely pursue an insurer cloaked with governmental immunity due to increased costs of litigation, enhanced defenses, and nearly certain appeal. As a consequence, the producer may be held 100 percent responsible for errors or find themselves jointly and severally liable for the actions of numerous tortfeasors.

Producers may guard against pitfalls presented by moratoriums through education on relevant policies and procedures and continuing education prior to each hurricane season. (Many professional liability insurers offer premium discounts for insureds who demonstrate appropriate levels of annual continuing education). Immunity presents a more challenging problem in litigation. Juries, however, may be allowed to consider an insureraEUR(TM)s or other third partyaEUR(TM)s responsibility without these entities actually being a named party to the suit. Some jurisdictions allow the conduct of an insurer or other third parties to be submitted to the jury through proper and imaginative pleading and presentation of evidence.

Documentation: Everything Should Be in Writing
Another major producer/agent pitfall is the failure to properly and timely document events, communications, and payment histories, and to maintain organized files. Thorough documentation and due diligence can prevent a lawsuit, force non-suit after filing, establish documented defenses to claims asserted or establish a foundation for a prompt and more affordable settlement when liability is clear.

Faced with undocumented aEURoeswearing matchesaEUR? between agencies, producers, staff, and customers who have frequently been devastated financially and emotionally, juries consistently frown on acceptance of the version of facts professed by a producer who has failed to maintain his or her files in a good and businesslike manner. A well documented file should contain printed versions of email communications, facsimile transmission sheets and verifications, electronic applications, filings, and correspondence involving insurance activities. While producers are legally held to a standard of care requiring the producer to perform as a aEURoereasonable insurance agent or producer would perform under the same or similar circumstances,aEUR? juries inevitably apply a standard more consistent with agent and producer perfection. As will be discussed further below, this courtroom reality is further complicated because juror composition derives from the very communities hardest hit by the brunt of these storms and most jurors or venire members have either suffered similar legitimate losses or know those who have. Depending upon jurisdiction and venue, producers find themselves affiliated with the aEURoebig bad insurance companyaEUR?aEUR"a stigma to juries that is not easily overcome. When contested litigation quickly turns into the proverbial aEURoehe said/she said,aEUR? maintenance of detailed files and producible documentation can serve as the produceraEUR(TM)s sword and shield.

Key elements of proper documentation that should be contained in every file include 1) organization of information; 2) confirmation of coverage; 3) policy timelines and correspondence; 4) evidence of payment or non-payment-fiduciary responsibilities; 5) evidence of method of mailing; and 6) maintenance of final form policy documents.

aEURc Organization of Information
Insurance policies inherently involve vast amounts of paperwork that may span periods of years. Much of the business world has progressed into the electronic age of communication and document management. Independent producing agents, however, frequently maintain and utilize Jurassic-age methods for file documentation and maintenance. The importance of this first element cannot be underestimated.

We recently tried a case in which our producer/client utilized his own unique system of file organization and documentation. In an effort to save paper, he recycled documents by printing on both sides of printer paper and scrap. The consumer file related to the property forming the basis of the suit contained numerous documents pertaining to other clients, other claims and other communications. This producer printed new policies and correspondence on the back of old documents. By reutilizing the same facsimile cover sheet, he destroyed evidence of his multiple transmission efforts. Serious veracity issues were created due to his sloppiness and lack of documented verification of his version of facts. This compromised his defense, ultimately contributing to a gross negligence finding against him.

Organization and consistency are critical when painting a picture of ordinary prudence. Had our producer/client maintained organized files, there would have been no question regarding the date a facsimile was sent or the number of times a request for premium payment had been made. There is no doubt the producer made the requests, but he could not prove this because of the disorganized nature of his system. Documents that should have shielded him from liability actually supported plaintiffaEUR(TM)s negligence claim and opened the door to arguments related to falsification of documents. Ultimately the case was won on damages, but had plaintiff prevailed on his damages model our producer/client would have faced potential uninsured exposure due largely to his lack of organization. (His professional liability carrier maintained a reservation of rights with respect to coverage for punitive damages, which evaporated due to the minimal compensatory damage award).

Creating and maintaining an organized file helps the producer avoid a lack of documentation pitfall. Each of the categories of documents listed below have proven through contested litigation to form an evidentiary foundation for helping the producer prove organization and establish evidence for use at trial to defend liability and damage claims.

aEURc Confirmation of Coverage
Before issuing initial quotes for coverage, producers invariably receive a request from a client. These requests prompt discussions between the producer and client. Ultimately, recommendations are made and the client chooses coverage. This process is a breeding ground for future professional liability claims. In the wake of a natural disaster, customers who underinsured to save money in the short term immediately place blame on the producer alleging that they did not recommend, sell, or provide adequate coverage. aEURoe20-20 hindsightaEUR? application to events and microscopic re-examination of the producersaEUR(TM) (and clientsaEUR(TM)) behavior and performance has never been more prevalent than during the discovery phase of contested litigation and trial. Such analyses are truncated, if not completely eliminated, by thorough documentation identifying various coverage options recommended and evidencing the clientaEUR(TM)s acceptance or rejection. Consistent usage of electronic communication methods such as email and utilization of aEURoedeliveryaEUR? and aEURoereadaEUR? receipts establish the paper trail needed to defend sometimes spurious claims. As defense counsel, it is extremely gratifying to find oneself holding a handful of irrefutable documents that undermine plaintiffaEUR(TM)s version of facts. Creating this paper trail is a simple matter of maintaining and following standard procedures.

Another recent claim found our producer agent client a co-defendant with several insurers. Claims included purely insurer-related breach of contract and extra-contractual claims and producer-related claims sounding of fraudulent inducement, negligence, and false and deceptive trade practices. Fortunately, we were able to obtain a non-suit for our client at the virtual outset of discovery. A aEURoebright-lineaEUR? level of proper agent performance was established by his file documentation.

Our client discovered early in his 30-year career that consumers criticize their agents in the wake of a catastrophic event if they do not have adequate coverage. Despite best business practices, he had been sued before and learned that with tangible evidence establishing compliance with the standard of care, juries were less likely to criticize his performance from a liability standpoint. He developed standard procedures that required a client signature each time recommended coverage was rejected. Whether dealing with a quote for a new policy or renewing an existing policy, reducing communications with the consumer to writing is paramount.

aEURc Policy Timelines and Correspondence

Timeliness of policy renewal or binding of new coverage becomes more critical during hurricane season due to existence of public insurers and their moratoriums. As discussed above, when a named storm has reached certain statutorily defined coordinates, insurers freeze business activities and refuse to write or renew windstorm coverage.
Producers track storms to determine if the jurisdictionally relevant moratorium has taken effect. If a moratorium is issued, the producer must immediately notify the consumer that coverage cannot be bound until the moratorium is lifted. See May v. United Servs. AssaEUR(TM)n, 844 S.W.2d 666, 669 (Tex. 1992) (holding an insurance agent who undertakes to procure insurance for another owes a duty to the client to use reasonable diligence in attempting to place requested insurance and to inform the client promptly if they are unable to do so); Karam v. St. Paul Fire & Marine Ins. Co., 265 So.2d 821, 823 (La. 1972); Wiles v. Mullinax, 148 S.E.2d 229, 232 (N.C. 1966).

Policy renewal or coverage modifications are more complicated. Policy periods typically run from 12:01 a.m. on the inception date until midnight one year later. For example, a policy period that began at 12:01 a.m. on September 13, 2007, expires on September 13, 2008, at midnight. Using this example, if the policy was not properly and timely renewed the client would be without coverage for damages sustained during Hurricane Ike, which made landfall at 2:10 a.m. on September 13, 2008.

We recommend producers establish timelines to effectuate renewals and prevent lapses in coverage. Approximately 45 days prior to the renewal deadline the producer should send correspondence to the insured reminding them of renewal, inviting dialogue regarding coverage, and requesting selection of the same. This renewal notice to the consumer should be maintained in the file along with any renewal notice received from the relevant insurer and evidence of delivery and receipt.

Fifteen days prior to the renewal deadline, premium payment plus selection or rejection of coverage should have been received from the client or their lienholder. If not received, producers should resend written correspondence indicating that coverage may lapse and requesting immediate response. This correspondence, as all correspondence, should be maintained in the file with evidence of delivery and receipt.

Finally, five days prior to the renewal deadline producers should send correspondence reflecting that the policy will be cancelled if action is not taken by the client. This correspondence should also be maintained in the file with evidence of delivery and receipt. In addition to sending written correspondence, verbal contact with the client throughout this process and maintenance of detailed notes related to the dates and times of conversations, content, and phone numbers used provides defense counsel with factual tools for defending professional liability claims.
Maintaining a standard protocol for renewal that is followed and documented may arm the producer with evidence of habit or routine, which may be admissible. Fed. R. Evid. 406; Ala. R. Evid. 406; Fl. R. Evid. 406; La. Code Evid. Ann. 406; Miss. R. Evid. 406; N.C. R. Evid. 406; S.C. R. Evid. 406; Tex. R. Civ. E. 406. There may be situations, such as when the producing agent themselves become victims of the catastrophe, in which the producer cannot produce documentation or a file. In this event, the produceraEUR(TM)s renewal routine will support defense contentions that the producer likely met his or her standard of care. Electronic backup of computer file systems, where available, provides a mechanism for access to supporting defensive evidence.

aEURc Evidence of Payment or Non-PaymentaEUR"Fiduciary Responsibilities
Once payment is received from the consumer, producers should make a copy of the check and place it in the file. This provides information regarding the date of remittance and amount from which coverage selection can usually be deduced. As a general rule, producers should deposit the check into the relevant producer account prior to issuing a check to the insurer. A copy of the deposit slip reflecting the date of deposit and amount should be placed into the consumer file. Prior to mailing payment, a copy of the producer check that is to be mailed to the insurer should be made and placed in the file.

While this process may seem tedious, it affords an additional layer of protection for producers in their capacity as fiduciaries. When a producer accepts money from a consumer, he or she immediately owe certain fiduciary duties, which include a high duty of good faith, fair dealing, honest performance, and strict accountability. Sassen v. Tanglegrove Townhouse Condominium Ass'n, 877 S.W.2d 489, 492 (Tex. App.-Texarkana 1994, writ denied); See also, Miller v. Jackson Hosp. and Clinic, 776 So. 2d 122, 124 (Ala. 2000). (The agent or employee is bound to exercise the utmost good faith, loyalty, and honesty toward the principal or employer). Maintaining copies of all payments should deflate a breach of fiduciary duty cause of action. When renewal or requested binding of coverage cannot or does not occur, producers should ensure that the clientaEUR(TM)s funds are timely returned (including the non-earned commission). All such transactions must be documented and maintained.

From a defense perspective, these records should enable counsel to identify potential pitfalls early in litigation and may reduce litigation costs associated with obtaining records by subpoena from multiple entities in an effort to establish the timelines of receipts and payments made on behalf of the client.

aEURc Evidence of Method of Mailing
Public/state insurers will often renew (not initiate new) coverage even during a moratorium if the renewal notice and premium payment are mailed in a particular statutorily prescribed manner as discussed above. From a practical standpoint, it is important to understand that during a moratorium the various public/state insurers actually close their doors to afford employees an opportunity to organize their own affairs, protect their families, and rest prior to the whirlwind of work expected after a storm. Consequently, there may be no employee present to accept mail and date stamp the same received. In addition, the United States Postal Service can encounter logistical problems (even despite their aEURoerain, snow and dark of nightaEUR? motto) attempting to deliver mail during mandatory evacuations or in the days immediately preceding landfall.

For these reasons, it is imperative that a producer select a method of mailing that affords some protection in the event the premium payment and renewal are not timely received or logged in by the relevant state agency or insurer. Furthermore, the producer should retain documentation related to the method of mailing chosen. This recommendation is not made in an abundance of caution, but is a practical necessity when defending a professional liability case related to a failure to timely renew windstorm coverage. See supra at ? aEURoeWhy Is a Moratorium a Producer Pitfall?aEUR?

Documentation related to each client and their insurance policies either provides tangible evidence for their defense or highlights obvious professional errors that may form the basis for early evaluation and resolution of claims.

aEURc Maintenance of Final Form Policy Documents
We recommend that producers maintain copies of final form policy documents, including declarations pages, schedules, endorsements, policy jackets, and correspondence demonstrating transmittal to and receipt by the insured. In addition, cover correspondence should always be included that requests immediate review by the insured and return communication if there is any discrepancy found. Form documents invariably support the defense of a professional liability claim because they prevent the inadvertent omission of information and provide tangible evidence that the produceraEUR(TM)s conduct was consistent with any other reasonably prudent producer.

What Happens When the ProduceraEUR(TM)s File Is Destroyed by the Storm?
Obviously it does not matter how well a producer maintains files if they are completely destroyed by a catastrophic event. In the wake of several catastrophic hurricanes we have encountered producers who lost everything (business and personal) to the storm and the looters that followed. Paper files may be lost, but electronic copies can remain with the producer or often be retrieved post-storm. As the task of assessing damage is initiated, producers serve as vital support mechanisms for clients. Devastated insureds (potential future litigants) demand information, answers, and claims assistance usually without thinking about the impact the same storm may have on their producer. Producers should establish contingency plans and methods for alternative communication in anticipation of power interruption. Such plans should include written documentation or logbooks (to be carried by the producer) containing vital information regarding each client, their respective insurance program, and contact information. Without such plans, clients may be unforgiving of delays in communications with their producer due to loss of traditional telephone, facsimile, and Internet access.

At a minimum, all documents should be placed into filing cabinets and locked prior to the storm. As suggested above, electronic backups are appreciated; but as observed, unlikely to exist given the usual business methods employed by small independent producing agents. If a total loss occurs, files can be recreated by subpoenaing records from lienholders (if any) and insurers during the course of litigation.

Litigation after Landfall
Landfall occurs for the producer/agent the moment the United States Weather Bureau announces a stormaEUR(TM)s trajectory reaches those statutorily defined coordinates that indicate the storm is imminent. All lines of communication are aEURoefloodedaEUR? by clients or potential clients with calls, emails, and facsimiles requesting additional coverage or verification of existing coverage. Producers must finalize business, secure their personal and business premises, and begin perhaps the process of evacuating their families. Under these circumstances, it is understandable that mistakes may occur.

Nevertheless, professional liability claims arising from storm-related damage and losses invariably include breach of written or verbal contractual agreements, extra-contractual damages or fraud. Although plaintiffs bear the burden of proof, the connotation of these civil allegations tend to shift the burden to the producer to disprove the same. The remainder of this article addresses the litigation process and pitfalls that arise related to allegations of liability and claims for damages resulting from a producer/agentaEUR(TM)s failure to renew or secure a windstorm policy.

Professional Liability Coverage Issues
Most producers insure themselves against liability for errors and omissions. When a claim is articulated their professional liability insurance carrier (aEURoethe carrieraEUR?) is notified. Reservations of rights may or may not be issued depending upon the allegations made, investigation is initiated, and the carrier usually assigns the matter to outside counsel. Throughout litigation the client/producer and the carrier should be apprised of all developments. Adjusters and their managers expect extensive documentation to support their files and claims decisions. Compliance with all reporting requirements, litigation management guidelines and deadlines is paramount for defense counsel. Carriers and insureds expect timely reporting and concise analysis of all facts, legal issues, and the ramifications of the same with respect to analysis of liability and damages.

Identification of coverage deductibles, self-insured retention provisions and aEURoeconsent provisionsaEUR? must be completed early in the handling of a claim. When the producer/client is financially responsible for a portion of the settlement, a candid discussion of insured rights should be conducted by lead defense counsel followed by the execution of a written aEURoeconsent to settleaEUR? acknowledgement of financial responsibility for their portion of the settlement amount if agreed to by the insured/producer. An example is included herein for illustrative purposes:

I, (insert aEURoeproduceraEUR?), hereby consent to the settlement of
(insert aEURoethe carrieraEUR?) claim number _______. I acknowledge my contractual obligation (insert producers financial responsibility $ amount) for taxable court costs only, which involves the pending claim of (insert aEURoeplaintiffaEUR?). In giving this consent I authorize (insert aEURoethe carrieraEUR?) to settle this claim on my behalf in accordance with the terms of my professional liability insurance, policy number __________.
I acknowledge that I have had the opportunity to discuss my decision to settle this claim with representatives of (insert aEURoethe carrieraEUR?), as well as my defense counsel and my independent personal attorney.

This acknowledgment is designed to address potential conflicts by having the producer/agent expressly obligate their financial responsibility and consent to the settlement of the pending claim. In some jurisdictions it may be advisable to have this document notarized by a certified notary public. Most forward-thinking carriers have adopted an intra-company procedure that allows the claims department to advance the deductible or self-insured retention toward an agreed settlement and allow their underwriting departments to recover these funds directly from the insured/producer. These procedures assist defense counsel in their efforts to bring claims to timely resolution where appropriate.

aEURoeWhy Did They Sue Me?aEUR?
Determining plaintiffaEUR(TM)s motivation for naming the producer/agent can be evident from documentation, but is frequently confusing, concerning, and personal. Claims bases may revolve around the produceraEUR(TM)s professional duties and responsibilities and breaches, however, there are numerous other motivations for plaintiffs to name producer/agents. A common defense counsel pitfall in is failing to early identify plaintiffaEUR(TM)s motivation and fashion their defense strategy accordingly.
A producer/agent may be named s

olely to defeat diversity jurisdiction. 28 U.S.C. ? 1332. This usually allows a plaintiff to maintain their cause in state court. After one year the producer/agent can be dismissed by plaintiff without risk of removal to federal court. 28 U.S.C. ? 1446(b). PlaintiffaEUR(TM)s counsel may choose not to dismiss with prejudice due to their own professional liability exposure; however, a dismissal or non-suit without prejudice can be effective when limitations are near application.
Also, producers may be sued through an abundance of caution if the insurer is a state-sponsored entity. Filing a claim against a quasi-governmental entity can be very costly for a plaintiff. As a result, plaintiffaEUR(TM)s counsel may choose to focus their claims attention on the producer/agent. In these events, it is vital to a proper defense to subpoena all business and policy records from the public insurer, escrow agents, and any other potential defendants to determine if any should be added as traditional third-party defendants or be designated as responsible third parties.
Determining your producer/clientaEUR(TM)s role in the coverage procurement process is critical, especially when multiple agencies, producers, or insurers have all been named in litigation pleadings.

Potential Claims
Hurricane and tropical storm cases are typically multi-faceted and involve the property/casualty insurers, flood and windstorm insurers in addition to the producing agent. Breach of contract, insurance code violations, consumer protection statute allegations, and extra-contractual claims are among those generally asserted against insurers and their producing agents.

aEURc Tort
Tort claims center on professional malpractice and may include causes of action for negligence, gross negligence, negligent misrepresentation, fraud, breach of fiduciary duty, fraudulent inducement, and various statutory violations including applicable insurance code violations or consumer protection statute violations. Statutes of limitation vary by cause of action and jurisdiction. The expiration of prescriptive periods is an important consideration as exemplary or punitive damages are typically not recoverable in the absence of tort claims. Tort submissions may include actual, compensatory, exemplary, or punitive damages. AttorneysaEUR(TM) fees may be recoverable where statutorily authorized.

aEURc Contract
Producers (other than their documented conversations with clients) do not maintain or require separate written agreements related to the procurement of insurance coverage. While oral agreements constitute valid enforceable contracts, they generally are more difficult to prove and more easily defended. The statutes of limitation or repose applicable to breach of contract causes of action vary by jurisdiction. E.g., Miss. Code Ann. ? 15-1-49 (3 years); S.C. Code Ann. ? 15-3-530 (three years); N. C. Gen. Stat. ? 1-52(1) (three years); Fla. Stat. Ch. 95.11(3) (four years); Tex. Civ. Prac. & Rem. Code Ann. ?16.004(a) (four years); Ala. Code 1975 ? 6-2-34 (6 years); Ga. Code Ann. ? 9-3-24 (6 years); Terrebonne Parish School Bd. V. Mobil Oil Corp., 310 F.3d 870, 886 (5th Cir. 2002), citing La. Civ. Code Ann. Art. 3499 (10 years). Damage findings may include actual damages and attorneysaEUR(TM) fees as statutorily prescribed or contractually authorized.

aEURc Damage Models
Liability may be clear, but plaintiffaEUR(TM)s damage model is more often than not inflated and does not acknowledge that recoverable damages are usually only those that would have been covered had the windstorm policy been in place. In other words, while limiting claims to those sounding in tort may defeat claims sounding in contract (including requests for attorneysaEUR(TM) fees), the proper measure of damages under the missing insurance policy are usually those sounding in contract. This may present insurance carrier reservations of rights and coverage defenses and generate internal conflicts between defense counsel and his or her obligations to the client/insured, as well as the carrier who has retained him or her. As a result, attacking plaintiffaEUR(TM)s damage model is a key component to success.

aEURc AttorneysaEUR(TM) Fees
As indicated above, attorneysaEUR(TM) fees are recoverable under several theories of liability. This presents a two-fold pitfall in windstorm litigation. The first consideration is whether an award of attorneysaEUR(TM) fees will be covered by the terms of the professional liability policy. Second, a producer may be successfully defended as to damages, yet face a sizable award for attorneysaEUR(TM) fees allowed by state statute.

By way of illustration, we recently tried a professional liability Hurricane Ike claim in Jefferson County, Texas, during which plaintiffaEUR(TM)s damage model of approximately one million dollars was successfully defended and resulted in a jury finding of merely $9,550.00 in actual damages. Unfortunately, the jury also awarded $165,000.00 in attorneysaEUR(TM) fees to plaintiff (an award substantially less than that requested by plaintiff). Litigation had been combative and attempts to mediate proved futile. Ultimately the case was settled post-verdict, but it is important to recognize and defend against this silent damage component at the outset of litigation.

Alternative Dispute Resolution
Most cases are referred to some type of alternative dispute resolution process prior to trial. In Texas, both Jefferson and Galveston Counties have standing orders that govern hurricane litigation. Mediation is often court-ordered, but may prove to be a pitfall without preparation and realistic expectations. Allow the discovery process to serve as an indicator. If plaintiffaEUR(TM)s counsel is combative and uncooperative it is possible that they simply seek a verdict because they believe a jury will provide the best benchmark (especially in the case of opposing counsel who have taken on hundreds, if not thousands, of storm-related claims). On the other hand, plaintiffaEUR(TM)s counsel may be dealing with an uncooperative, unrealistic, or unorganized plaintiff. Identification of potential obstacles to reaching an agreement prior to mediation saves time, expense and frustration.

Trial Proceedings
Many authors, too numerous to name or quote, profess that jury selection and expert testimony constitute the most vital proceedings during a contested trial on the merits. The importance of voir dire examination cannot be overstated. Potential jurors and the eventual jury hail from the same storm-ravaged communities in which plaintiffaEUR(TM)s property is situated. Jurors are predictably less sympathetic to the entire insurance industry due to publicity and their personal experiences, as well as the experiences of their families and neighbors. Our jurors undoubtedly will have some pre-conceived opinions related to producing agents and the insurance industry in general. After all, they have been bombarded over the past several years with negative publicity about homeowners, property and casualty, auto, health care, and every other type of insurance.

Expert testimony is the other primary component upon which our cases turn. As is true for any dispute involving insurance coverage, actual damages should be limited to those that would have been recoverable under the terms of the policy. See, e.g., Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003) (holding insurance policies are interpreted as contracts); Bonin v. Westport Ins. Corp., 930 So.2d 906, 910 (La. 2006); Leonard v. Nationwide Mut. Ins. Co., 499 F.3d 419, 429 (5th Cir. (Miss.) 2007); Federated Mut. Ins. Co. v. Abston Petroleum, Inc., 967 So.2d 705 (Ala. 2007); Park aEUR~N Go v. U.S. Fidelity & Guar. Co., 471 S.E.2d 500, 503 (1996); Medley Warehouse, LC v. Scottsdale Ins. Co., 39 So.3d 440, 445 (Fla. 3rd DCA 2010). Windstorm plaintiffs hire public adjusters who are trained to provide damage estimates or appraisals that are ridiculously inflated and often do not consider the terms of the underlying policy. The public adjusteraEUR(TM)s goal is to get plaintiff as much money as possible; plain and simple. Defense counsel must attack whether the plaintiffaEUR(TM)s damages expert is qualified to testify. Daubert challenges must and should be the standard of proper defense strategies.

Testifying or consulting experts must be qualified to opine on coverage issues related to windstorm policies, causation, reasonable and necessary costs of repair, and damage mitigation and must be able to articulate a rational and acceptable methodology for the basis of their opinions. See generally, Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 589aEUR"90 (1993). Defense testifying experts who are personable, knowledgeable, reasonable, and persuasive will undermine a plaintiffaEUR(TM)s damages model and impart to the jury an alternative figure that probably would have been remitted to plaintiff under the relevant policy had it been in force and effect on the date of loss. When evidence regarding claims valuation is properly presented, juror bias against unnecessary litigation may reduce an award of attorneysaEUR(TM) fees.

Quite frankly, we have found great solace in the inherent beauty and fairness of juries. There is a reason our founding fathers insisted on the addition of the Seventh Amendment to the Constitution of the United States of America. Jurors listen; they synthesize; they apply logic and reason; they resist bias; they believe that their responsibility to resolve disputes is a vital directive of citizenship, and without question they believe that they are the ears, mouths, and eyes of their respective communities when it comes to resolving disputes in a fair and impartial manner.

Conclusion
Although windstorm insurance is mandatory in most coastal states, consumers sometimes find themselves without adequate coverage in the wake of a storm. Litigation sparked by the desire or need to either recover or profit from our natural disasters will continue so long as tropical storms continue to impact our coastal regions.
Avoidance of these pitfalls requires that producers understand the regulations, exclusions and various policies and procedures promulgated by applicable windstorm insurers that may suspend or impose lapses in coverage for the client. In addition, producers should develop standard business practices for documentation. A proper process will protect the producer from allegations related to the recommendation and procurement of coverage. Pitfalls pre-date landfall and continue through trial. PlaintiffaEUR(TM)s motivations, professional liability coverage issues, applicable causes of action, alternative dispute resolution, expert witness testimony, and trial strategy must be consistently evaluated throughout the life of claim.

Our producer/agents experience professional and personal landfall beginning approximately 20aEUR"84 hours prior to storm landfall. By this time, there is little producer/agents can do to alter their professional trajectory in the face of an impending and approaching storm. Either they have prepared for this professional landfall and embraced business practices calculated to support their business activities, or succumbed to indifference exposing themselves and their companies to the pitfalls addressed herein.

This article was originally published in the January 2011 issue of For The Defense, the monthly magazine of DRI aEUR" The Voice of the Defense Bar. The authors are members of DRI and its Professional Liability Committee. Used by permission.