A 1996 case heard by the Mississippi Supreme Court resulted in a very important precedent. In Moeller v. American Guaranty and Liability Insurance Company
, the court acknowledged the conflict of interest that exists when an insurer defends a lawsuit under its reservation of rights. Essentially, the problem recognized was that the insurer could gain access to confidential information about its insured and leverage that information later in a claim denial or coverage denial.
The groundbreaking ruling in this case was that an insured party facing a lawsuit and being defended by an insurance company under a reservation of rights is entitled to choose independent counsel. The insurance company is obligated to pay for what has since become known as "Moeller Counsel."