When an insurance company owes a defense to a policyholder against a third-party claim, who gets to appoint defense counsel: the insurance company, or the policyholder?

In instances where a defense attorney is appointed by an insurance company to represent a policyholder, the insurance company often hires “panel” defense counsel which is retained scores or hundreds of times by the insurance company. The policyholder may find that their interests diverge from the insurance company’s under various circumstances in which the insurance company reserves its rights or otherwise imposes conditions on the possibility or extent of coverage. In such cases, defense strategy may affect whether the insurance company limits the extent of coverage or acknowledges any coverage at all. That potential conflict leaves open the question of whether the insurance company panel counsel can provide proper representation when such a divergence arises.