The Role of Coverage Opinions in Insurance Decision-Making: Insights from Seasoned Insurance Lawyers

Coverage opinions are vital decision-making tools for insurance companies; and, when used effectively, they can help insurers effectively manage their claim-related risk. At the same time, unnecessarily obtaining coverage opinions can be a drain on resources; and, when seeking a coverage opinion isn’t the best option, it is imperative to choose an alternative (i.e., seeking a declaratory judgment) that is better suited to the specific circumstances at hand.

With this in mind, what do insurers need to know about using coverage opinions in insurance decision-making in 2026? Here are some key insights from our insurance lawyers:

When Does It Make Sense to Seek a Coverage Opinion?

The first key decision insurers need to make is whether to seek a coverage opinion from their insurance counsel. Broadly speaking, insurers can (and should) use coverage opinions as tools to inform their decision-making regarding complex claims. If an insurer’s obligations with regard to a claim are unclear—whether due to the complexity or uniqueness of the claim or other factors— this is a scenario in which seeking a coverage opinion can be a cost-effective way to manage the insurer’s risk.

When doesn’t it make sense to seek a coverage opinion? If an insurer is capable of making a sound decision without engaging its insurance counsel, a coverage opinion isn’t necessary—and, if an insurer is seeking coverage opinions at an unusually high rate, this could be a sign that additional training or better claim management protocols are needed. Conversely, if the circumstances surrounding a claim are such that the claimant is likely to dispute a denial no matter what, then it may be more cost-effective to proceed directly to dispute resolution.

What Is Involved in Preparing a Coverage Opinion?

Preparing a coverage opinion is a multi-step process that requires a clear and comprehensive understanding of the relevant policy language, relevant facts and relevant law. In broad strokes, the steps involved in preparing a coverage opinion are:

• Examining the Policy Language – Our insurance lawyers typically begin by reviewing the relevant policy language to gain an understanding of the nature of the coverage that is available. As we investigate the claim, we will do so with the relevant policy language in mind—while also relying on our extensive experience providing coverage opinions and litigating coverage-related disputes.
• Investigating the Claim – Next, we will thoroughly investigate the claim. Depending on the circumstances, this may involve reviewing the evidence that our client has collected already, gathering evidence directly, or both. When analyzing an insurer’s coverage obligations, it is critical to have a comprehensive understanding of all of the relevant facts.
• Applying the Law – After examining the policy language and investigating the claim, we will analyze both under applicable law. Our lawyers will consider all pertinent sources of statutory and common law authority before reaching an informed and reasoned opinion about whether the insurer is required to provide coverage.

Again, this is a very broad overview. It is also important to keep in mind that some claims are significantly more complex (and uncertain) than others. As a result, while preparing coverage opinions generally involves following the same overarching process, a custom-tailored approach is required in every case.

Can I Rely on a Coverage Opinion to Make a Coverage Decision?

So, you obtained a coverage opinion. Now what? As we said in the introduction, coverage opinions are decision-making tools. An opinion is just that—an opinion—although a coverage opinion is based on a lawyer’s experience and analysis of the relevant policy language, facts and law.

As a result, after obtaining a coverage opinion, it is still up to the insurer to make a final decision regarding coverage. While insurers should consider their legal counsel’s advice, they should not do so in a vacuum. Ultimately, while a coverage opinion is a valuable source of information, it is just one source of many.

When Should I Consider Seeking a Declaratory Judgment Instead of Relying on a Coverage Opinion?

As an alternative to seeking a coverage opinion, insurers that are seeking to make informed decisions about coverage can also seek declaratory judgments when warranted. A declaratory judgment is a binding decision (subject to appeal) regarding an insurer’s liability that is rendered prospectively, before a claimant files a wrongful denial or bad-faith insurance claim in court.

When deciding whether to seek a coverage opinion or a declaratory judgment, some key considerations include:

• The Complexity or Novelty of the Issue(s) – Generally speaking, the more complex or novel the issue(s) involved in a claim, the less certainty a coverage opinion will be able to provide.
• The Likelihood of Litigation In the Event of a Denial – If a claimant is likely to pursue litigation no matter what, then it may make sense to go ahead and seek a declaratory judgment. With that said, seeking a coverage opinion can still be beneficial in this scenario.
• The Likelihood of Similar Claims – If an insurer is likely to face similar claims in the future, a declaratory judgment could provide certainty and establish precedent that will guide future claim-related decisions.

As you can see, there is no single “right” answer. When faced with a challenging claim, deciding how best to proceed requires a thorough assessment of the specific circumstances involved.

What If a Claimant Still Files a Wrongful Denial or Bad Faith Claim After We Relied on a Coverage Opinion?

Let’s say you seek a coverage opinion, you deny coverage based on the opinion, and the claimant still goes to court. Does this mean that all of your effort was for nothing?

The answer to this question is a clear, “No.” When insurers rely on coverage opinions in good faith, this can play a central role in coverage-related litigation. At a minimum, a sound coverage opinion will raise serious questions about the veracity of the claimant’s lawsuit, and it will help insulate the insurer against liability based on any allegations of unreasonableness and bad faith.

Need to Know More? Schedule a Call with an Insurance Lawyer at Rendigs

If you would like to know more about the role of coverage opinions in insurance decision-making, we invite you to get in touch. Please call 513-381-9200 or tell us how we can reach you online to schedule a call with an insurance lawyer at Rendigs.