Q: Part of my home burned, and I'm repairing the large burned section of the home. County building codes require upgrades from what was originally there. Does my homeowners policy cover this added expense?
A: It depends. If your policy has what's called "law and ordinance coverage" -- it's often referred to as "L&O" or "upgrade coverage," then yes, your policy would address the added costs to make the required upgrades.
As a precaution, ask your agent or insurer if you already have the coverage or if you can add it to your policy.
Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.
Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)
Insurance and fallen trees
Q: Will my insurance pay to repair my neighbor's home if my tree falls on his home?
A: It may not have to. Typically, a homeowner's own insurance coverage pays for such damage, unless you were negligent and your negligence caused the tree to fall.
Say the tree was obviously diseased or damaged and posed a clear risk to your neighbor's home, for example. In such cases, you could be found negligent and your insurer would cover the claim.
Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.
Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)
A: It may not have to. Typically, a homeowner's own insurance coverage pays for such damage, unless you were negligent and your negligence caused the tree to fall.
Say the tree was obviously diseased or damaged and posed a clear risk to your neighbor's home, for example. In such cases, you could be found negligent and your insurer would cover the claim.
Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.
Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)
California Previews NAIC’s End Game for Self-Insurance
In case you had any doubt about the end game the National Association of Insurance Commissioners (NAIC) has in mind for self-insurance nationally, you simply need to look at what is happening on the left coast.
Legislation is now moving through the California State Legislature that would impose new regulations on stop-loss insurance in such a way that would effectively eliminate the ability of companies in that state with 50 or fewer employees from self-insuring their group health plans. It does this by prohibiting stop-loss carriers from providing coverage with specific attachment points below $95,000 and inserting other regulatory hurdles, including a provision stating that stop-loss insurance cannot discriminate in providing “coverage” to plan participants.
We had heard rumors that Insurance Commissioner Dave Jones was developing proposed legislation with a $40,000 minimum specific attachment point requirement. That would have been bad enough, but a highly charitable interpretation of such development could conclude that Commissioner Jones’ motive was simply to support common sense health care marketplace regulation.
Such a motive is highly suspect of course, but the fact that he chose to push an attachment point requirement that is more than three times higher than that of any other state is clearly a brush back pitch to the self-insurance industry, to use a baseball analogy.
And Commissioner Jones did not throw this pitch without direction from the dugout. The NAIC coaching staff likely sent him the signal to bring the heat in order to set the stage for other states to do likewise. California makes for the perfect stalking horse due to its size and political composition of the Legislature which is generally hostile to the interests of the state’s business community.
We should also note that the word on the street is that Commissioner Jones is using his position as a stepping stone for higher public office and is looking for political fights to burnish his image as a serious player.
While the weather is generally nice in California, a perfect storm of legislative and regulatory mischief is indeed brewing. And such a storm could be coming to your state next.
So what’s behind all this focus on self-insurance? There are two primary influences at play.
First, it cannot be overstated how much is riding politically for the Obama Administration and many others within Democratic Party establishment at both the federal and state level regarding the successful implementation of state health insurance exchanges as mandated by the Affordable Care Act.
As part of this obsession they are trying to stamp out any possible complication and have now latched on to the theory that the growth in the number of smaller self-insured group health plans will create adverse selection in the health care marketplace and therefor will threaten the viability of the exchanges when they come online in 2014, absent the law being overturned by the Supreme Court.
(This blog and other publications have previously addressed why this conclusion is a canard, so we won’t revisit the rebuttal analysis now.)
Armed with this concern, proponents of the ACA have positioned the NAIC to ramp up its efforts to clamp down on the ability of employers to self-insure.
While industry observers have been fixated on the NAIC ERISA & ACA Work Group over the past year as it has been looking at updating its stop-loss model act - which presumably would bump up attachment point requirements - this blog is starting to think a little misdirection is at work here.
Sure, the NAIC could at some point come out with an updated model act that would not be favorable to the self-insurance industry but this is slow process. Moreover, keep in mind that these are just suggested laws that each state would need to individually adopt.
It seems more clear that while this model act development process slowly plays out and keeps everyone’s attention, the NAIC, through individual insurance commissioner proxies, will simply “bum rush” the self-insurance industry with legislation like what has been introduced in California.
And just in case these insurance commissioners do not feel sufficiently motivated by NAIC orthodoxy, the health insurance industry is happy to provide the necessary nudge, which is the second factor in play on why self-insurance (via stop-loss insurance) is in the regulatory crosshairs. It’s no secret that health insurers are concerned about losing market share in the small group market and they are enthusiastically parroting the adverse selection argument to justify new regulation.
The fact that many insurance commissioners and/or the governors receive political support from the health insurance industry should also not be overlooked when making the circumstantial case that collusion is taking place among very powerful policy-makers and interest groups to restrict the ability of employers to self-insure.
Granted, California’s legislation is targeted at smaller employers, which a small segment of the overall self-insurance /alternative transfer marketplace. But make no mistake, the end game of the NAIC is too strangle this marketplace in every way it can and limited encroachments left unchecked will likely lead to more existential threats. Those involved with risk retention groups (RRGs) can certainly attest to this observation.
It’s important to understand this as the industry determines how it intends to position itself so it is not on the receiving end of any more brush-back pitches.
Collins & Lacy wins motion to dismiss crossclaim, Opinion published in SC Lawyers Weekly
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| Post by Logan Wells |
On April 17, 2012, in Barber v. American Family Home Insurance Co., the United States District Court for the District of South Carolina, inter alia, granted the cross-defendant’s motion to dismiss crossclaims.
The subject of the amended complaint and counterclaim was the insureds’ right to insurance proceeds, while the subject of the crossclaim was an alleged domestic dispute. The court found that the crossclaim did not arise out of the same transaction or occurrence as the amended complaint and counterclaim, and thus, did not comply with Fed. R. Civ. P. 13(g), or Fed. R. Civ. P. 14(a)(3) . The court also found that 28 U.S.C. § 1367(b) prohibited the exercise of supplemental jurisdiction over the crossclaim as the cross-claimant and cross-defendant were both citizens of South Carolina
Civil Practice – Federal Jurisdiction – Diversity – Interpleader – Insurance Proceeds – Non-Diverse Counterclaim Defendant – Crossclaim — Domestic DisputeBy S.C. Lawyers Weekly staffBarber v. American Family Home Insurance Co. (Lawyers Weekly No. 002-075-12, 9 pp.) (Joseph F. Anderson Jr., J.) 3:11-cv-02328; D.S.C.
Published: April 18, 2012
Time posted: 4:25 pm
Tags: Civil Practice, Crossclaim, Diversity, Domestic Dispute, Federal Jurisdiction, Insurance Proceeds, Interpleader, Non-Diverse Counterclaim Defendant
Holding: Plaintiff Nancy Barber filed a breach of contract action against the defendant-insurer after the insurer made a check for insurance proceeds payable to both Nancy Barber and Kelly Barber. The insurer removed on the basis of diversity jurisdiction and filed a counterclaim against Nancy and Kelly Barber, both of whom are S.C. residents. Under United Capitol Insurance Co. v. Kapiloff, 155 F.3d 488 (1998), adding a non-diverse party as a counterclaim defendant does not destroy complete diversity for purposes of federal jurisdiction.
Plaintiff’s motion to remand to state court is denied. Plaintiff’s crossclaims against Kelly Barber are dismissed.
Plaintiff’s crossclaims against Kelly Barber arise out of an alleged domestic dispute. For the most part, evidence related to the crossclaims is entirely different than evidence regarding the insurance contract. The logical relationship between the complaint, the counterclaim, and the crossclaims is not sufficiently meaningful to satisfy Fed. R. Civ. P. 13(g) (crossclaims) or 14(a)(3) (third-party claims).
Because the torts alleged in the crossclaims do not involve the same transaction or occurrence as the complaint and counterclaim, the crossclaims do not fall within the scope of Rules 13(g) and 14(a)(3). As such, the assault, battery, intentional infliction of emotional distress, negligence per se, and gross negligence claims should be dismissed.
Furthermore, Kelly Barber has been made a party pursuant to Rule 13, via either Rule 19 (compulsory joinder) or Rule 20 (permissive joinder). Because the Barbers are both S.C. citizens, this court’s exercise of supplemental jurisdiction over Nancy Barber’s crossclaims against Kelly Barber would be inconsistent with the jurisdictional requirements of 28 U.S.C. § 1332. Such supplemental jurisdiction is expressly prohibited by 28 U.S.C. § 1367(b); thus, this court is constrained to dismiss all of the causes of action asserted in the crossclaim against Kelly Barber.
Actions by Insured against Insurer – Limitation Period not always Certain
Shaver v. Co-operators General Insurance Co. [2011] AJ No. 1411
Mr. Shaver was injured in a three vehicle accident on July 14, 2000 with one other identified driver. The Motor Vehicle Accident Claims Fund accepted liability for the accident and consented to a partial judgement in Mr. Shaver’s favour for $100,000.00. This judgement was entered on January 19, 2010.
Mr. Shaver found this compensation to be inadequate and issued a claim against his insurer, the Co-operators, on July 29, 2010 based on the SEF 44 endorsement in his policy:
Every action...against the insurer...under this endorsement shall be commenced [within 2 years] from the date upon which the eligible claimant...knew or ought to have known that the quantum of the claims with respect to an insured person exceed the minimum limits for motor vehicle liability insurance in the jurisdiction in which the accident occurred.
The Co-operators brought a summary judgment motion in Alberta arguing that Mr. Shaver was out of time as more than 10 years had passed since the claim arose. Mr. Shaver argued that his claim against the Co-operators arose only on January 19, 2010.
The court held that the limitation period in this endorsement allowed an injured person to sue later than the ultimate 10 year statutory limitation period in cases where the insured learned of inadequate insurance or of total claims exceeding the insurance limits after the expiry of that limitation period. The Co-operators appealed this decision to the Alberta Court of Appeal.
The Alberta Court of Appeal upheld the lower court’s decision, citing the principle provided by the Alberta Court of Appeal in Wawanesa Mutual Insurance Co., [1994] AJ No. 126:
An insured’s claim against his own insurer arises not at the time of the accident, but when he knows, or should have known, that the tortfeasor’s coverage will be inadequate to cover the insured’s damages.
In the case at hand, both parties agreed that it was not until January 19, 2010 that Mr. Shaver knew that the torfeasor’s coverage would not be sufficient.
- Kristen Dearlove, Student-at-Law
Mr. Shaver was injured in a three vehicle accident on July 14, 2000 with one other identified driver. The Motor Vehicle Accident Claims Fund accepted liability for the accident and consented to a partial judgement in Mr. Shaver’s favour for $100,000.00. This judgement was entered on January 19, 2010.
Mr. Shaver found this compensation to be inadequate and issued a claim against his insurer, the Co-operators, on July 29, 2010 based on the SEF 44 endorsement in his policy:
Every action...against the insurer...under this endorsement shall be commenced [within 2 years] from the date upon which the eligible claimant...knew or ought to have known that the quantum of the claims with respect to an insured person exceed the minimum limits for motor vehicle liability insurance in the jurisdiction in which the accident occurred.
The Co-operators brought a summary judgment motion in Alberta arguing that Mr. Shaver was out of time as more than 10 years had passed since the claim arose. Mr. Shaver argued that his claim against the Co-operators arose only on January 19, 2010.
The court held that the limitation period in this endorsement allowed an injured person to sue later than the ultimate 10 year statutory limitation period in cases where the insured learned of inadequate insurance or of total claims exceeding the insurance limits after the expiry of that limitation period. The Co-operators appealed this decision to the Alberta Court of Appeal.
The Alberta Court of Appeal upheld the lower court’s decision, citing the principle provided by the Alberta Court of Appeal in Wawanesa Mutual Insurance Co., [1994] AJ No. 126:
An insured’s claim against his own insurer arises not at the time of the accident, but when he knows, or should have known, that the tortfeasor’s coverage will be inadequate to cover the insured’s damages.
In the case at hand, both parties agreed that it was not until January 19, 2010 that Mr. Shaver knew that the torfeasor’s coverage would not be sufficient.
- Kristen Dearlove, Student-at-Law
TIMES THEY ARE A-CHANGIN’
Have you noticed how the younger folks are always looking down at their smart phones? They make up Generation Y. That generation is generally defined as those born between 1980 and 1999. They have lost interest in many of the services and products their parents found important according to a recent article by 24/7 Wall St.
1. Cars
Teens love cars right? Well, a recent study by Gartner research revealed that, if forced to choose, 46% of all 18-to-24-year-old drivers in the United States would choose access to the Internet over access to a car! As recently as 1998, 64.4% of potential drivers ages 19 and younger had drivers licenses, according to the Federal Highway Administration. Just ten short years later, in 2008, that amount had dropped to 46.3%. People are also waiting longer to get their licenses.
2. Email
From December 2009 to December 2010, time spent using email by the 12- to 17-years-old age group dropped a tremendous 59%. While the youth drop it, their parents and grandparents are finally picking it up. In comparison, time spent using email by people 55 to 64-years-old has increased 22%, and it has increased 28% among those 65 years and older. Texting and Instant Messaging is the new order of the day.
3. Newspapers
While readership rates for print newspapers are falling across the board, the country’s younger generation has abandoned the medium the most. As of 2010, only 7% of 18- to 24-year-olds reported having read a print newspaper the day before, according to the Pew Research Center for the People & the Press. This is the first time that figure has reached single digits. This age group also has among the highest rates of people reportedly receiving news through social networking sites or Twitter.
4. Landline phones
Landline phones are losing popularity among Generation Y, who are becoming increasingly content with only having wireless phones. According to a report from the National Center for Health Statistics, 51.3% of Americans aged 25 to 29 lived in households with only wireless phones in the first six months of 2010. This is the first time the number of adults in wireless-only households has been greater than the number of adults in landline households for any age group.
5. Cigarettes
Smoking rates among young people have historically exceeded those of the general population. Now that group is dropping the habit quicker than anyone. According to the Centers for Disease Control and Prevention, the share of people 18 to 24 years of age who were current cigarette smokers decreased by 17.6% from 2005 to 2010 — the largest decrease among any age group.
6. Desktop computers
Millennials are the only generational group to be more likely to own a laptop computer than a desktop. According to data from Pew Research Center, 70% own a laptop, while 57% own a desktop. By contrast, 64% of those aged 57-65 own a desktop, while only 43% own a laptop.
7. Television
Adults aged 18 to 24 watch less traditional television than any other age group in the country, according to Nielsen’s most recent Cross Platform Report. That group, on average, watches just under 24 hours per week. The national average is approximately 32.5 hours. One of the leading reasons for this difference is Generation Y’s relationship with the Internet. According to a report published in April 2010 by electronics review/research company Retrevo, 23% of those under 25 watch “most” of their television online now.
8. CDs
Music has changed quickly with the advent of iPods and digital songs. Back in 2002, compact discs (CDs) had a more than 95% market share of music sales. In 2010, they had less than half. Various reports suggest this decline is the result of all age groups moving away from CD sales toward digital sales.
So, this generation will not be anxious to drive, won’t smoke, won’t have a desktop computer or a landline phone, will text you in response to your email, and will not be listening to a CD, reading a newspaper or watching a TV when they finally sign off Facebook and you get them to answer their cell phone.
Insurance: When a car is burglarized
Q: My clothes, camping gear, camera and guitar were stolen from my car. Will my auto insurance pay for these things?
A: Maybe, but there may well be dollar limits for things like clothing, sports equipment, etc. that might be incidental to an outing or vacation. Your auto policy would specify those limits. (We had an odd fraud case a couple of years ago involving a man who kept claiming that his $33,000 collection of silk neckties was being stolen from his car.)
For things that are generally considered personal property, rather than auto-related property like a spare tire, jack, or roadside emergency kit, you might be able to file a homeowner's or renter's insurance claim. Talk to your agent or insurer -- and think about your deductibles. If you have a high deductible, it may not be worth it to file a claim for a small loss.
Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.
Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)
A: Maybe, but there may well be dollar limits for things like clothing, sports equipment, etc. that might be incidental to an outing or vacation. Your auto policy would specify those limits. (We had an odd fraud case a couple of years ago involving a man who kept claiming that his $33,000 collection of silk neckties was being stolen from his car.)
For things that are generally considered personal property, rather than auto-related property like a spare tire, jack, or roadside emergency kit, you might be able to file a homeowner's or renter's insurance claim. Talk to your agent or insurer -- and think about your deductibles. If you have a high deductible, it may not be worth it to file a claim for a small loss.
Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.
Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)
Dogs and insurance
Q: Am I covered if my dog bites someone else visiting my home, or when we're at a city park or campground?
A: Generally yes. Your homeowners policy will typically cover the incident at home or away from home, but once your insurance company knows that your dog caused an injury, the company may take a second look at you as a risk. The company may not want to continue coverage, or could raise its rates, since it's hard to guarantee that the dog will never bite someone again.
Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.
Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)
A: Generally yes. Your homeowners policy will typically cover the incident at home or away from home, but once your insurance company knows that your dog caused an injury, the company may take a second look at you as a risk. The company may not want to continue coverage, or could raise its rates, since it's hard to guarantee that the dog will never bite someone again.
Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.
Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)
Job openings: Actuary, financial examiner, analyst, technician, receptionist
Due to retirements, a promotion, etc., we have several jobs that we're looking to fill. It's been quite a while since we've had this many openings.
The jobs are listed below, along with a few highlights. For the official job listing and specifics, including duties, salaries, required qualifications, etc., please click on each job's link below. Application deadlines vary -- these are listed under each job description -- but the earliest is next Monday.
Actuary: We're looking for someone to review health and disability insurance rate filings submitted by insurance carriers to our office. This person will also provide assistance to our company supervision division's work, which includes analysis of the finances of insurers, holding companies and other entities.
Financial examiner: These positions work out of our office in downtown Seattle. Among other duties, our examiners audit the operation of insurers.
Analyst: We're looking for a life- and health insurance compliance analyst to work in our consumer protection division, which is located in our main building in Tumwater. The job involves helping consumers with insurance questions, problems and complaints.
Insurance technician: This position involves answering consumer hotline calls and routing them to staff in various divisions, including agent/broker licensing and consumer advocacy. It also entails some IT support work.
Office assistant: This person will provide receptionist services and first-line help to phone and walk-in customers, as well as a variety of complex clerical duties.
The jobs are listed below, along with a few highlights. For the official job listing and specifics, including duties, salaries, required qualifications, etc., please click on each job's link below. Application deadlines vary -- these are listed under each job description -- but the earliest is next Monday.
Actuary: We're looking for someone to review health and disability insurance rate filings submitted by insurance carriers to our office. This person will also provide assistance to our company supervision division's work, which includes analysis of the finances of insurers, holding companies and other entities.
Financial examiner: These positions work out of our office in downtown Seattle. Among other duties, our examiners audit the operation of insurers.
Analyst: We're looking for a life- and health insurance compliance analyst to work in our consumer protection division, which is located in our main building in Tumwater. The job involves helping consumers with insurance questions, problems and complaints.
Insurance technician: This position involves answering consumer hotline calls and routing them to staff in various divisions, including agent/broker licensing and consumer advocacy. It also entails some IT support work.
Office assistant: This person will provide receptionist services and first-line help to phone and walk-in customers, as well as a variety of complex clerical duties.
Trampolines and insurance
Q: I'm thinking about buying a trampoline for my kids. Are there any insurance issues?
A: Yup. Trampolines, while definitely fun, can cause injuries or even death. So it's a good idea to first talk to your insurance agent. Your insurance company may not want to continue coverage if you buy a trampoline. Also, if there is an injury claim, your insurer would review the claim, but might decide to later cancel your coverage. It's well worth a phone call to your agent or insurer first, rather than being surprised later.
Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.
Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)
A: Yup. Trampolines, while definitely fun, can cause injuries or even death. So it's a good idea to first talk to your insurance agent. Your insurance company may not want to continue coverage if you buy a trampoline. Also, if there is an injury claim, your insurer would review the claim, but might decide to later cancel your coverage. It's well worth a phone call to your agent or insurer first, rather than being surprised later.
Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.
Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)
In rear end collisions, liability is often considered to be automatic. But the Court of Appeal has reminded us that there is no such fixed rule.
In Martin-Vandenhende v. Myslik, 2012 ONCA 53 (C.A.), the plaintiff alleged the defendant rear-ended her vehicle as she slowed to make a left turn. She testified she activated her left turn signal prior to slowing down and commencing the turn. The defendant’s version of events was that the plaintiff activated her right turn signal and pulled to the right, which he interpreted to mean she was pulling over to allow him to pass. As he pulled around her vehicle, she turned left into him.
The trial judge found in favour of the plaintiff. He held that “taken at its highest”, the signal was “perhaps confusing” and the plaintiff was “perhaps giving [the defendant] inconsistent signals”. The Court held that this was not taking the defendant’s evidence at its highest, as his evidence was unequivocal: he was not confused or being given inconsistent signals, as he testified the plaintiff indicated she was going right, not left.
Justice Blair cited Beaumont v. Ruddy , [1932] O.R. 441 (C.A.) for the proposition that generally speaking, where one car runs into another from behind, the fault lies with the driver of the rear car, and he must satisfy the Court that the collision did not occur as a result of his negligence. Since the trial judge did not make factual findings to resolve the conflicting testimony between the parties, it could not be said one way or another whether Beaumont had been satisfied. Justice Blair held:
31 In addition, the trial judge's approach was wrong in law, in my view. The common law principle enunciated in Beaumont v. Ruddy does not prescribe that a following driver is always at fault if he or she runs into another from behind. It simply states that generally speaking this will be the case, and shifts the onus to the following driver to show otherwise. There is no principle of law of which I am aware that automatically fixes a following driver who runs into another vehicle from the rear with liability "no matter what [the lead driver] chooses to do, within [his or] her own lane." Subject to the law's general bias in favour of fault on the part of the following driver and the "following too closely" jurisprudence, liability - as in any negligence case - depends upon whether the following driver was acting reasonably in the circumstances and, conversely, whether the lead driver was as well.
The Court allowed the appeal and ordered a new trial.
- Tara Pollitt
In Martin-Vandenhende v. Myslik, 2012 ONCA 53 (C.A.), the plaintiff alleged the defendant rear-ended her vehicle as she slowed to make a left turn. She testified she activated her left turn signal prior to slowing down and commencing the turn. The defendant’s version of events was that the plaintiff activated her right turn signal and pulled to the right, which he interpreted to mean she was pulling over to allow him to pass. As he pulled around her vehicle, she turned left into him.
The trial judge found in favour of the plaintiff. He held that “taken at its highest”, the signal was “perhaps confusing” and the plaintiff was “perhaps giving [the defendant] inconsistent signals”. The Court held that this was not taking the defendant’s evidence at its highest, as his evidence was unequivocal: he was not confused or being given inconsistent signals, as he testified the plaintiff indicated she was going right, not left.
Justice Blair cited Beaumont v. Ruddy , [1932] O.R. 441 (C.A.) for the proposition that generally speaking, where one car runs into another from behind, the fault lies with the driver of the rear car, and he must satisfy the Court that the collision did not occur as a result of his negligence. Since the trial judge did not make factual findings to resolve the conflicting testimony between the parties, it could not be said one way or another whether Beaumont had been satisfied. Justice Blair held:
31 In addition, the trial judge's approach was wrong in law, in my view. The common law principle enunciated in Beaumont v. Ruddy does not prescribe that a following driver is always at fault if he or she runs into another from behind. It simply states that generally speaking this will be the case, and shifts the onus to the following driver to show otherwise. There is no principle of law of which I am aware that automatically fixes a following driver who runs into another vehicle from the rear with liability "no matter what [the lead driver] chooses to do, within [his or] her own lane." Subject to the law's general bias in favour of fault on the part of the following driver and the "following too closely" jurisprudence, liability - as in any negligence case - depends upon whether the following driver was acting reasonably in the circumstances and, conversely, whether the lead driver was as well.
The Court allowed the appeal and ordered a new trial.
- Tara Pollitt
Trying to make our website better
We are redesigning the website for our agency (not this blog, but the whole Office of the Insurance Commissioner website). The point is to make it easy for consumers and other users of our site to quickly find exactly what they need.
Please help us by taking part in a brief interactive survey that will help us decide what topics to put where. It just takes a few minutes.
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Please help us by taking part in a brief interactive survey that will help us decide what topics to put where. It just takes a few minutes.
Many thanks.
U.S. District Court holds that exclusion for earth movement does not apply to damages from burst pipe
A ceiling pipe in a warehouse owned by Espedito Realty burst. The break was not noticed for several days. The water pooled against a wall and eventually seeped down between the concrete floor and exterior wall. As a result, the sub-base below the concrete floor subsided, and the warehouse floor sank.
Espedito's insurer, National Fire Insurance Company of Hartford, paid some of the damages, but it refused to pay for the repair of the sunken floor. It asserted that an exclusion for "earth movement" applied.
The earth movement exclusion excludes coverage for damages arising from earthquake, landslide, mine subsidence, volcanic eruption, and "earth sinking, rising or shifting, including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty."
Espedito's experts opined that water from the broken pipe penetrated the ground underneath the floor, resulting in a subsidence of wasting away of the soil that caused the floor to sink.
National Fire argued that the cause of the earth movement was irrelevant.
In Espedito Realty, LLC v. Nat'l Fire Ins. Co. of Hartford, __ F. Supp. 2d __, 2012 WL 1014176 (D. Mass.) the court held that the exclusion does not apply:
Espedito's insurer, National Fire Insurance Company of Hartford, paid some of the damages, but it refused to pay for the repair of the sunken floor. It asserted that an exclusion for "earth movement" applied.
The earth movement exclusion excludes coverage for damages arising from earthquake, landslide, mine subsidence, volcanic eruption, and "earth sinking, rising or shifting, including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty."
Espedito's experts opined that water from the broken pipe penetrated the ground underneath the floor, resulting in a subsidence of wasting away of the soil that caused the floor to sink.
National Fire argued that the cause of the earth movement was irrelevant.
In Espedito Realty, LLC v. Nat'l Fire Ins. Co. of Hartford, __ F. Supp. 2d __, 2012 WL 1014176 (D. Mass.) the court held that the exclusion does not apply:
The unavoidable fact is that pipes burst rather frequently. It is a
rare property owner who has not dealt with the problem, or at least suffered
anxiety over the possibility, and it is hardly intuitive that an "earth
movement" exclusion would bar coverage for the homely situation where a pipe
bursts and a floor sinks as a result. No objectively reasonable insured
reading the policy would think so, especially when the only reference to the
impact of water is to "water flowing underground." If the policy truly
intended to cover this commonly recurring situation, it should have said
so.
LOTTERIES & PROBABLITIES
LOTTERIES & PROBABILITIES
Your odds of winning the multistate Jackpot Lottery are 1 in 175,223,510.
My odds are zero, because I will not buy a ticket. I don’t like that people have to lose for me to win. My injury law practice is all on a win-win basis. I like it that way.
At any rate, numbers like 175 million are daunting. None of us deal with numbers like that. But let me put into perspective just how slim those odds really are.
Let’s look at some scary things, published by the Daily Beast, you probably have never even thought about:
Death by Vending Machine Odds: 1 in 112 million
On average, two people in the U.S. are crushed to death underneath vending machines each year. Please snack responsibly.
Dying in an Airline-Related Terrorist Attack Odds: 1 in 25 million
No one has died in an airplane-related terrorist attack since 9/11. The pat-downs of elderly people and toddlers are really paying off.
Having Identical Quadruplets Odds: 1 in 15 million
Identical quadruplets would be adorable, but you wouldn’t be able to support them because you probably won’t win the lottery…
Dying From Being Left-Handed Odds: 1 in 4.4 million
It’s a right-handed world. Apparently, a fair number of left-handed people die each year from using right-handed products incorrectly.
Becoming a Movie Star Odds: 1 in 1,505,000
There’s more than one way to make money in this world, and movie stardom is a better bet than playing the lottery.
Dying in a Plane Crash Odds: 1 in 1 million
If you are too scared to board a plane, why did you just buy a lottery ticket?
Death by Flesh-Eating Bacteria Odds: 1 in 1 million
Not as rare as one would hope, but there are worse ways to die. Maybe.
Getting Struck by Lightning Odds: 1 in 1 million.
A lightning strike is probably still preferable to flesh-eating bacteria.
Dying in a Bathtub Odds: 1 in 840,000
These odds are not an excuse for your young sons to stop bathing. Sorry boys.
Dying in an On-the-Job Accident Odds: 1 in 48,000
This is something I see on a regular basis.
Murder Odds: 1 in 18,000
Hopefully it won’t be over a lottery ticket, but if it is, at least your murderer probably won’t win, either.
Dying in a Car Accident Odds: 1 in 6,700
It is the most dangerous thing most of us will ever do. (Good luck driving to the store to buy that lottery ticket.)
I know, you are thinking that the slimmest odds are better than none, right? Someone has to win, and you figure, it could be you?
How would you feel about a man standing in field waiting on some collectable space junk to just randomly fall out the sky that he could sell for millions? Sounds crazy, right? I hate to be the bearer of bad news, but statistically you would be better off following his lead than trying the larger lottery odds.
Injury Attorney David Peel founded the Peel Law Firm in Millington in 2000. He makes himself available to speak to organizations, churches and civic clubs at no cost. To contact him and see more articles, visit PeelLawFirm.com
OIC web applications: Back online
We updated the system underlying many of our web-based applications last night, and everything's back online. Thanks for your patience.
Our web applications will be down for several hours tonight
Shortly after midnight tonight, we'll be taking all of our web-based applications offline for system maintenance. They will be back up by 7 a.m.
During this time, most of our online services will be down. This includes things like online licensing, consumer complaints, E-tax filings, searches for health insurance rate filing, company lookups, agent/broker lookups, etc.
The website itself will still be up.
During this time, most of our online services will be down. This includes things like online licensing, consumer complaints, E-tax filings, searches for health insurance rate filing, company lookups, agent/broker lookups, etc.
The website itself will still be up.
Collins & Lacy Opens Charleston Office and Welcomes Attorneys Mikell Wyman, Tom Bacon and Bennett Crites
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| Post by Pete Dworjanyn |
We are pleased to announce the opening of our new Charleston location, with three attorneys joining Collins & Lacy: Bennett Crites (practicing in premises liability, products liability and commercial transportation) and workers' compensation attorneys Mikell Wyman and Tom Bacon. Our Charleston office is already growing - Tom first came on board with Bennett in the initial opening, and Mikell has just joined the two attorneys.
From both a litigation and workers' compensation standpoint, these attorneys bring a wealth of experience and opportunity to Collins & Lacy. We welcome Mikell, Tom and Bennett to the Collins & Lacy Family. If you want to learn more about our new Charleston
Kusnierz - Combining Impairments in Determining Catastrophic Impairment
Kusnierz v. The Economical Insurance Company (2012) 108 O.R. (3d) 272 (C.A.)
Kusnierz is an important Court of Appeal decision regarding catastrophic impairment under the SABS.
Mr. Kusnierz suffered a below the knee amputation and clinical depression in a 2001 accident. The parties disagreed as to whether he met the criteria to be declared catastrophically impaired, and the trial judge held that he did not. The key issue was whether physical and psychological impairments can be combined in evaluating whether a person is catastrophically impaired under the SABS.
The Court of Appeal held that it is permissible to combine physical and psychological impairments for the following reasons:
1. The legislator did not expressly forbid the combination;
2. The AMA Guides aim to assess the total effects of a person’s impairments on daily activities;
3. The Guides describe a number of situations where physical impairments should take into account mental and behavioural impairments;
4. The combination of impairments is consistent with the purpose of the SABS. The Court noted that the respondent conceded that there are few cases where physical and psychological impairments are catastrophic when combined but not when assessed separately. The class of persons who are CAT will therefore remain small; and
5. Combination promotes fairness and the objectives of the statutory scheme.
Although Kusnierz has the potential to open up the floodgates for catastrophic claims, it may be that the class of cases that fit into this situation remains small, as predicted by the Court of Appeal. It may take time before the full effects of Kusnierz are truly known.
- Tara Pollitt
Kusnierz is an important Court of Appeal decision regarding catastrophic impairment under the SABS.
Mr. Kusnierz suffered a below the knee amputation and clinical depression in a 2001 accident. The parties disagreed as to whether he met the criteria to be declared catastrophically impaired, and the trial judge held that he did not. The key issue was whether physical and psychological impairments can be combined in evaluating whether a person is catastrophically impaired under the SABS.
The Court of Appeal held that it is permissible to combine physical and psychological impairments for the following reasons:
1. The legislator did not expressly forbid the combination;
2. The AMA Guides aim to assess the total effects of a person’s impairments on daily activities;
3. The Guides describe a number of situations where physical impairments should take into account mental and behavioural impairments;
4. The combination of impairments is consistent with the purpose of the SABS. The Court noted that the respondent conceded that there are few cases where physical and psychological impairments are catastrophic when combined but not when assessed separately. The class of persons who are CAT will therefore remain small; and
5. Combination promotes fairness and the objectives of the statutory scheme.
Although Kusnierz has the potential to open up the floodgates for catastrophic claims, it may be that the class of cases that fit into this situation remains small, as predicted by the Court of Appeal. It may take time before the full effects of Kusnierz are truly known.
- Tara Pollitt
Appeals Court holds that per person rather than aggregate limit determines how much underinsurance individuals can recover
Steven and Angelica Blackburn were in an auto accident. Angelica incurred medical bills and lost wages in excess of $241,000 and Steven incurred medical bills and lost wages in excess of $80,000.
The other vehicle was driven by Helen Vieira. Vieira's insurance policy with Travelers had a bodily injury limit of $50,000 per person and $100,000 per accident. It paid Angelica and Steven $50,000 each.
The Blackburns sought additional coverage from their own carrier,Commerce, with which they had underinsurance coverage of $100,000 per person and $300,000 per accident. They asserted that they were each entitled to $100,000, because they were jointly entitled to the difference between the $100,000 per accident coverage limit o f Vieira's coverage and the $300,000 per accident limit of their policy. Commerce asserted they were each entitled to only $50,000 (the $100,000 per person limit less the $50,000 they had already received.)
In Commerce Ins. Co. v. Blackburn, 81 Mass. App. Ct. 519 (2012), the court agreed with Commerce, citing policy language providing that recovery is subject to the per person limit.
My first thought was that under this analysis there is more than $100,000 of illusory coverage. If the accident were caused by someone with no insurance, the optional uninsured coverage would apply, not the underinsured coverage. In Massachusetts the statutory minimum per person coverage for injury to someone else is $20,000 (although I believe there are states that do not have minimum coverage). Therefore, the most either Steven or Angelica could recover under the underinsured coverage, if they are injured by someone insured in Massachusetts, is $80,000 (the $100,000 per person limit minus the $20,000 they would receive from the tortfeasor's insurance), or a combined total of $160,000. That would leave a gap of $140,000 in the per accident limit they could never get.
So I looked at the standard Massachusetts auto policy. The underinsurance coverage covers the named insureds, as well as, in certain circumstances, any household member and anyone occupying the insured's vehicle.
On a related note, I strongly recommend that everyone purchase as much underinsured and uninsured coverage as they can afford. Don't rely on other drivers to have adequate insurance to cover your loss if they injure you in an accident.
The other vehicle was driven by Helen Vieira. Vieira's insurance policy with Travelers had a bodily injury limit of $50,000 per person and $100,000 per accident. It paid Angelica and Steven $50,000 each.
The Blackburns sought additional coverage from their own carrier,Commerce, with which they had underinsurance coverage of $100,000 per person and $300,000 per accident. They asserted that they were each entitled to $100,000, because they were jointly entitled to the difference between the $100,000 per accident coverage limit o f Vieira's coverage and the $300,000 per accident limit of their policy. Commerce asserted they were each entitled to only $50,000 (the $100,000 per person limit less the $50,000 they had already received.)
In Commerce Ins. Co. v. Blackburn, 81 Mass. App. Ct. 519 (2012), the court agreed with Commerce, citing policy language providing that recovery is subject to the per person limit.
My first thought was that under this analysis there is more than $100,000 of illusory coverage. If the accident were caused by someone with no insurance, the optional uninsured coverage would apply, not the underinsured coverage. In Massachusetts the statutory minimum per person coverage for injury to someone else is $20,000 (although I believe there are states that do not have minimum coverage). Therefore, the most either Steven or Angelica could recover under the underinsured coverage, if they are injured by someone insured in Massachusetts, is $80,000 (the $100,000 per person limit minus the $20,000 they would receive from the tortfeasor's insurance), or a combined total of $160,000. That would leave a gap of $140,000 in the per accident limit they could never get.
So I looked at the standard Massachusetts auto policy. The underinsurance coverage covers the named insureds, as well as, in certain circumstances, any household member and anyone occupying the insured's vehicle.
On a related note, I strongly recommend that everyone purchase as much underinsured and uninsured coverage as they can afford. Don't rely on other drivers to have adequate insurance to cover your loss if they injure you in an accident.
Man charged with insurance fraud after $17,000 stolen-bicycle claim
A Pierce County man has been charged with insurance fraud, forgery and attempted theft after filing a $17,000 claim for two bicycles that investigators say he never owned.
John Leonard Southerly, of Fox Island, last May told his insurance company that two Specialized Epic bicycles and accessories had been stolen from his garage. He filed a police report with a Pierce County sheriff's deputy, saying that he'd left the garage door open and discovered that the two bikes, valued at $17,562, were gone.
Southerly told his insurer, Travelers Indemnity Co., that he'd bought both bikes from an Arizona company. When Travelers asked for copies of his receipts, Southerly sent an email that was purportedly from the bike company. The bike company email came from a Gmail account. Attached was an invoice for each bike. Southerly later also filed a sworn statement of proof of loss for the bikes.
Travelers sent an investigator to talk to the bike shop owner and try to verify that the invoices were authentic. Nope, the owner said, pointing out discrepancies.
Then, last June, Travelers received an email from a different Gmail address.
"This is Detective Harris," it began. "I work out of the Tacoma office. I am trying to follow up on a case that involves Mr. Southerly..."
The email didn't contain contact information for this "Detective Harris," or even specify which law enforcement agency the detective supposedly worked for.
Travelers denied Southerly's claim and turned the case over to the state insurance commissioner's Special Investigations Unit. It quickly determined that there is no Detective Harris working for the Pierce County Sheriff's Office, the Tacoma Police Department or the Lakewood Police Department.
With search warrants, the Special Investigations Unit determined that both Gmail accounts listed Southerly's real email as a secondary contact and were sent from Southerly's IP address.
On March 30, Southerly was charged in Pierce County Superior Court with one count of insurance fraud ("false claims or proof"), three counts of forgery and one count of attempted first-degree theft.
His arraignment is set for Friday.
John Leonard Southerly, of Fox Island, last May told his insurance company that two Specialized Epic bicycles and accessories had been stolen from his garage. He filed a police report with a Pierce County sheriff's deputy, saying that he'd left the garage door open and discovered that the two bikes, valued at $17,562, were gone.
Southerly told his insurer, Travelers Indemnity Co., that he'd bought both bikes from an Arizona company. When Travelers asked for copies of his receipts, Southerly sent an email that was purportedly from the bike company. The bike company email came from a Gmail account. Attached was an invoice for each bike. Southerly later also filed a sworn statement of proof of loss for the bikes.
Travelers sent an investigator to talk to the bike shop owner and try to verify that the invoices were authentic. Nope, the owner said, pointing out discrepancies.
Then, last June, Travelers received an email from a different Gmail address.
"This is Detective Harris," it began. "I work out of the Tacoma office. I am trying to follow up on a case that involves Mr. Southerly..."
The email didn't contain contact information for this "Detective Harris," or even specify which law enforcement agency the detective supposedly worked for.
Travelers denied Southerly's claim and turned the case over to the state insurance commissioner's Special Investigations Unit. It quickly determined that there is no Detective Harris working for the Pierce County Sheriff's Office, the Tacoma Police Department or the Lakewood Police Department.
With search warrants, the Special Investigations Unit determined that both Gmail accounts listed Southerly's real email as a secondary contact and were sent from Southerly's IP address.
On March 30, Southerly was charged in Pierce County Superior Court with one count of insurance fraud ("false claims or proof"), three counts of forgery and one count of attempted first-degree theft.
His arraignment is set for Friday.
Appeals Court holds insurer must defend additional insured where primary insured not named in complaint
A Greyhound bus was involved in an accident resulting in five fatalities and numerous injuries. Unicco was responsible by contract for tire maintenance on the bus.
Suits were filed against Greyhound alleging that Greyhound negligently inspected and maintained tires on the bus. One of the suits named Unicco as a defendant, and Greyhound brought third-party suits against Unicco where it was not named.
Unicco had a GL policy from Travelers under which Greyhound was an additional insured "only with respect to liability arising out of [Unicco's] ongoing operations performed for [Greyhound]" and, in a different endorsement, except with respect to "liability arising out of the independent acts or omissions of [Greyhound]."
It was undisputed that Greyhound was entitled to coverage under the ongoing operations endorsement. Travelers declined to defend or indemnify Greyhound, although it is not clear why.
In Greyhound Lines, Inc. v. Travelers Property Casualty Co. of Am., 2012 WL 987515 (Mass. App. Ct.) (unpublished), the court held that Greyhound is also entitled to coverage under the second endorsement. The complaint in the suit naming Unicco alleged that Unicco's negligent performance under the tire maintenance agreement caused or contributed to the accident.
In what is either a typo or very poor phrasing, the court stated, "the duty to defend is not . . . an all or nothing proposition." Luckily the court went on to explain that the duty to defend is, in fact, an all or nothing proposition (at least in Massachusetts). "An insurer's broad duty to defend generally extends to all counts of a complaint, even those not specifically covered by the policy." Since at least some of the counts were covered, Travelers had a duty to defend Greyhound for all counts.
The court also held that Travelers had a duty to defend Greyhound in the lawsuits in which Unicco was not named, because of "the facts reasonably known to Travelers from the lawsuits in which Unicco is named as a direct defendant and is alleged to be liable for the accident, and because similar claims for negligence with respect to the maintenance and the inspection of tires are alleged against Greyhound."
Suits were filed against Greyhound alleging that Greyhound negligently inspected and maintained tires on the bus. One of the suits named Unicco as a defendant, and Greyhound brought third-party suits against Unicco where it was not named.
Unicco had a GL policy from Travelers under which Greyhound was an additional insured "only with respect to liability arising out of [Unicco's] ongoing operations performed for [Greyhound]" and, in a different endorsement, except with respect to "liability arising out of the independent acts or omissions of [Greyhound]."
It was undisputed that Greyhound was entitled to coverage under the ongoing operations endorsement. Travelers declined to defend or indemnify Greyhound, although it is not clear why.
In Greyhound Lines, Inc. v. Travelers Property Casualty Co. of Am., 2012 WL 987515 (Mass. App. Ct.) (unpublished), the court held that Greyhound is also entitled to coverage under the second endorsement. The complaint in the suit naming Unicco alleged that Unicco's negligent performance under the tire maintenance agreement caused or contributed to the accident.
In what is either a typo or very poor phrasing, the court stated, "the duty to defend is not . . . an all or nothing proposition." Luckily the court went on to explain that the duty to defend is, in fact, an all or nothing proposition (at least in Massachusetts). "An insurer's broad duty to defend generally extends to all counts of a complaint, even those not specifically covered by the policy." Since at least some of the counts were covered, Travelers had a duty to defend Greyhound for all counts.
The court also held that Travelers had a duty to defend Greyhound in the lawsuits in which Unicco was not named, because of "the facts reasonably known to Travelers from the lawsuits in which Unicco is named as a direct defendant and is alleged to be liable for the accident, and because similar claims for negligence with respect to the maintenance and the inspection of tires are alleged against Greyhound."
Insured's Participation in Investment Scheme Triggers Business Enterprise Exclusion
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| Post by Logan Wells |
Fourth Circuit Finds Insured’s Participation in Investment Scheme Triggers Business Enterprise
On March 29, 2012, in an unpublished opinion, the United States Court of Appeals for the Fourth Circuit affirmed the judgment of the Eastern District of Virginia, holding that an insured’s activities as investor in companies for which the insured acted as legal counsel triggered the Business Enterprise Exclusion ("BEE") contained in the professional liability policy issued to the insured, thereby precluding coverage.
In Minnesota Lawyers Mutual Insurance Company v. Antonelli, Terry, Stout & Kraus, LLP, the Antonelli firm and attorney Stout sought coverage for Ferguson v. Stout, a malpractice suit arising out of the alleged activities of the firm and attorney with respect to certain business entities they represented. According to the Ferguson
Telefind received substantial financial backing from a group of outside investors (“Richards Investors”). The Richards Investors lent Telefind $6 million via a loan through Flatt Morris , S.A.
Later, when it became necessary to protect the WET from Telefind’s creditors, Stout devised a legal strategy that he told the Richards Investors and Andros would legally protect Telefind’s interest in the WET, recommending placing the patents in a separate legal entity and stressing that their entire interest in the WET would be lost if they did not follow his advice. To implement the strategy, three employees of ESA Telecommunications (“ESA”), a company Telefind worked with previously, filed the WET patents in their names. Stout emphasized that for the strategy to be successful Andros and the Richards Investors could not have any documented direct ownership interest in the WET, assuring them they would continue to participate in any benefits associated with the WET. Andros and the Richards Investors disavowed their legal interest in the patents and the ESA employees assigned the patents to Stout. In 1992, Stout created NTP, Inc. to hold the WET patents.
The Antonelli firm and Stout notified their professional liability carrier, Minnesota Lawyers Mutual Insurance Company (“MLM”), of the Ferguson Ferguson Ferguson
[This policy does not provide coverage for] any claim arising out of professional services rendered by any insured in connection with any business enterprise:
(a) owned in whole or in part;
(b) controlled directly or indirectly; or
(c) managed, by any insured, and where the claimed damages resulted from conflicts of interest with the interest of any client or former client or with the interest of any person claiming an interest in the same or related business enterprise.
The Antonelli firm and Stout appealed, arguing the Ferguson action was covered because (1) a number of terms within the BEE were ambiguous; and (2) even if the BEE applied to the Ferguson complaint on the whole, the Ferguson plaintiffs “might prove only the allegations falling within coverage without proving the allegations within the exclusion.”
Ambiguity
The Antonnelli firm and Stout first argued that a number of terms within the BEE were ambiguous and therefore should be construed in their favor, contending that favorable construction would demonstrate that the Ferguson complaint did not fall within the BEE. Addressing each part of the BEE individually, the court rejected the argument:
Under the terms of the Policy, the BEE excludes coverage for claims (1) “arising out of professional services” (2) rendered “in connection with any business enterprise” (3) owned, controlled, or managed, by any insured, and (4) resulting “from conflicts of interest with the interest of any client or former client.”
There is no dispute that this case “aris[es] out of professional services” that Appellants provided to the Ferguson
Further, and just as clearly, these “professional services” were rendered “in connection with [a] business enterprise,” meeting the second requirement of the exclusion. The phrase “in connection with” is a common insurance phrase that is given particularly broad scope. See, e.g., Goldman Paper Stock Co. v. Richmond, F. & P.R., 212 Va. 293, 296 (Va. Fitchburg
The Ferguson
Finally, the asserted damages surely resulted “from conflicts of interests.” The defendant attorneys in this case allegedly obtained complete ownership and control of their clients’ assets and exploited those assets for personal benefit. This conduct violates any number of Virginia
Accordingly, the court found the allegations of the Ferguson
Potentiality
The appellants also argued that even if the BEE applied to the Ferguson complaint on the whole, because the Ferguson Ferguson Ferguson
The court of appeals rejected the appellants’ argument, pointing out that Virginia
In the Ferguson Ferguson plaintiffs, there would be no loss for the Ferguson Northbrook Prop. & Cas. Ins. Co., 475 S.E.2d 264, 265-66 (Va. Ferguson
The court also rejected the appellants’ reliance on authority finding a duty to defend where alternative allegations fall within the policy:
Appellants’ reliance on authority finding a duty to defend where some alternative allegations fall within the policy is also unavailing. Cases considering alternatively worded complaints do not look to any conceivable cause of action. They require that the complaint actually asserts the claim. See, e.g., Fuisz v. Selective Ins. Co., 61 F.3d 238, 245 (4th Cir. 1995) (avoiding intentional act exclusion because “each of the four causes of action” alleged “reckless disregard” in addition to “actual malice”). Given that the Ferguson
Thus, the court found that the BEE exclusion applied to exclude coverage for the Ferguson
Material Changes in Risk – Duty of Insurers to Communicate to Insureds
Thomas v. Aviva Insurance Co. [2011] N.B.J. No. 371
A fire occurred in an elderly insured’s home which was caused by a wood stove. When the insured had applied for insurance seven years earlier, he had indicated that he had electric heat as his primary heating source. One year later, a wood stove had been installed as a secondary heat source.
The insurer voided the policy and denied coverage on the basis that the insured failed to notify them of the installation of the wood stove. The insurer took the position that the installation of the wood stove constituted a material change in risk.
The insured was sent renewal policy notices that contained a caution to ensure that all information in the policy was accurate. The insured had dropped out of school at the age of 16 and never read the policy and was unaware of the obligation to inform the insurer of the installation of the wood stove.
The insured sued for breach of contract and was successful at trial. The trial judge held that the “insured’s knowledge was the determinative factor and the lack of guilty knowledge on the part of the insured supported the conclusion that the wood stove, as a supplementary or auxiliary heating unit, was not a material change of risk”.
The insurer appealed to the New Brunswick Court of Appeal. The appeal was dismissed. Chief Justice Drapeau found that the insurer had treated the matter of auxiliary heating sources as inconsequential “and effectively advised [the insured] in its various renewal notices that only the information provided in the original application was material to the risk”. In the original application for insurance, the insured was only asked about his home’s primary heating source. This suggests that the insurer did not consider the installation of the wood stove to be a material circumstance requiring disclosure. Lastly, Chief Justice Drapeau held that even if the installation of the wood stove constituted a change material to the risk, the insurer’s duty of good faith to the insured required that the insured be advised of this in plain language. This last point seemed to be especially important in this case as the insured had “very limited formal education”.
- Kristen Dearlove, Student-at-Law
A fire occurred in an elderly insured’s home which was caused by a wood stove. When the insured had applied for insurance seven years earlier, he had indicated that he had electric heat as his primary heating source. One year later, a wood stove had been installed as a secondary heat source.
The insurer voided the policy and denied coverage on the basis that the insured failed to notify them of the installation of the wood stove. The insurer took the position that the installation of the wood stove constituted a material change in risk.
The insured was sent renewal policy notices that contained a caution to ensure that all information in the policy was accurate. The insured had dropped out of school at the age of 16 and never read the policy and was unaware of the obligation to inform the insurer of the installation of the wood stove.
The insured sued for breach of contract and was successful at trial. The trial judge held that the “insured’s knowledge was the determinative factor and the lack of guilty knowledge on the part of the insured supported the conclusion that the wood stove, as a supplementary or auxiliary heating unit, was not a material change of risk”.
The insurer appealed to the New Brunswick Court of Appeal. The appeal was dismissed. Chief Justice Drapeau found that the insurer had treated the matter of auxiliary heating sources as inconsequential “and effectively advised [the insured] in its various renewal notices that only the information provided in the original application was material to the risk”. In the original application for insurance, the insured was only asked about his home’s primary heating source. This suggests that the insurer did not consider the installation of the wood stove to be a material circumstance requiring disclosure. Lastly, Chief Justice Drapeau held that even if the installation of the wood stove constituted a change material to the risk, the insurer’s duty of good faith to the insured required that the insured be advised of this in plain language. This last point seemed to be especially important in this case as the insured had “very limited formal education”.
- Kristen Dearlove, Student-at-Law
"Hobo Prince" ordered to stop selling illegal insurance in WA
From a press release we just issued:
OLYMPIA, Wash. – A Clark County man who promises years’ worth of weekly $900 payouts in exchange for a one-time $25 signup fee has been ordered to stop selling illegal insurance in Washington.
The order was issued Monday by the Washington state Office of the Insurance Commissioner, Mike Kreidler.
Shelby Horatio Bell, doing business as “Hobo Prince Economic Project,” has held seminars in Washington and Oregon, encouraging people to sign up for his plan. Once a participant pays a one-time $25 fee, Bell promises to pay the participant $900 a week for seven years.
He maintains that each person’s contract is financed through a complex series of transactions, including issuance of a $500,000 “reverse” insurance policy purchased with a $25,000 payment from an unnamed bank. A contract obtained by Kreidler's Legal Affairs Investigators named a well-known insurer and one of its brokers – neither of which have any insurance arrangement with Bell or his program. In another contract, Bell maintained that he was the insurer.
Neither Bell nor his companies (Hobo Prince Economic Project and an Oregon company known as Be’Rio Transports) are authorized to transact insurance in Washington state. The arrangement being offered violates multiple provisions of the state’s insurance code.
Kreidler’s office repeatedly tried to contact Bell by phone and mail. Reached by cell phone at one point, Bell agreed to meet with a state investigator, but then didn’t show up for the appointment.
The cease and desist order requires Bell and his companies to immediately stop selling, offering, or soliciting any insurance in Washington. It also bars him from transacting insurance business in the state.
Nothing in the order prevents Bell or his companies from fulfilling the contracts that he has already entered into. Nor does it prevent him from refunding money paid by Washington consumers.
Bell has the right to demand a hearing to contest the order.
The full order can be found at: http://www.insurance.wa.gov/oicfiles/orders/2012orders/12-0076.pdf
OLYMPIA, Wash. – A Clark County man who promises years’ worth of weekly $900 payouts in exchange for a one-time $25 signup fee has been ordered to stop selling illegal insurance in Washington.
The order was issued Monday by the Washington state Office of the Insurance Commissioner, Mike Kreidler.
Shelby Horatio Bell, doing business as “Hobo Prince Economic Project,” has held seminars in Washington and Oregon, encouraging people to sign up for his plan. Once a participant pays a one-time $25 fee, Bell promises to pay the participant $900 a week for seven years.
He maintains that each person’s contract is financed through a complex series of transactions, including issuance of a $500,000 “reverse” insurance policy purchased with a $25,000 payment from an unnamed bank. A contract obtained by Kreidler's Legal Affairs Investigators named a well-known insurer and one of its brokers – neither of which have any insurance arrangement with Bell or his program. In another contract, Bell maintained that he was the insurer.
Neither Bell nor his companies (Hobo Prince Economic Project and an Oregon company known as Be’Rio Transports) are authorized to transact insurance in Washington state. The arrangement being offered violates multiple provisions of the state’s insurance code.
Kreidler’s office repeatedly tried to contact Bell by phone and mail. Reached by cell phone at one point, Bell agreed to meet with a state investigator, but then didn’t show up for the appointment.
The cease and desist order requires Bell and his companies to immediately stop selling, offering, or soliciting any insurance in Washington. It also bars him from transacting insurance business in the state.
Nothing in the order prevents Bell or his companies from fulfilling the contracts that he has already entered into. Nor does it prevent him from refunding money paid by Washington consumers.
Bell has the right to demand a hearing to contest the order.
The full order can be found at: http://www.insurance.wa.gov/oicfiles/orders/2012orders/12-0076.pdf
King County woman pleads guilty to forgery and attempted fraud
A King County woman has pleaded guilty to attempted fraud and forgery for trying to claim weeks of injury-related lost wages after an auto accident. The problem: She didn't have a job at the time.
Ka'Yah M. Alexander claimed that a 2010 accident in the parking lot of a Memphis, Tenn. hotel left her unable to return to work for 37 days due to her injuries. She sent a demand letter to Travelers Insurance, seeking $10,000 for lost wages, pain and medical expenses. She also sent the company a letter, purportedly from the group home where she worked, saying that she was on medical leave from work.
An investigation by Travelers and by the state insurance commissioner's Special Investigations Unit determined that the work-loss letter was not authentic.The company provided a termination letter showing that Alexander had been let go from her job two days after the accident.
Alexander pleaded guilty last month. She was sentenced to fines and community service.
Ka'Yah M. Alexander claimed that a 2010 accident in the parking lot of a Memphis, Tenn. hotel left her unable to return to work for 37 days due to her injuries. She sent a demand letter to Travelers Insurance, seeking $10,000 for lost wages, pain and medical expenses. She also sent the company a letter, purportedly from the group home where she worked, saying that she was on medical leave from work.
An investigation by Travelers and by the state insurance commissioner's Special Investigations Unit determined that the work-loss letter was not authentic.The company provided a termination letter showing that Alexander had been let go from her job two days after the accident.
Alexander pleaded guilty last month. She was sentenced to fines and community service.