Everything Needed by the Insurance Claims Professional from Barry Zalma

The Examination Under Oath & the Homeowners Policy

Insurance, to work effectively, must be understood by those who purchase insurance like a homeowners policy, and those who act on behalf of insurers and policyholders to make sure that insurers and policyholders keep the promises made when the policy was acquired.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it for insurers and their claims staff to become insurance claims professionals.

THE HOMEOWNERS INSURANCE POLICY

HOW TO BUY AN APPROPRIATE HOMEOWNERS POLICY AND SUCCESSFULLY MAKE A CLAIM TO THE INSURER

Insurance is a contract between a person seeking insurance and an insurer. It is obtained by making contact with the insurer as a prospective insured seeking insurance. The homeowners policy is a specialized policy of insurance that protects the homeowner from certain risks of loss to the real and personal property at the home, the exposure the insured faces for injury to a household employee, and the exposure the insured faces to liability for bodily injury or property damage caused to third parties. The book explains how to buy a homeowners policy and how to collect on any claim made to the homeowners insurer.

Paperback Book     Kindle Book

The Insurance Examination Under Oath Second Edition

A Tool Available to Insurers to Thoroughly Investigate Claims and Work to Defeat Fraud

A Tool Available to Insurers to Thoroughly Investigate Claims and Work to Defeat Fraud.

The insurance Examination Under Oath (“EUO”) is a formal type of interview authorized by an insurance contract. It is taken under the authority provided by the agreement of the insurer, when he, she or it acquires a policy of insurance, to submit to a condition of the insurance contract that compels the insured to appear and give sworn testimony at the demand of the insurer. Failure to appear and testify is considered a breach of a material condition.

The EUO is conducted before a notary and a certified shorthand reporter who is present to give the oath to the person interviewed. The reporter will record the entire conversation and prepare a transcript to be read, reviewed, corrected and signed by the witness under penalty of perjury or by an oath taken before a notary or judge.

The EUO is a tool only sparingly used by insurers in the United States. A professional insurer will only require an insured to submit to an EUO when a thorough claims investigation raises questions:.about the application of the coverage to the facts of the loss, the potentiality that a fraud is being attempted, or to assist the insured in the obligation to prove to the insurer the cause and amount of loss.

Although seldom used the EUO is an important tool needed by insurers when there is a question of coverage, destruction of evidence needed to prove a compensable loss or the amount of loss or evidence indicating the potential that a fraud is being attempted.The EUO and Legal Action provisions in an insurance policy are conditions precedent to an insured’s ability to file suit, and that since the insured failed to substantially comply with the terms of those provisions, the appropriate remedy is dismissal without prejudice. The insured’s failure to comply with these conditions does not bar his ability to bring suit to recover, but merely suspends his ability to bring suit until he has fully complied with those conditions.

Available as a paperback here 

Available as a Kindle book here

 


© 2020 – Barry Zalma

As the author, Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

Crooked Docs Ordered to Pay Restitution to Insurers and Medicare

Four Doctors Convicted of Medicare Fraud Must Pay $56,686,731.53 in Restitution

Four doctors convicted of health insurance fraud – with details in Zalma’s Insurance Fraud Letter of February 15, 2020, argued with the court about the extent of restitution required to be paid. The amount, and extent of opioid fraud, was difficult for the court to quantify to the four crooked doctors.

In United States Of America v. Michael L. Babich, Alec Burlakoff, Michael J. Gurry, Richard M. Simon, Sunrise Lee, Joseph A. Rowan, and John Kapoor, Criminal Action No. 16-cr-10343-ADB, United States District Court District Of Massachusetts (February 14, 2020) on May 2, 2019, a jury convicted Defendants Michael Gurry, Richard Simon, Sunrise Lee, Joseph Rowan, and John Kapoor of conspiring to violate the Racketeer Influenced and Corrupt Organizations (“RICO”) statute, 18 U.S.C. § 1962(d). Separately, Defendants Michael Babich and Alec Burlakoff both pled guilty.

DISCUSSION

The parties agree that there are individual victims as well as institutional victims, but disagree as to who should be compensated, for how much, and based on what conduct. The convictions were based on the predicate acts of mail and wire fraud in connection with the Insys reimbursement center (“the IRC”) and the prior authorization requests that went through the IRC. According to the indictment had the insurers known that the defendants gave bribes and kickbacks to the targeted practitioners, the insurers would not have authorized payment for Subsys.

This language clearly links the insurance fraud to the bribes and the bribed practitioners.

The Government, also with support from the language of the indictment, argued that the offense of conviction is broad enough to encompass all prior authorization requests that went through the IRC, even from doctors that were not identified in the indictment as having been bribed.

Insurance Providers

Defendants must pay each insurer an amount equal to the loss incurred by the insurer due to the RICO conspiracy. The Defendants argue that the Government is impermissibly asking the Court to consider all paid Subsys claims nationwide, as opposed to the claims related to prescriptions from the thirteen bribed practitioners. The Government agrees that it cannot prove that every call that went through the IRC was fraudulent.

Given the challenges in resolving the legal and factual issues raised by the parties, the Court finds that trying to quantify restitution beyond the thirteen identified medical professionals bribed would, as foreseen by the Guidelines, be too complicated and unduly prolong and burden the sentencing process. The Court further finds that any restitution number arrived at without reviewing individual files would be too speculative. Therefore, the Court will limit restitution to those losses for which there is either no dispute regarding restitution or for which the payments can be traced to the bribed co-conspirator doctors.

The Court, therefore, found restitution to be owed to the insurers, including Medicare. The information included as to each insurer comes from materials provided by that insurer.

Medicare

Medicare paid approximately $169,058,169.00 for Subsys prescriptions for patients who had no principal diagnosis of cancer within a year before the prescription. The Government is seeking $136,768,059.00, which represents payments for claims that originated in the IRC, arguing that Medicare would not have knowingly authorized payment for any Subsys prescription if the prescription was off-label (i.e., not for breakthrough cancer pain) or if it knew that the prior authorization request originated at the IRC rather than from a physician’s office. The Court notes that despite this representation, there is evidence that Medicare covered off-label use of fentanyl products that were similar to Subsys.

Given the complex issues of fact related to the cause or amount of Medicare’s losses, the Court limits the restitution award to $30,232,895.00, which represents the prescriptions attributable to the thirteen co-conspirator prescribers.

Aetna

Aetna seeks $15,769,912.00 in restitution. It reviewed all reimbursements from 2012 until October 2018 and found that it had covered Subsys for 3,690 Aetna members. Of those members, 1,894 received Subsys prescriptions despite not having a cancer diagnosis. Those prescriptions cost Aetna $15,772,637.00. Applying the 80.9% threshold to represent claims that were processed through the IRC, all of which Aetna argues were fraudulent, Aetna estimates that it paid $12,760,063.00 in fraudulent claims. Given the complex issues of fact related to the cause or amount of Aetna’s losses, the Court limits the restitution award to $1,193,479.00, which represents the prescriptions attributable to the thirteen co-conspirator prescribers.

Anthem Blue Cross Blue Shield

Anthem has not provided sufficient evidence for the Court to find their calculations accurate by a preponderance of the evidence. Again, given the complex issues of fact related to the cause or amount of Anthem’s losses, the Court would limit the restitution award to the prescriptions attributable to the thirteen co-conspirator prescribers. Because Anthem does not provide any quantification of its payments for prescriptions written by the thirteen bribed doctors identified by the Government, no restitution is awarded on this record.

Cigna

Given the complex issues of fact related to the cause or amount of Cigna’s losses, the Court limits the restitution award to $1,838,768.07, which represents the prescriptions attributable to the thirteen co-conspirator prescribers.

Caremark

Given the complex issues of fact related to the cause or amount of Caremark’s losses, the Court limits the restitution award to $15,072,543.35, which represents the prescriptions attributable to the thirteen co-conspirator prescribers.

CONCLUSION

The Government has demonstrated by a preponderance of the evidence that the victims are entitled to at least $56,686,731.53.

ZALMA OPINION

The four doctors were very successful thieves. The restitution order does not cover everything they stole, only those amounts the court felt confident was proved as a result of the prescriptions issued by the four doctors. They will be spending time in jail and will not be able to earn, or steal, money to pay the more than $56 million. Hopefully the government will take possession of, and sell, all of the property obtained by the four from their criminal activity and any cash, bonds or marketable stock purchased with the ill gotten funds. I won’t hold my breath before they collect but if collected it will support a team of investigators and prosecutors for the next few years.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

 

 

Posted in Zalma on Insurance | Leave a comment

How Some Use Insurance Fraud for Fun and Profit and Others Defeat Them

Fictionalized True Insurance Crime Books

In the last 52 years I have run across some very unusual insurance claims. I have fictionalized some of those stories to protect the guilty.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it for insurers and their claims staff to become insurance claims professionals.

Arson for Terrorism and Profit

Arson for Terrorism and Profit: How an Insurance Investigator and Insurance Lawyer Defeated a Plot to use a Fire to Fund Terrorism by [Zalma, Barry]How an Insurance Investigator and Insurance Lawyer Defeated a Plot to use a Fire to Fund Terrorism (c) 2020 by Barry Zalma & ClaimSchool, Inc.

There are many excuses for the inability of the criminal justice system to effectively handle arson cases and eventually, almost universally, the prosecutor will find an excuse not to prosecute an arson case regardless of the amount of evidence produced. As a result, with regard to an arson-for-profit scheme, the time, investigative work, and litigation is left to the insurer to refuse to pay a claim based on fraud, pay the investigators and lawyers needed to prosecute a civil fraud defense to a fraudulent claim created with an arson-for-profit scheme.

The following story is based upon an attempted arson-for-profit that took up a large portion of my professional career. Although fiction, the story is based on a true crime that involved the efforts of the intended victims – an English insurer and an American insurer – the work of professional fire cause and origin investigators, private investigators, insurance claims handlers, insurance coverage lawyers and insurers who refused to pay tribute to a criminal. After five years of investigation and litigation the defendants established that the arson-for-profit scheme was designed for more than cash but was intended to obtain funds to support a terrorist organization whose purpose was to kill or maim anyone connected to the government of Germany.The names, places, professions, organizations, fire departments, police, prosecutorial agencies and of the individuals involved have been changed to protect the innocent, criminal, and professional.

Available as a Paperback

Available as a Kindle book

HEADS I WIN, TAILS YOU LOSE

Product DetailsA collection of columns originally published in the magazines “Insurance Journal,” “Insurance Week,” and “The John Cooke Insurance Fraud Report” insurance trade publications serving the insurance community in the United States that have been updated and revised.

The title, “Heads I Win, Tails You Lose” is meant to describe insurance fraud as it works in the Unites States. It means that whenever a person succeeds in perpetrating an insurance fraud everyone who buys insurance is the loser.

Available as a Kindle Book.

Available as a paperback.

Candy and Abel: Murder for Insurance MoneyProduct Details

How a young lawyer and wise old investigator defeated an attempt at life insurance fraud.

Available as a Kindle Book.

Available as a paperback.

Murder And Insurance Fraud Don’t Mix

My name is Marion Orpheus Montague. My friends, and some enemies, call me “MOM.” It is not a designation of my ability to nurture my clients. I have never been, nor will I Product Detailsever be, maternal. I accept the play on my initials because it causes adversaries to underestimate me.

I am 66-years-old. My grayish blond hair is thin and my full beard is a bit scraggly. My face is round and often tinged with red. My nose is full, my eyes green and my cheeks bulge out to the sides trying to emulate the belly that precedes every other part of my body as I walk. People see me and do not believe that I am a private investigator. Seeing me they often think that I am on leave from my winter work as a Macy’s Santa Claus.

I like being underestimated. It makes my job as an investigator easier.

See how a fake robbery at a jewelry store led to murder and prison.

Available as a Kindle book.

Available as a paperback

Murder & Old Lace: Solving Murders Performed for Insurance Money

Product Details

When the women first met – 20 years ago at a Santa Monica health spa – Magogassasanian appeared taken with Gogolivesky. The women moved Alvarado into an apartment, then started applying for life insurance policies on him. They jointly took out four policies, each as 50% beneficiaries in addition to the individual policies they bought from my client. Gogolivesky also took out three more policies on her own while Magogassasanian only took out a single individual policy on Earnest. The two women pocketed nearly $6,000,000 in insurance benefits on Alvarado alone and $4,000,000 in insurance benefits on Earnest. They also recovered a total of $5,000,000 on the other six old men they killed.

Available as a Kindle book.

Available as a paperback.

M.O.M. & The Taipei Fraud

How an Experienced Adjuster Defeated a $7 Million Fake Burglary Claim

The problem is that each option the insurers have available have a down side and Feng is represented by a lawyer who has proved highly successful in suing insurers and collecting large compensatory and punitive damage awards. Since the claims exceed $6 million dollars, he can expect, applying the law set out by the U.S. Supreme Court in State Farm Mut. Automobile Ins. Co. v. Campbell and BMW of North America, Inc. v. Gore as much as $60 million in punitive damages. So I need to explain to the insurers that they face an exposure anywhere from their policy limits to ten times the policy limit. They need the courage of their convictions to reject this major claim.

Available as a paperback.

Available as a Kindle book.

Arson-For-Profit Fire at the Cowboy Bar & Grill

A true crime novel based on the experience of the author, Barry Zalma, who for more than 51 years has acted for insurers who were faced with arson-for-profit, one of the most dangerous insurance fraud schemes. The book explains how an insurance claims adjuster, working with a fire cause and origin expert, a forensic accountant and insurance coverage lawyer, were able to defeat an arson-for-profit scheme and obtain a judgment requiring the perpetrator to take nothing and repay the insurer all of its expenses in defeating the claim.

Available as a paperback.

Available as a Kindle book

 


© 2020 – Barry Zalma

As the author, Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

A Plaintiff who Sits on Her Rights Loses Everything

Private Limitation of Action Provision of Policy Defeats Contract and Bad Faith Claim

Almost every first party property insurance policy contains a private limitation of action provision that shortens the statute of limitations in the state where the loss occurred. It is the obligation of every insured, and every lawyer for a policyholder to be certain – if litigation is required – to file suit before the expiration of the private limitation of action contained in the policy. Failure to Read the full policy will result in a total loss.

In Carey Mazzoni v. The Travelers Home And Mutual Insurance Company, Civil Action No. 3:19-2169, United States District Court Middle District Of Pennsylvania (February 13, 2020) The Travelers Home and Mutual Insurance Company (“Travelers”) filed a motion to dismiss as time-barred a breach of insurance contract claim and a statutory bad faith claim brought by the plaintiff, Carey Mazzoni, who was insured under a Homeowners insurance policy with Travelers.

FACTUAL BACKGROUND

On October 20, 2015 at the residence of plaintiff and Tara Mazzoni whose property “suffered water and mold damage as a result of a cracked drain pipe connector” and sustained damages to her home that were in excess of $60,000.00. The plaintiff’s property was insured by a Homeowners policy with Travelers at the time of the damage caused by the cracked pipe

Plaintiff submitted a claim to Travelers for the damage loss her property sustained from the cracked pipe. Travelers denied plaintiff’s claim and sent her a letter denying coverage on November 3, 2015.

In her complaint, plaintiff alleged that Travelers wrongfully withheld payment. Further, plaintiff alleged that the denial of payment by Travelers was with reckless disregard to the fact that such denial was without a reasonable basis in violation of the Pennsylvania bad faith statute.

Travelers’ motion seeks to dismiss the plaintiff’s breach of contract claim based on a two-year limitations clause for filing suit under the policy.

THE POLICY

Plaintiff’s policy with Travelers includes the following provision: “9. Suit Against Us. No action can be brought against us unless there has been full compliance with all the terms under Section I of this policy and the action is started within two years after the date of loss.”

DISCUSSION

Travelers’ motion to dismiss arguing that plaintiff’s breach of contract claim is time-barred is based on a limitations period provided for in the plaintiff’s policy. The court found that the face of the complaint conclusively establishes that plaintiff knew or should have known of her claim at the date of her property damage andTravelers can raise the statute of limitations defense in a motion to dismiss.

The task of interpreting an insurance contract is generally performed by a court rather than by a jury. When the language of the policy is clear and unambiguous, a court is required to give effect to that language. Courts in interpreting a contract, do not assume that its language was chosen carelessly.

Under Pennsylvania law, “[i]t is well settled that a limitation on the time for bringing suit under an insurance contract is a contractual undertaking between the parties to the contract which is both valid and reasonable.” Kramer v. State Farm Fire & Cas. Ins. Co., 603 A.2d 192, 193 (Pa. Super. Ct. 1992) (citing Lardas v. Underwriters Ins. Co., 231 A.2d 740 (Pa. 1967)).

Since the Travelers’ policy had a 2-year suit limitation, there is no merit to plaintiff’s contention that Pennsylvania’s 4-year statute of limitations should control in this case.

Further, such suit limitations provisions will be upheld unless they are waived. In the instant case, the plaintiff’s policy clearly provides that no action can be brought against Travelers unless “the action is started within two years after the date of loss.” The water and mold damage at the plaintiff’s residence occurred on October 20, 2015, and plaintiff was aware of it at this time. Travelers denied plaintiff’s loss claim on November 3, 2015. Under the plain language of the policy, plaintiff had until October 20, 2017 to file her action. However, the plaintiff did not file her action in the state court until September 20, 2019, well over two years after the date of loss. Indeed, plaintiff filed her complaint almost two years after the statute of limitations expired.

The plaintiff’s bad faith claim alleges, in part, that Travelers wrongfully withheld payment to her claim and that its denial of coverage was with reckless disregard to the fact that the denial was without a reasonable basis.

No doubt that the two year statute of limitations for a bad faith suit begins to run when insured first learned that the insurance company was denying coverage. Plaintiff argued that since her bad faith claim is brought in conjunction with a contract claim, under Pennsylvania law she can assert a common law bad faith claim which sounds in contract and is subject to the 4-year statue of limitations for contracts.

Plaintiff cannot raise a separate claim for breach of the implied contractual duty to act in good faith in this case because such a common law claim merges with Plaintiff’s breach of contract claim she raised in Count I of her Complaint. Under Pennsylvania law, there is no separate cause of action for breach of the duty of good faith and fair dealing and that such a claim is subsumed within a breach of contract claim.

Since plaintiff filed her complaint on September 20, 2019, well after November 3, 2017, i.e., two years past the denial of claim date, plaintiff’s bad faith claim against Travelers is untimely and must be dismissed. Further, since it would be futile to allow plaintiff leave to amend her bad faith claim, Count II, this claim will be dismissed with prejudice.

Travelers’ motion to dismiss was granted and the bad faith claim was dismissed with prejudice as untimely.

ZALMA OPINION

The lawyers that filed this suit tried to argue that the state’s statute of limitations applied and ignored the private limitation of action provision. They, and their client, found that the policy’s contract terms deprived the insured of the right to sue since the first action was filed well after the expiration of the two year private limitations of action provision. Another lawsuit lost because of a failure to read the full policy and recognize how effective is the private limitation of action provision.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

Posted in Zalma on Insurance | Leave a comment

Zalma on Insurance on You Tube

A YouTube Channel for Those Interested in Insurance, Claims and Insurance Fraud

I have created a YouTube Account where I will publish video on insurance claims, insurance law and insurance fraud. The first videos are availble at https://www.youtube.com/channel/UCFg7qxC0tVgKcMUqoUfnwPw

The tort of bad faith available at https://www.youtube.com/watch?v=l5uZTvCe9X0

Murder for Life Insurance Fraud is available at https://www.youtube.com/watch?v=mipNvZEgEh0

Convicted for Insurance Fraud available at https://www.youtube.com/watch?v=ZUPfvUNSDy8

Please subscribe to the YouTube channel to see all new videos I will post.

 


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

Posted in Zalma on Insurance | Leave a comment

Insurance Law Deskbooks

Everything Needed by the Insurance Claims Professional from Barry Zalma

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it for insurers and their claims staff to become insurance claims professionals.

The earnings of almost every civil lawyer in the United States are funded by the insurance industry. Insurance can best be described as the mother’s milk of the law profession. The civil defense lawyer is paid by an insurer for each hour he or she works. The civil plaintiffs’ lawyer is usually paid by taking a percentage of any judgment entered in favor of the plaintiff, which judgment is usually paid by the defendant’s insurer.

In almost every situation in which a civil lawyer practices law the funds for that work come, either directly or indirectly, from insurance. Consequently, lawyers must use their wits and energies to avoid or to pursue litigation to the benefit of the client. Both sides understand that an insurer will eventually pay one or both sides in the dispute. Insurance is important to every civil dispute and even some that fall within the criminal courts.

Every lawyer retained to prosecute or defend a civil suit should begin the representation with a serious effort to find insurance coverage for the benefit of the client or the defendant the client is suing. Without that knowledge, the lawyer will find he or she is litigating with duct tape firmly self-placed across his or her mouth.

The following two books, published this week, will help every lawyer, claims person, or claims executive to deal with insurance claims and insurance coverage.

New Books from Full Court Press

The Insurance Law Deskbook

9781949884296The Insurance Law Deskbook is intended to help law students, practitioners, insurance lawyers, professional claims personnel, insured persons, and anyone else involved in insurance. The book, published for the first time under Full Court Press, includes the full texts and digests of insurance-related decisions of the U.S. Supreme Court, the U.S. District Courts of Appeal, state appellate courts, and foreign courts that have molded the American insurance law, as well as vital explanatory chapters, historical context, form letters, and more.

Paperback, only $95.00 available at https://www.fastcase.com/store/fcp/insurance-law-deskbook-2/

California Insurance Law Deskbook

9781949884289

ISBN: 978-1-949884-28-9 (Print) 978-1-949884-30-2(Ebook)
Format: Digital(Epub,Mobi,PDF), Print

California has long led the way when it comes to insurance jurisprudence in the United States, and few know more about California insurance law than Barry Zalma.

Available at https://www.fastcase.com/store/fcp/california-insurance-law-deskbook/ a paperback for only $95.00.


© 2020 – Barry Zalma

As the author, Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

No Coverage, No Claim, No Bad Faith

You are Not “In, On or Open” a Vehicle When You are Blocks Away

When a woman on a tour of the United States left the tour bus, checked into her hotel, walked into the shopping center of the town and was injured when struck by an automobile attempted to collect UIM benefits from the tour bus insurance policy in Sandrine Mounier, et al. v. RLI Corporation, et al., No. CV-19-01778-PHX-GMS, United States District Court For The District Of Arizona (January 17, 2020).

BACKGROUND

Defendant Four Season Travel, L.L.C. (“Defendant Four Season”), a California company, is in the business of hiring out buses and drivers to clients for a variety of services, including tours. Sandrine and Gustave Mounier (“Plaintiffs”), French residents, purchased a tour of the Western United States through Geo Tours USA (“Geo Tours”). Geo Tours hired Defendant Four Season to provide the tour bus and bus driver for the tour.

On November 10, 2015 the tour bus arrived in Page, Arizona and dropped the passengers, including Plaintiffs, off at their hotel. After the passengers deboarded, the bus driver parked and locked the tour bus in the hotel parking lot. Plaintiffs proceeded to check into their hotel and explore the shopping district in town. On their way back to the hotel to get ready for dinner, Plaintiffs crossed a crosswalk. While in the crosswalk, Ms. Mounier was hit by non-party Albert Henry’s car and fell on her wrist. The accident was .3 miles away from the hotel and occurred about two hours after Plaintiffs had deboarded the tour bus. Ms. Mounier was taken to a nearby hospital and then transported to Utah for further treatment. Plaintiffs were unable to finish the tour, and upon her return to France Ms. Mounier underwent surgery to treat her injuries.

Plaintiffs recovered the limits of Mr. Henry’s insurance policy and then notified Geo Tours and Defendant Four Season of their claims. Defendant Four Season turned the claim over to Defendant RLI who had issued a business auto policy including a California underinsured motorist coverage endorsement (the “Policy”) to Defendant Four Season. The Policy provided that Defendant RLI “will pay all sums the ‘insured’ is legally entitled to recover as compensatory damages from the owner or driver of an ‘uninsured vehicle.'” The Policy defines an “insured” as “[a]nyone ‘occupying’ a covered ‘auto.'” Defendant RLI denied Plaintiffs’ claim because it found that Plaintiffs did not qualify as “insured” under the Policy.

Plaintiffs sued RLI alleging breach of contract and insurance bad faith.

DISCUSSION

The Policy defines “occupying” as “in, upon, getting, on, out or off.” It is undisputed that, at the time of the accident, Plaintiffs were 0.3 miles away from the tour bus and were not getting in, on, out, or off the bus. Thus, the Plaintiffs’ coverage determination hinges on whether Plaintiffs were “upon” the tour bus because of multiple court decisions that that have stretched the language to include people close to the vehicle.

Under California law, to be “upon” a vehicle, an individual must be performing some act necessarily related to the vehicle and be in its immediate proximity at the time of the accident. Under Arizona law, an individual is “upon” a vehicle when the individual’s activities at the time of the accident are in such close proximity to the car and so related to its operation and use that they are an integral part of one’s occupancy and use of the car.

The Court found no conflict since both states require insureds to be near the insured vehicle and to be engaged in some activity closely related to the use of the vehicle. Thus, a choice of law analysis for the breach of contract claim is not necessary. Moreover, because the facts of the accident are undisputed, the Court only need to decide whether Plaintiffs qualify as insureds as a matter of law.

Many courts have addressed the issue of occupancy. Plaintiffs were neither walking to or from the tour bus but had deboarded the bus nearly two hours prior and were heading back to their hotel.

Plaintiffs argued that both Arizona and California look to the person’s purpose and intent at the time of the accident to determine “occupancy.” Because Plaintiffs’ purpose and intent was to tour the Southwest, and they were using the tour bus for that purpose, Plaintiff argued either state would find them to be insureds under the Policy. The tour bus was not being used for any purpose other than transportation and, more importantly, the tour bus was not being used by Plaintiffs at the time of the accident.

Because the Court found that Plaintiffs were not “occupying” the tour bus under either Arizona or California law, it concluded that Plaintiffs were not insured under the Policy. As a result, their breach of contract claim fails.

Liability for “bad faith” has been strictly tied to the implied-in-law covenant of good faith and fair dealing arising out of an underlying contractual relationship. Where no such relationship exists, no recovery for “bad faith” may be had. Defendant RLI’s Motion for Summary Judgment was granted because there was no coverage under RLI’s policy there could be no possibility of a tort of bad faith claim.

ZALMA OPINION

The court opinions that stretch the meaning of the “in, on or upon” language of an insurance policy caused this case to be brought to a trial court even though the plaintiff was neither in, on, upon or close to the vehicle but was three tenths of a mile away walking toward the hotel. It is time for the courts to use the simple, clear and unambiguous language of the policy and conclude that “in” means the plaintiff must be inside the vehicle, “on” means touching the vehicle, and “upon” means sitting on the vehicle. It does not logically mean near, close, or withing blocks of the vehicle.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

Rescission of Insurance and Collection of Blog Posts

Rescission of Insurance – 2nd Edition

Newly updated and expanded, “Rescission of Insurance – 2nd Edition” provides the insurance coverage lawyer, policyholder lawyer and claims professionals with everything needed to understand and enforce the equitable remedy of rescission. Everyone involved in or with the business of insurance must understand that rescission is an equitable remedy as ancient as the common law of Britain. When the United States was conceived in 1776 the founders were concerned with protecting their rights under British common law. They adopted it as the law of the new United States of America modified only by the limitations placed on the central government by the U.S. Constitution approved in 1789.

The viability and ability to enforce contracts was recognized as essential to commerce. Courts of law were charged with enforcing legitimate contracts. Courts of equity were charged with protecting contracting parties from mistake, fraud, misrepresentation and concealment since enforcing a contract based on mistake, fraud, misrepresentation or concealment would not be fair. The common law developed rules that courts could follow to refuse to enforce the terms of a contract that was entered into because of mutual mistake of material fact, a unilateral mistake of material fact, the breach of warranty (a presumptively material promise to do or not do something), a material concealment, or a material misrepresentation. The remedy – called rescission – created a method to apply fairness to the insurance contract and allow an insurer to void a contract and allowed courts to refuse to enforce such a contract entered into by misrepresentation or concealment of material facts.

Available as a paperback.

Available as a Kindle book.

Random Thoughts on Insurance

Product DetailsAfter more than 50 years acting as a claims person and insurance coverage lawyer I enjoy reading court decisions concerning insurance. The idea of this blog is to find new cases that are interesting to me and then write a summary. Some of the cases reviewed will be important. Some may be of first impression. Others will be totally unimportant. All will be interesting.

The case digests and articles from 2010 to the present, in the nine volumes summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.


© 2020 – Barry Zalma

As the author, Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

Failure to Prove Breach of Contract Defeats Bad Faith Claim

Frozen Pipes Insufficient to Prove Insured Failed to Heat Building

When a major water damage loss occurred after freezing allegedly caused pipes to burst, conflicting expert testimony disputed what caused the pipes to freeze, making it impossible to grant summary judgment on an exclusion for failure to maintain heat.

In Henlopen Hotel, Inc. v. United National Insurance Company, C.A. No. N18C-09-212 PRW, Superior Court Of The State Of Delaware (January 10, 2020) Henlopen Hotel sued its insurer, United National Insurance Company for contract breach and insurance bad-faith following a coverage denial for water damage caused by a ruptured pipe in January 2018. United National denied coverage based on its factual conclusion that the pipe burst due to freezing and its interpretation of Helopen Hotel’s policy.

THE DISPUTE

United National supports its conclusion that the pipe burst due to freezing with the expert analysis of J. Frank Peter (“Peter”). Henlopen Hotel seeks to admit the testimony of its own expert witness, Mervin T. Thomas (“Thomas”), to rebut this factual conclusion and give support to Henlopen Hotel’s alternative hypothesis that the pipe failed due to accumulated wear and age.

In Henlopen Hotel’s Motion for Partial Summary Judgment, it seeks the Court’s determination that the water damage is covered under the policy based on either of two theories:

  1. that its undisputed efforts to keep the pipes heated satisfied the terms of the policy’s Heat Requirement Endorsement and therefore make the damage compensable irrespective of whether those efforts successfully prevented freezing.
  2. Alternatively, that United National has failed to produce admissible evidence that freezing occurred and caused the damage.7

In United National’s Motion for Summary Judgment, the insurer argued that the Heat Requirement Endorsement creates an ipso facto coverage exclusion for frozen pipes, and that the record shows beyond all genuine dispute that the pipe ruptured due to a freeze. Similarly, United National argued that because the policy unambiguously denies coverage, there was no breach of the covenant of good faith and fair dealing.

In the alternative, United National argues that even if a triable issue exists as to coverage, the exclusion and factual record demonstrate that United National’s behavior shows neither bad faith nor maliciousness and so require entry of summary judgment as to the insurance bad faith count and prayer for punitive damages.

DISPUTED FACTS PRECLUDE SUMMARY JUDGMENT FOR BREACH

United National’s coverage denial is based solely on the Heat Requirement Endorsement. Under a light most favorable to Henlopen Hotel, the Court must credit Expert Thomas’s opinion that the pipe did not suffer a freeze-related failure. When the Court does so, and should the jury follow, Henlopen Hotel would be found to have satisfied any possible reading of the Heat Requirement Endorsement and is entitled to have the claim paid.

Conversely, on Henlopen Hotel’s motion, viewing the record in a light most favorable to United National requires crediting Mr. Peter’s expert analysis and opinion that the pipe failed because it froze in the cold weather. From that, of course, the fact finder could reasonably infer the freeze was caused by Henlopen Hotel’s failure to maintain heat in the building as required. And, under such circumstances, the coverage exclusion created by the Heat Requirement Endorsement would apply.

Thus, each of the parties’ cross-motions for summary judgment as to Count I (Breach of Contract) must be denied.

UNITED NATIONAL HAS A BONA FIDE BASIS TO DISPUTE LIABILITY.

To establish bad faith, an insured must show that the insurer’s refusal to honor its contractual obligation was clearly without any reasonable justification. Where an insurer’s denial of coverage is premised on a theory sufficiently well-supported as to resist summary judgment, they are entitled to contest coverage and cannot be subject to an “extra-contractual” claim for bad faith or punitive damages.

United National’s refusal to pay has at all times been based on the theory that the damage was caused by Henlopen Hotel’s failure to keep the pipes heated and prevent a freeze. As that theory is sufficiently supported to preclude summary judgment in Henlopen Hotel’s favor, United National’s motion for summary judgment as to Count II (Bad Faith) should be granted.

UNITED NATIONAL BEARS THE BURDEN OF SHOWING AN EXCLUSION.

An insured bears the initial burden of showing that a loss is within the coverage provisions of an insurance policy. Once this burden is met, the insurer bears the burden of proof that a policy exclusion applies to the loss.

United National argues that the Heat Requirement Endorsement phrases itself as “a condition of this insurance” and therefore shifts the burden to Henlopen Hotel to prove that the included exceptions do not apply. The cardinal rule of contract construction is that where possible, a court should give effect to all contract provisions. United National’s desired reading of the Heat Requirement Endorsement as an ipso facto exclusion for frozen pipes cannot be reconciled with the document’s plain language.

The Heat Requirement Endorsement informs Henlopen Hotel that it is “required to maintain heat at a level sufficient in buildings and other structures covered by this policy to prevent freezing of plumbing, heating, air conditioning and fire protection systems.” This precludes United National’s reading for two reasons. First, the compulsory action the Heat Requirement Endorsement obligates the insured to undertake is to maintain heat. Second, the exclusion is a consequence if the insured does not comply with the requirement.

The focus of the language of the Heat Requirement Endorsement is at all times with the actions taken by the insured and under its control. Resting a determination of coverage entirely on whether a freeze occurs—no matter the steps and precautions taken by the insured to prevent such freeze—would likewise negate this operative language rendering it meaningless.

Whether Henlopen Hotel maintained heat is a disputed question of fact. United National can show that the exclusion of the Heat Requirement Endorsement applies and acts to preclude recovery under the policy by showing both that the pipe failed due to a freeze during the relevant cold spell, and that the freeze occurred because Henlopen Hotel failed to adequately maintain heat in the hotel building. The mere fact of a freeze might, on its own, be sufficient to permit a jury to infer that the cause of the freeze was Henlopen Hotel’s failure to maintain heat. However, proving a freeze is not per se conclusive, as the fact finder could determine that the freeze occurred due to a supervening cause so extreme and unpredictable as to excuse the failure of Henlopen Hotel’s efforts to overcome and prevent such an occurrence.

Since Count II (Breach of the Implied Covenant of Good Faith) relates to an obligation addressed by an express term of the contract, the implied covenant is displaced and United National’s motion for summary judgment on that count was granted.

ZALMA OPINION

The Delaware Superior Court disposed of the bad faith claim easily since it was clear the insurer acted upon a reasonable interpretation of its policy based upon the expert reporting of a qualified expert. The fact that another qualified expert opined the exact opposite established that there was disputed facts that could not be resolved at summary judgment. The conclusion, with regard to breach of contract, seems to be a stretch by calling into play a Deus ex Machina – a supervening cause so extreme and unpredictable as to excuse the failure to prevent the freezing. This issue will be resolved at trial but probably should have considered the fact that pipes don’t freeze if they are kept warmer than the freezing point of water – 32 degrees.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

 

 

 

 

Posted in Zalma on Insurance | Leave a comment

Rescission of Insurance and True Crime Insurance Stories

Insurance Law & Fun

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it for insurers and their claims staff to become insurance claims professionals.

Rescission of Insurance – 2nd Edition

Newly updated and expanded, “Rescission of Insurance – 2nd Edition” provides the insurance coverage lawyer, policyholder lawyer and claims professionals with everything needed to understand and enforce the equitable remedy of rescission. Everyone involved in or with the business of insurance must understand that rescission is an equitable remedy as ancient as the common law of Britain. When the United States was conceived in 1776 the founders were concerned with protecting their rights under British common law. They adopted it as the law of the new United States of America modified only by the limitations placed on the central government by the U.S. Constitution approved in 1789.

The viability and ability to enforce contracts was recognized as essential to commerce. Courts of law were charged with enforcing legitimate contracts. Courts of equity were charged with protecting contracting parties from mistake, fraud, misrepresentation and concealment since enforcing a contract based on mistake, fraud, misrepresentation or concealment would not be fair. The common law developed rules that courts could follow to refuse to enforce the terms of a contract that was entered into because of mutual mistake of material fact, a unilateral mistake of material fact, the breach of warranty (a presumptively material promise to do or not do something), a material concealment, or a material misrepresentation. The remedy – called rescission – created a method to apply fairness to the insurance contract and allow an insurer to void a contract and allowed courts to refuse to enforce such a contract entered into by misrepresentation or concealment of material facts.

Available as a paperback.

Available as a Kindle book.

Fictionalized True Insurance Crime Books

HEADS I WIN, TAILS YOU LOSE

Product DetailsA collection of columns originally published in the magazines “Insurance Journal,” “Insurance Week,” and “The John Cooke Insurance Fraud Report” insurance trade publications serving the insurance community in the United States that have been updated and revised.

The title, “Heads I Win, Tails You Lose” is meant to describe insurance fraud as it works in the Unites States. It means that whenever a person succeeds in perpetrating an insurance fraud everyone who buys insurance is the loser.

Available as a Kindle Book.

Available as a paperback.

Candy and Abel: Murder for Insurance MoneyProduct Details

How a young lawyer and wise old investigator defeated an attempt at life insurance fraud.

Available as a Kindle Book.

Available as a paperback.

Murder And Insurance Fraud Don’t Mix

My name is Marion Orpheus Montague. My friends, and some enemies, call me “MOM.” It is not a designation of my ability to nurture my clients. I have never been, nor will I Product Detailsever be, maternal. I accept the play on my initials because it causes adversaries to underestimate me.

I am 66-years-old. My grayish blond hair is thin and my full beard is a bit scraggly. My face is round and often tinged with red. My nose is full, my eyes green and my cheeks bulge out to the sides trying to emulate the belly that precedes every other part of my body as I walk. People see me and do not believe that I am a private investigator. Seeing me they often think that I am on leave from my winter work as a Macy’s Santa Claus.

I like being underestimated. It makes my job as an investigator easier.

See how a fake robbery at a jewelry store led to murder and prison.

Available as a Kindle book.

Available as a paperback

Murder & Old Lace: Solving Murders Performed for Insurance Money

Product Details

When the women first met – 20 years ago at a Santa Monica health spa – Magogassasanian appeared taken with Gogolivesky. The women moved Alvarado into an apartment, then started applying for life insurance policies on him. They jointly took out four policies, each as 50% beneficiaries in addition to the individual policies they bought from my client. Gogolivesky also took out three more policies on her own while Magogassasanian only took out a single individual policy on Earnest. The two women pocketed nearly $6,000,000 in insurance benefits on Alvarado alone and $4,000,000 in insurance benefits on Earnest. They also recovered a total of $5,000,000 on the other six old men they killed.

Available as a Kindle book.

Available as a paperback.

Arson for Terrorism and Profit

Arson for Terrorism and Profit: How an Insurance Investigator and Insurance Lawyer Defeated a Plot to use a Fire to Fund Terrorism by [Zalma, Barry]How an Insurance Investigator and Insurance Lawyer Defeated a Plot to use a Fire to Fund Terrorism (c) 2020 by Barry Zalma & ClaimSchool, Inc.

There are many excuses for the inability of the criminal justice system to effectively handle arson cases and eventually, almost universally, the prosecutor will find an excuse not to prosecute an arson case regardless of the amount of evidence produced. As a result, with regard to an arson-for-profit scheme, the time, investigative work, and litigation is left to the insurer to refuse to pay a claim based on fraud, pay the investigators and lawyers needed to prosecute a civil fraud defense to a fraudulent claim created with an arson-for-profit scheme.

The following story is based upon an attempted arson-for-profit that took up a large portion of my professional career. Although fiction, the story is based on a true crime that involved the efforts of the intended victims – an English insurer and an American insurer – the work of professional fire cause and origin investigators, private investigators, insurance claims handlers, insurance coverage lawyers and insurers who refused to pay tribute to a criminal. After five years of investigation and litigation the defendants established that the arson-for-profit scheme was designed for more than cash but was intended to obtain funds to support a terrorist organization whose purpose was to kill or maim anyone connected to the government of Germany.The names, places, professions, organizations, fire departments, police, prosecutorial agencies and of the individuals involved have been changed to protect the innocent, criminal, and professional.

Available as a Paperback

Available as a Kindle book

M.O.M. & The Taipei Fraud

How an Experienced Adjuster Defeated a $7 Million Fake Burglary Claim

The problem is that each option the insurers have available have a down side and Feng is represented by a lawyer who has proved highly successful in suing insurers and collecting large compensatory and punitive damage awards. Since the claims exceed $6 million dollars, he can expect, applying the law set out by the U.S. Supreme Court in State Farm Mut. Automobile Ins. Co. v. Campbell and BMW of North America, Inc. v. Gore as much as $60 million in punitive damages. So I need to explain to the insurers that they face an exposure anywhere from their policy limits to ten times the policy limit. They need the courage of their convictions to reject this major claim.

Available as a paperback.

Available as a Kindle book.

Arson-For-Profit Fire at the Cowboy Bar & Grill

A true crime novel based on the experience of the author, Barry Zalma, who for more than 51 years has acted for insurers who were faced with arson-for-profit, one of the most dangerous insurance fraud schemes. The book explains how an insurance claims adjuster, working with a fire cause and origin expert, a forensic accountant and insurance coverage lawyer, were able to defeat an arson-for-profit scheme and obtain a judgment requiring the perpetrator to take nothing and repay the insurer all of its expenses in defeating the claim.

Available as a paperback.

Available as a Kindle book.

© 2020 – Barry Zalma

As the author, Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

Greed Falls Afoul of a Clear and Unambiguous Exclusion

An Insurer May Relieve Itself Of Liability by Imposing Conditions Prior To Assuming An Obligation

People who are injured in an auto accident always believe the insurance available from the tortfeasor and an underinsured motorist insurer is insufficient and try valiantly to obtain even more from other insurers. Failing to read and understand a clear and unambiguous exclusion results in losing a motion for summary judgment and a wasteful appeal.

In Ana S. Deras v. Yasamin T. Hamwi, Marisol D. Santos, Government Employees Insurance Company, Defendants, and Allstate New Jersey Property & Casualty Insurance Company, Docket No. A-4167-18T3, Superior Court Of New Jersey Appellate Division (February 11, 2020) Ana S. Deras appealed from an order granting summary judgment to defendant Allstate New Jersey Property & Casualty Insurance Company (Allstate) and denying her request for underinsured motorist (UIM) coverage under Allstate’s policy.

FACTS

Plaintiff suffered an injury while she was a passenger in a car (host vehicle) involved in an accident with another car (tortfeasor’s vehicle). The host vehicle, insured by Government Employees Insurance Company (GEICO), was owned and driven by plaintiff’s friend. The tortfeasor’s vehicle failed to stop at a stop sign and struck the host vehicle. The tortfeasor’s vehicle was insured by Plymouth Rock Assurance (Plymouth).

Plaintiff sought UIM coverage from Allstate. Allstate denied plaintiff’s UIM claim based on an exclusion in the Policy, prohibiting coverage for resident relatives who are not occupants of a car insured under the Policy, and who are insured under another policy.

Plaintiff’s counsel wrote to Allstate, confirming coverage by GEICO and advising Plymouth made a settlement offer. Counsel also advised of plaintiff’s intent to proceed with her UIM claim against Allstate regardless of the exclusionary language in the Allstate policy.

Plaintiff settled with GEICO and Plymouth. After settling with these insurance companies, plaintiff dismissed all claims except her UIM claim against Allstate.

Allstate filed a motion for summary judgment, seeking dismissal of plaintiff’s complaint because she was not covered under the Policy. The trial judge agreed with Allstate’s denial of UIM coverage, granted Allstate’s motion, and denied plaintiff’s cross-motion.

ANALYSIS

The interpretation of an insurance contract is a question of law which the appellate courts decide independent of the trial court’s conclusions. Under the Allstate Policy an “insured person” is defined as the policyholder “and any resident relative or civil union partner under New Jersey law.” The Policy defines an “underinsured auto” as a vehicle “to which a liability bond or policy applies at the time of accident but its limit for liability is less than the limit of liability for this coverage.”

There are seven exclusions for which Allstate will not pay any damages an insured person is legally entitled to recover. One of the exclusions states Allstate “will not provide [UIM] coverage to any resident relatives who are not occupants of the insured auto described on the Policy Declarations, including a replacement auto and an additional auto, and who are insured under another auto policy.”

Here, the issue is whether plaintiff is eligible for UIM benefits under the Policy as a resident relative subsequent to her receipt of benefits as an insured under the GEICO policy. In determining whether a claimant shall receive UIM benefits, courts employ a two-step approach. First, the court must determine whether a UIM claimant qualifies for UIM benefits and Second a determination as to whether plaintiff is entitled to the benefits of more than one policy in light of the relevant policies terms.

Plaintiff contends she is entitled to UIM coverage under an Endorsement that provides the coverage limits apply to an insured person who is the named insured or resident spouse of the named insured and any resident relative who is not the named insured or spouse of a named insured on another insurance policy, and who is in, on, getting into or out of an insured auto or non-owned auto.

Plaintiff argued the Endorsement applied and she was entitled to UIM coverage under the Policy.

UIM insurance is essentially a creature of contract law and should be interpreted accordingly.

The appellate court concluded that where the terms of an insurance contract are clear, they are to be accorded their plain and ordinary meaning. The parties to an insurance contract may contract for any lawful coverage, and the insurer may limit its liability and impose restrictions and conditions upon its obligation under the contract not inconsistent with public policy or statute. It is fundamental that in the absence of a statutory prohibition to the contrary, an insurance company has a right to impose whatever conditions it desires prior to assuming its obligations.

Courts enforce the terms of an insurance contract as written, so long as the language is clear. The court concluded that the Endorsement does not apply since there is no UIM coverage. The plain language of the Exclusion states UIM coverage is not available. The court concluded, therefore, that Allstate had the right to relieve itself of liability, as in this situation, by imposing conditions prior to assuming an obligation. There was no UIM coverage as a result of plaintiff’s being deemed an insured under GEICO’s policy.

Because plaintiff was occupying the host vehicle, she was an “insured” under GEICO’s policy, triggering Allstate’s exclusion and depriving her of  entitlement to UIM benefits from Allstate.

ZALMA OPINION

Failure to RTFP (Read the Full Policy) strikes again. The exclusion used by Allstate is clear and unambiguous. That the plaintiff was an insured of the Allstate policy means nothing if the policy provides no coverage for the injuries she claimed as a result of the actions of the underinsured motorist.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

 

Posted in Zalma on Insurance | Leave a comment

Ethics – Two Books Needed by Every Insurance Professional

The Little Book on Ethics for the American Lawyer

The practice of law demands more than knowledge of statutory and case law. It requires more than technical proficiency in the nuts and bolts of legal practice. A lawyer is an officer of the legal system whose conduct should conform to the requirements of the law, both in professional service to clients and in the lawyer’s business and personal affairs.

The practice of law requires that every lawyer treat each client, each adversary, and the court ethically and in good faith.

The practice of law is different from other professions because it requires that the lawyer act for his or her client, not him or herself, only if the actions for the client are ethical and in good faith.

What is Ethical Behavior?

The concept of ethical behavior refers to well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues, all of which are essential to the lawyer.

Ethics, for example, refers to those standards that impose the reasonable obligations to refrain from murder, rape, theft, assault, slander, and fraud. Ethical standards also include those that imply virtues of honesty, compassion, and loyalty.

There are rights presumed to exist such as those described in the Declaration of Independence submitted to King George of England in 1776 that held: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of happiness.” The unalienable rights also include the right to life, the right to freedom from injury, and the right to liberty. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons.

Ethics, for example, refers to those standards that impose the reasonable obligations to refrain from murder, rape, theft, assault, slander, and fraud. Ethical standards also include those that imply virtues of honesty, compassion, and loyalty.

There are rights presumed to exist such as those described in the Declaration of Independence submitted to King George of England in 1776 that held: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of happiness.” The unalienable rights also include the right to life, the right to freedom from injury, and the right to liberty. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons.
Ethics also refers to the study and development of one’s standards of conduct.

Feelings, laws, and social norms can deviate from what is ethical. It is necessary, especially to people involved in the practice of law, to constantly examine one’s standards to ensure that they are reasonable and well-founded conduct that ethically treats a client, an adversary, and the court with the utmost good faith.

There is no single answer to the question of what is ethical behavior by a lawyer. Ethical behavior is subjective and fact dependent.

Available as a Kindle book here.

Available as a paperback here.

Ethics for the Insurance Professional

Methods for Insurers and their Personnel to Act with the Utmost Good FaithProduct Details

Ethics is a process of systematically applying, using, defending and recommending concepts of right and wrong behavior. Ethical behavior is required of both parties to a contract of insurance for the system to work. Ethics is the essence of insurance. Ethical behavior is required of both parties to a contract of insurance for the system to work. If any party to the insurance contract acts unethically the ability of insurance to work effectively and profitably will fail. Ethics is the essence of insurance. Since insurance was first created it has been a business of utmost good faith. As a result, the insured and the insurer are expected to treat each other ethically.

Available as a paperback.


© 2020 – Barry Zalma

As the author, Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

Conditions Matter

Failure to Maintain Underlying Insurance Defeats Claim for Defense from Umbrella Insurer

Every insurance policy ever issued contains conditions that are the basis of the policy and must be fulfilled if an insured wishes to receive the benefits of the policy. Umbrella policies are designed to provide indemnity over basic underlying insurance. An umbrella policy, therefore, will consider that the policy will provide no benefits if the condition to maintain underlying insurance is breached by the insured.

In Ramji Govindarajan v. Government Employee Insurance Company, Case No. 18-cv-07797-JSC, United States District Court Northern District Of California (February 5, 2020) Ramji Govindarajan (“Plaintiff” or “Mr. Govindarajan”) sued his former insurer Government Employees Insurance Company (“GEICO” or “Defendant”) for failing to defend him in a defamation action filed in California state court.

BACKGROUND

Plaintiff purchased a GEICO “Personal Umbrella Policy” (the “Policy”) on or around May 27, 2016. The Policy became effective on May 28, 2016 and covered a period of one year. The Policy’s declarations page lists “Minimum Required Limits of Primary Insurance” for both automobile and “primary residence.”

The Policy’s “Part V – Defense of Suits Not Covered by Other Insurance” section required that the primary insurance must be maintained. Plaintiff did not maintain primary insurance on his residence at any time during the Policy.

Dr. Geeta Murali Ganesh filed the underlying defamation action. The complaint brought a single claim for defamation, alleging that unknown Doe defendants had “published numerous fake reviews about Rosebank and Dr. Ganesh” on www.ratemds.com (“RateMDs”), a website that allows users to provide reviews and comments on medical facilities and medical professionals.

The case was tried before a jury, and on January 10, 2018, the jury returned a verdict in favor of Mr. Govindarajan. The jury found that he did not make any of the 22 defamatory RateMDs posts at issue in the action. The court entered judgment in favor of Mr. Govindarajan in February 2018. Dr. Ganesh and Rosebank filed an appeal and the California Court of Appeal affirmed the judgment in August 2019.

Plaintiff filed a claim under the Policy seeking coverage related to the underlying action. GEICO Claims Attorney Michael A. Stodghill was assigned to investigate the claim.  Mr. Stodghill discovered that Plaintiff had personal automobile insurance but no primary residence insurance.

GEICO, thereafter, refused to provide Mr. Govindarajan with a legal defense to the lawsuit per the Umbrella Policy’s terms and conditions. Because GEICO asserted reservations of rights as to the defamation claim in the underlying action, it assigned “monitoring counsel” to attend the trial “in the event that the evidence . . . showed that the allegedly defamatory posts were published during the policy period.” Plaintiff spent over $350,000 in defending the underlying action.

DISCUSSION

An insurer owes a broad duty to defend its insured against claims that create a potential for indemnity. There is no duty to defend, however, where it has been shown that there is no potential for coverage.

The policy provided that a condition to Plaintiff receiving benefits under the Policy was that he maintain insurance on his primary residence. There is no dispute that Plaintiff did not carry any insurance on his primary residence at any time during the Policy period. Thus, under the Policy’s plain terms, Plaintiff did not meet the requirements for defense coverage.

Since Plaintiff did not have insurance on his primary residence at any time during the Policy period, and that such insurance was unambiguously a condition to any coverage under the Policy, Defendant met its burden of showing that it is entitled to judgment as a matter of law on Plaintiff’s claims.

It is undisputed that the unsuccessful defamation lawsuit Plaintiff’s former in-laws pursued against him extracted a heavy financial toll. However, it is also undisputed that Plaintiff did not satisfy the conditions to obtaining insurance coverage from Defendant for the defense of that lawsuit. Accordingly, the Court granted Defendant’s motion for summary judgment.

ZALMA OPINION

RTFP (Read the Full Policy) applies here. The condition that underlying insurance be maintained is a clear and unambiguous condition precedent to coverage. For the small cost of a homeowners policy the Plaintiff lost the chance of recovering his $350,000 in defense costs. If he, and his counsel, had RTFP, they would not have bothered filing this suit.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

 

 

 

 

Posted in Zalma on Insurance | Leave a comment

Help Dealing With Insurance Claims Regulations

California Fair Claims Settlement Practices Regulations

A Guide to Insureds, Public Insurance Adjusters, and Lawyers to Properly Investigate and Adjust Insurance Claims

This book was designed to assist insurance personnel who do business in the state of California. It will assist all insurance claims personnel, claims professionals, independent insurance adjusters, special fraud investigators, private investigators who work for the insurance industry, the management in the industry, the attorneys who serve the industry, public insurance adjusters, policyholders and counsel for policyholders working with insurers doing business in California. All insurers doing business in California must comply with the requirements of the Regulations or face the ire of, and attempts at financial punishment from, the CDOI. That punishment is now questionable and limited because some courageous insurers fought the CDOI and succeeded before an administrative law judge who limited the right to punish. Regardless of difficulties in assessing punishment the state of California requires all who are involved in the claims process — even if only tangentially — to be trained with regard claims handling in compliance with the Regulations and attest to completion of such training under oath. To avoid the annual training the claims person can submit a sworn document that avers that he or she has read and understood the Regulations. Reviewing this book and the Regulations set forth below should be sufficient to comply with the training requirements of the Regulations. It is necessary that insurance personnel who are engaged in any way in the presentation, processing, or negotiation of insurance claims in California be familiar with the Regulations. Counsel for insurers and policyholders should also be familiar with the Regulations since they set a minimum standard for claims handling in the state.

Available as a Kindle book.

Available as a paperback.

California SIU Regulations

The State of California Imposes Control on the Investigation of Insurance Fraud

California SIU Regulations: The State of California Imposes Control on the Investigation of Insurance FraudCalifornia SIU Regulations is designed to assist California insurance claims personnel, claims professionals, independent insurance adjusters, special fraud investigators, private investigators who work for the insurance industry, the management in the industry, the attorneys who serve the industry, and all integral anti-fraud personnel working with California admitted insurers to comply with the requirements of California SIU Claims Regulations.

The state of California, by statute, requires all admitted insurers to maintain a Special Investigative Unit (an “SIU”) that complies with the requirements set forth in the Special Investigative Unit Regulations (the “SIU Regulations”) and train all integral anti-fraud personnel to recognize indicators of insurance fraud.

Available as a Kindle Book.

Available as a paperback.


© 2020 – Barry Zalma

As the author, Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

Rescission Requires Proof of Deception About a Material Fact

Summary Judgment Reversed Because Issues of Fact Remained

People whose claims are denied attempt – often successfully – to make the denial a class action that will allow the plaintiff and the plaintiff’s lawyer with a windfall. Insurers who use the remedy of rescission without clear and convincing evidence, often run afoul of the courts, and can open the door to class actions.

In Michael Bradley, individually and on behalf of a class of other similarly situated individuals v. Direct Auto Insurance Company, No. 2-19-0426, 2020 IL App (2d) 190426-U, Appellate Court Of Illinois Second District (February 7, 2020) Plaintiff, Michael Bradley (Bradley), individually and on behalf of others similarly situated, appealed from the circuit court of Kane County’s orders denying his motion to stay and granting summary judgment in favor of defendant, Direct Auto Insurance Company (Direct Auto), regarding his complaint asserting violations of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act). Bradley argues on appeal that the circuit court erred.

BACKGROUND

Bradley purchased an automobile insurance policy issued by Direct Auto in May 2015 to cover his 2014 Kia Forte. The insurance application asked if there were “any other cars in the household other than those listed on the application?” Bradley understood the term “household” to mean family members or dependents. Because he was not married, had no children, and owned no other vehicles, he answered the question in the negative. At the time he completed the insurance application, Bradley was renting a room in a house owned by Lewis Stonehouse. Stonehouse owned a 2007 GMC Yukon that was also garaged at the same address. Bradley did not consider Stonehouse to be part of his “household.” Bradley did not intend to drive any vehicle other than his own, including Stonehouse’s, nor did he intend for any other person to drive it.

Shortly after midnight on June 18, 2015, Bradley’s vehicle was damaged in a collision while being driven by Devon Jayne, who was a friend of Stonehouse’s daughter, Ashley and was driving without Bradley’s permission.  Bradley submitted an affidavit and stated:

“On 6/18/15, the insured went to sleep. His keys were on the counter. Devon wanted to go driving so Ashley took the insured’s keys and took his 2014 Kia Forte for a ride. Devon was driving and Ashley was the passenger. The insured had no knowledge they took his vehicle as he was sleeping.”

Direct Auto sent Bradley correspondence on September 1, 2015, stating that his policy was “null and void from inception due to a MATERIAL MISREPRESENTATION on [his] policy application.” Individually and on behalf of others similarly situated, Bradley filed a single-count complaint against Direct Auto on June 24, 2016, asserting violations of the Consumer Fraud Act. He alleged that as a business strategy, Direct Auto targets low-income customers by offering auto insurance at below-market rates; that the insurance coverage provided by Direct Auto is illusory because it never intended to pay out claims; and, as a standard practice, it denies coverage to its policy holders. Bradley alleged that Direct Auto violated the Consumer Fraud Act because it engaged in unfair or deceptive acts or practices.

The circuit court granted Direct Auto’s motion for summary judgment in a written order on April 18, 2019. It listed the elements for a claim under the Consumer Fraud Act, which it stated were that (1) the defendant committed a deceptive act or practice; (2) the defendant intended the plaintiff to rely on the deception; and (3) the deception occurred in a course of conduct involving trade or commerce. It concluded that there was no evidence of a deceptive act by Direct Auto or an act intended by it to induce reliance by Bradley, and that there was no evidence of a separate and independent tort, or other act beyond a breach of contract that would support a claim under the Consumer Fraud Act.

ANALYSIS

Direct Auto’s motion was premised on evidence that, in its view, affirmatively disproved Bradley’s allegations that its investigation and subsequent decision to rescind his insurance policy constituted a deceitful or unfair act. Most notably, Direct Auto attached the affidavit of Torello, Direct Auto’s claim manager. Torello identified each step Direct Auto took in investigating Bradley’s claim, as well as identified what information it received, when it received that information, and what it did with that information. In ultimately granting Direct Auto’s motion for summary judgment, the circuit court clearly relied on this affidavit in finding that there was “nothing fraudulent or deceptive in the method of the investigation conducted by [Direct Auto],” nor did Bradley “rely on any misrepresentations …”

To establish a violation under the Act, a plaintiff must establish:

  1. a deceptive act or practice by the defendant;
  2. the defendant’s intent that the plaintiff rely on the deception;
  3. the occurrence of the deception during a course of conduct involving trade or commerce; and
  4. the consumer fraud proximately caused the plaintiff’s injury.

Alternatively, a plaintiff may recover against a defendant for an unfair practice as opposed to deceptive conduct. The appellate court agreed with the Plaintiff that there were genuine issues of material fact as to whether Direct Auto’s conduct was deceptive or unfair under the Consumer Fraud Act such that entry of summary judgment in favor of Direct Auto was improper. As noted by Direct Auto, the linchpin of Bradley’s argument is that Direct Auto knew that his statement that there were no “other cars in the household other than those listed on the application” was not a material misrepresentation when it rescinded his policy.

To establish rescission the trial court had to determine (1) whether the statement was false and (2) whether the Plaintiff intended to deceive Direct Auto on his insurance application or whether the statement materially affected the acceptance of the risk or hazard assumed by Direct Auto.

Bradley alleged that Direct Auto violated the Consumer Fraud Act by, among othr things, rescinding policies without a legal basis and with the knowledge that its policyholders could not afford to litigate the dispute. These allegations are not specific to Bradley, but instead relate to Direct Auto’s participation in the insurance market generally. The court reversed the summary judgment entered in favor of Direct Auto, and remanded the case back to the trial court.

ZALMA OPINION

Trial courts dislike granting motions for summary judgment because they are often reversed and eliminate the right to a trial. In this case the trial court granted the insurer’s motion because it proved a material misrepresentation. The court did not consider the fact that the loss was clearly and unambiguously excluded because the insurer elected to use the equitable remedy of rescission rather than use the exclusion. At trial they should use the exclusion and and produce evidence that there is no legal basis for the allegation that the policy was illusory by simply showing the number of claims actually paid each year. In addition they can bring on an underwriter to explain what would have happened had Bradley advised of the other vehicles in the building where he lived.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

 

 

Posted in Zalma on Insurance | Leave a comment

Basic Manuals for Dealing with Property and Liability Insurance Claims

Two Books Needed by Every Claims Adjuster

The Compact Book of Adjusting Property Insurance Claims – Second Edition

A Manual for the First Party Property Insurance Adjuster

The insurance adjuster is not mentioned in a policy of insurance. The obligation to investigate and prove a claim falls on the insured. Standard first party property insurance policies, based upon the New York Standard Fire Insurance policy, contain conditions that require the insured to, within sixty days of the loss, submit a sworn proof of loss to prove to the insurer the facts and amount of loss.

The policy allows the insurer to then, and only then, respond to the insured’s proof of loss. The insurer can then either accept or reject the proof submitted by the insured.

The Compact Book of Adjusting Property Claims -- Second Edition: A Primer For The First Party Property Claims Adjuster.Technically, if the wording of the policy was followed literally the insurer could sit back, do nothing, and wait for the proof. If the insured was late in submitting the proof the insurer could reject the claim. If the insured submits a timely proof of loss the insurer could either accept or reject the proof of loss. If the insurer rejected the proof of loss the insured could either send a new one or give up and gain nothing from the claim. Suit on the policy would be difficult because the policy contract limited the right to sue to times when the proof of loss condition had been met.

Insureds and insurers were not happy with that system. It made it too difficult for a lay person to successfully present a claim. The system, as written into the standard fire policy seemed to run counter to the covenant of good faith and fair dealing that had been the basis of the insurance contract for centuries. Most insurers understood that their insureds were mostly incapable of complying with the strict enforcement of the policy conditions. To fulfill the covenant of good faith and fair dealing insurers created the insurance adjuster to fulfill its obligation to deal fairly and in good faith with the insured.

The Second edition adds new material from 2018 and 2019, is easier to use and more compact than the original.

Available as a Kindle book.

Available as a paperback.

The Compact Book on Adjusting Liability Claims, Second Edition

A Handbook for the Liability Claims Adjuster

This Compact Book of Adjusting Liability Claims is designed to The Compact Book Of Adjusting Liability Claims Second Edition: A Handbook for the Liability Claims Adjusterprovide the new adjuster with a basic grounding in what is needed to become a competent and effective insurance adjuster. It is also available as a refresher for the experienced adjuster.

The liability claims adjuster quickly learns that there is little difficulty with a claimant (the person alleging bodily injury or property damage against a person insured) if the claim is paid as demanded. The insured may be unhappy if the claimant’s claim is paid as presented since most do not believe they did anything wrong or fear an increase in premiums charged for subsequent policies.

The adjuster must be prepared to salve the insured’s emotions, explain why in the law and the policy it was appropriate to pay the claimant and that the settlement is in the best interest of both the insured and the insurer the adjuster represents.
The adjuster knows, and must be prepared to explain to an insured, that if a claim is resisted or denied the claimant will be unhappy, will probably file suit. If not promptly settled the claimant’s lawyers will rake the insured over the coals to prove that the insured is liable for the claimant’s injuries. The litigation will take time, effort, and money to establish the extent of the injuries and who is responsible for the injuries. Failure to settle promptly can cost the insured his or her reputation and will certainly cost the insurer much more than the claim could have been resolved for had it been resolved before the claimant retained a lawyer.

Available as a Kindle book

Available as a paperback.


© 2020 – Barry Zalma

As the author, Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

It is Essential to Read the Entire Contract Requiring Additional Insured

Insurer’s Over Precise Interpretation of Contract Ignores Meaning of Entire Contract

The covenant of good faith and fair dealing requires an insurer to interpret its obligations under a policy of insurance fairly, in good faith, and to interpret it as written as long as the contract is clear and unambiguous. It is improper for an insurer to assert an ambiguity that does not exist in the wording of the contract of insurance or the contract mandating adding additional insureds.

In Jason Dean Mays v.  C-DIVE, L.L.C., Catlin Insurance Company; New York Marine & General Insurance Company, et al, No. 19-30106, USDC No. 2:16-CV-13139, USDC No. 2:16-CV-13318, USDC No. 2:16-CV-13951, USDC No. 2:16-CV-13952, USDC No. 2:17-CV-668, United States Court Of Appeals For The Fifth Circuit (February 5, 2020) an explosion injured four divers while they were decommissioning a pipeline in the Gulf of Mexico. The divers worked for C-Dive, L.L.C. Gulf South Pipeline Company, the owner of the pipeline, had hired C-Dive to plug it. The divers sued C-Dive and Gulf South for Jones Act negligence as well as negligence and unseaworthiness under general maritime law.

Gulf South responded with cross-claims against C-Dive and third-party claims against C-Dive’s insurers, Catlin Insurance Company and New York Marine & General Insurance Company. Among other things, Gulf South claimed that its master services agreement (MSA) with C-Dive required that Gulf South would be included as an additional insured under C-Dive’s comprehensive general liability insurance policies. C-Dive, Catlin, and New York Marine countered that the MSA was between C-Dive and Gulf South’s parent company, Boardwalk Pipelines, LP, and that the additional insured provision applied only to the parent company—not its subsidiaries.

The district court granted Gulf South’s motion. It concluded that the MSA’s additional insured provision applied to Boardwalk Pipelines, LP and its subsidiaries, including Gulf South. Because C-Dive’s policies with Catlin and New York Marine cover any entity that C-Dive contractually agrees to include as an additional insured, those policies covered Gulf South too. C-Dive and its insurers appeal.

ANALYSIS

The interpretation of a maritime contract is a matter of law. Under admiralty law, a contract should be read as a whole and its words given their plain meaning unless the provision is ambiguous.

Whether the MSA required Gulf South to be an additional insured on C-Dive’s insurance policies is the sole issue before the Fifth Circuit. The MSA provided that C-Dive’s insurance policies “shall be endorsed to include Boardwalk Pipelines, LP as [an] additional insured.” C-Dive and its insurers assert that the use of “Boardwalk Pipelines, LP” means the additional insured requirement covers only the parent company.

Reading the MSA as a whole, the Fifth Circuit concluded that the MSA unambiguously uses “Boardwalk Pipelines, LP” and “Boardwalk” interchangeably such that the additional insured provision’s reference to Boardwalk Pipelines, LP encompasses subsidiaries like Gulf South.

In reaching its decision the Fifth Circuit noted that the MSA’s description of Boardwalk Pipelines, LP indicates that the agreement draws no distinction between the parent entity and its affiliates. The MSA opens by stating that Boardwalk Pipelines, LP is “hereinafter referred to as ‘Boardwalk.'” This “hereinafter referred” clause treats Boardwalk Pipelines, LP and Boardwalk as one and the same. The MSA goes on to explain that “[r]eference to Boardwalk shall also include its subsidiaries and . . . affiliates of Boardwalk, including . . . Gulf South.”

By attributing subsidiaries and affiliates to “Boardwalk,” this clause uses the term both to describe the parent company and to clarify that any reference to that parent includes its affiliates. If the MSA meant to distinguish between Boardwalk Pipelines, LP and Boardwalk, it would have omitted the “hereinafter referred” clause and provided that “reference to Boardwalk shall include Boardwalk Pipelines, LP‘s subsidiaries and affiliates.”

The MSA’s Insurance Requirements section further demonstrated that “Boardwalk Pipelines, LP” and “Boardwalk” are interchangeable. Consider first the additional insured provision itself, which states: “All [of C-Dive’s insurance] policies . . . shall be endorsed to include Boardwalk Pipelines, LP as additional insured and these policies will respond as primary to any other insurance available to Boardwalk.” The Fifth Circuit also concluded that it would make no sense to require C-Dive’s policies to include only the Boardwalk parent company as an additional insured but then to make those same policies primary for all of Boardwalk’s subsidiaries.

To the Fifth Circuit the nonsensical implications of a distinction between “Boardwalk Pipelines, LP” and “Boardwalk” illustrate that the two terms must mean the same thing for the MSA to make sense. An appellate court must recognize the definition of a contract term that leads to impractical or commercially absurd result is unreasonable.

In addition, addenda to the MSA contemplate that Boardwalk’s affiliates are included as additional insured. It states: “[A]s respects the operations of [C-Dive] and as respects work performed for Boardwalk Pipelines, LP under an agreement with [C-Dive], the following applies: (1) Boardwalk Pipelines, LP, its parent, subsidiary and affiliated companies, and its and their respective directors, officers, partners, managers, members, employees, representatives and agents named as additional insured under this policy; and (2) This insurance is primary insurance with respect to the interests of the above additional insured . . . .”

The certificate of insurance included as a supplement to the MSA also equates Boardwalk Pipelines, LP with Boardwalk just like the “hereinafter referred” clause. It lists “Boardwalk Pipelines, LP (collectively ‘Boardwalk’)” as the certificate holder. By following “Boardwalk Pipelines, LP” immediately with “(collectively ‘Boardwalk’),” the certificate suggests that the two terms carry the same meaning.

We therefore conclude that the only reasonable reading of the MSA is that it uses “Boardwalk Pipelines, LP” and “Boardwalk” interchangeably. The district court thus correctly concluded that the agreement unambiguously includes affiliates like Gulf South in the additional insured requirement.

ZALMA OPINION

It is essential when interpreting insurance contracts to read the entire policy and apply the terms and conditions of the policy as required by the contracts between the parties. Additional insured endorsements add more people as insureds in accordance with the agreements made by the parties and their insurers. The insurers agreed to an additional insured endorsement in accordance with the MSA and then tried, unsuccessfully, to limit who was an additional insured after a major loss. With the obvious impact in the terms of the MSA and its addenda the insurers and their counsel wasted their time, the insurer’s money and the time of the Fifth Circuit.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

 

Posted in Zalma on Insurance | Leave a comment

Bad Faith & Insurance Fraud

Unintended Consequences of the Tort of Bad Faith & How to Defeat Insurance Fraud

The Law of Unintended Consequences and the Tort of Bad Faith

The concept of unintended consequences is one of the building blocks of economics. Adam Smith’s “invisible hand,” the most famous metaphor in social science, is an example of a positive unintended consequence.

Most often, however, the law of unintended consequences illuminates the perverse unanticipated effects of legislation and regulation. In 1692 the English philosopher John Locke, a forerunner of modern economists, urged the defeat of a parliamentary bill desi

gned to cut the maximum permissible rate of interest from 6 percent to 4 percent. Insurance is controlled by the courts, through appellate decisions, and by governmental agencies, through statute and regulation. Compliance with the appellate decisions, statutes, and regulations—different in the various states—is exceedingly difficult and expensive.

The business of insurance is, unfortunately, subject to the law of unintended consequences as if it were on steroids.

Available as a paperback  

Available as a Kindle book

Insurance Fraud – Volume I & Volume II

In Two Volumes

Insurance fraud continually takes more money each year than it did the last from the insurance buying public. No one knows the actual amount with any certainty because most attempts at insurance fraud succeed. Estimates of the extent of insurance fraud in the United States range from $87 billion to more than $300 billion every year.

Insurers and government backed pseudo-insurers can only estimate the extent they lose to fraudulent claims. Lack of sufficient investigation and prosecution of insurance criminals is endemic. Most insurance fraud criminals are not detected. Those that are detected do

so because they became greedy, sloppy and unprofessional so that the attempted fraud becomes so obvious it cannot be ignored.

No one will ever be able to place an exact number on the amount lost to insurance fraud. Everyone who has looked at the issue knows – whether based on their heart, their gut or empirical fact determined from convictions for the crime of insurance fraud – that the number is enormous.

When insurers and governments put on a serious effort to reduce the amount of insurance fraud the number of claims presented to insurers and the pseudo-government-based or funded insurers drops logarithmically. Since the appointment of Attorney General Sessions, the effort to stop insurance fraud against Medicare and Medicaid has increased.

This book contains appellate decisions regarding insurance fraud from federal and state appellate courts across the country and full text of many insurance fraud statutes.

It is available as both a legal research tool and a product to assist insurers, insurance company personnel, independent insurance adjusters, special investigation unit investigators, state fraud investigators and insurance lawyers to become effective persons involved in the attempt to defeat or reduce the effect of insurance fraud.

Volume One available as a Kindle book and a paperback.

Volume Two Available as a Kindle book and a paperback


© 2020 – Barry Zalma

As the author, Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

A Masters Course on Property Insurance Claims

Adjusting Property Insurance Claims

If you are manage an insurance claims operation, operate a college based risk management and insurance program, are an insurance adjuster, are a public insurance adjuster, or want to create a professional insurance claims operation you need to train your new and experienced claims personnel. I have created a Master of Arts program in property insurance claims handling. I also have a similar program for liability claims handling.

The following is an outline of the Property Insurance Claims Master of Arts program:

An introduction to the Property Insurance program.

It introduces the excellence in claims handling requirement that should be imposed on all insurers. The program requires that insurers maintain a staff of experienced, well trained, and educated claims staff.

How to Acquire a First Party Property Insurance Policy

The Course covers the following:

Insurance and insurable interest.

  1. That an insurable interest does not require ownership but can be a leasehold interest, an easement, or any other interest where the loss of the property will cause damage to the person acquiring the insurance.
  2. How To use an insurance agent or broker.
  3. The difference between an insurance agent and an insurance broker.
  4. The importance of an insurance application.
  5. The need to read the policy.
  6. Hazards of not reading an insurance policy after it is obtained or issue

How to Read & Understand an Insurance policy

The Course covers the following:

  1. That insurance is a contract and how to understand the basic rules of interpretation of contracts.
  2. The application for insurance and how it is used by the applicant and the insurer.
  3. The need for offer, acceptance and consideration to form an insurance contract.
  4. How to read and understand the insurance contract.
  5. The first party property insurance contract and how it is formed and made effective.
  6. The importance of conditions and limitations in a first party property policy.
  7. The rules of insurance contract interpretation.
  8. The contra preferentum rule.
  9. The Standard fire policy.
  10. The auto material damage policy.

The Necessity for an Honest and Complete Application for Insurance.

The Course covers the following:

  1. What an application is and how it is used by an underwriter.
  2. The difference between a misrepresentation, concealment, or breach of warranty.
  3. The obligation of the applicant to deal fairly and in good faith with the insurer.
  4. What is material to an insurance underwriter.
  5. That fraud is not required to prove the need for rescission.
  6. The general rules with regard to relief for false statements on an application for insurance.

The Law of Contracts for the Insurance Professional

The Course covers the following:

  1. What a contract is.
  2. What constitutes an offer?
  3. What constitutes an acceptance of an offer?
  4. What is consideration?
  5. What are conditions?
  6. What are limitations?
  7. What are warranties?
  8. What is a breach?
  9. How are contracts interpreted?

Ethics for the Insurance Professional

The Course covers the following:

  1. What is ethics?
  2. Kant and the categorical imperative.
  3. Hegel and ethics and that the ethical life is a concept of freedom.
  4. Virtue ethics.
  5. Metaethics.
  6. The Golden Rule.
  7. Applied ethics.
  8. Uberrimae Fidei.
  9. Understanding the concept of Uberrimae Fidei.
  10. How an insurer insists on insurer-wide ethical behavior.
  11. How an insurer acts ethically.

What is the Problem with Fraud?

The Course covers the following:

  1. What is insurance fraud?
  2. Insurance fraud and the tort of bad faith.
  3. Insurance fraud and the evidence of good faith and fair dealing.
  4. The red flags of fraud.
  5. The tort of Insurance Fraud.
  6. The crime of insurance fraud.
  7. Obligations of insurers when insurance fraud is suspected.

Interviewing Techniques for the Insurance Professional

The Course covers the following:

  1. What is the interview?
  2. When is the interview a scientific exercise?
  3. When is the interview an art form.
  4. What is the purpose of the insurance interview?
  5. How does the interviewer prepare?
  6. What is important about body language?
  7. How does the interviewer obtain control of the interview?
  8. Obligations of insurers when insurance fraud is suspected.

Investigation of a first party property Insurance Claim

The Course covers the following:

  1. How a claim is investigated.
  2. The obligations of the insured to the insured who presents a claim.
  3. The obligation to present to the insurer relevant documents.
  4. The obligation of the insurer to review and analyze relevant documents.
  5. The need for an agreed scope of loss.
  6. The preparation of the statement of loss.
  7. The preparation and evaluation of the sworn statement in proof of loss.
  8. The facts and investigation results that must be included in the adjuster’s reporting.
  9. The public adjuster and his or her duties to the insured and the insurer.
  10. The need to establish that conditions have been met.

The creation of a Scope, Statement and proof of loss.

The Course covers the following:

  1. How a claim is adjusted.
  2. The obligations of the insured to the insurer to agree on a scope of loss.
  3. The obligation of the adjuster to take the scope of loss and value all of the damage.
  4. The obligation of the insurer to review and analyze relevant documents.
  5. The need for the adjuster to prepare a statement of loss to summarize the findings about coverage and the extent of loss.
  6. The use of the statement of loss to reach agreement with the insured as to the amount of loss and claim.
  7. That after agreement is reached a sworn proof of loss is prepared for the signature of the insure after which payment follows.

The Duties of an Insured Presenting a First Party Property Claim

The Course covers the following:

  1. The duties a policy of first party property insurance imposes on the insured.
  2. The duties are basically a requirement that the insured fulfill all policy conditions.
  3. The use of an “appraisal” to resolve disputes over the amount of loss.
  4. The “Concealment, Misrepresentation, or Fraud” condition of the policy and how the insured can avoid its use to defeat its claim.
  5. The hazard faced by an insured who fails to fulfill the conditions of the policy.
  6. The need of the insured to prove his or her loss.
  7. The use of a public insurance adjuster.
  8. How the covenant of good faith and fair dealing assists the insured who does not fully comply with policy conditions.

The Insurance Examination under Oath

The Course covers the following:

  1. The duties of an insured to submit to an examination under oath.
  2. The duties of an insured to submit documents that establish or support the claim.
  3. The fact that the examination under oath condition is a condition precedent to indemnity.
  4. That the examination under oath condition is hoary with age and has been an honored part of the policy list of condition that must be obeyed.
  5. That any false statement at examination under oath is sufficient to allow the insurer to void coverage.
  6. That the named insured or any person who is an insured must submit to examinations under oath.
  7. That he purpose of a Cooperation Clause is to enable the insurer to obtain all knowledge and facts concerning the cause of the fire and the loss involved while the information was fresh in order to protect itself from fraudulent and false claims.

Insurance Fraud Prevention

The Course covers the following:

  1. The use of investigators to gather evidence establishing that a fraud is being attempted.
  2. The various types of fraud attempted against first party property policies.
  3. Understanding the staged accident.
  4. Understanding the use of paper property.
  5. How to discover an arson for profit.
  6. How to prove that an insured is involved in an arson for profit.
  7. How to discover health insurance fraud.
  8. How to recognize professional conspiracies.
  9. How to recognize fraud in the Legal Profession.
  10. How to act in good faith and fair dealing with regard to insurance fraud.

Compliance with Special Investigation Unit Regulations

The Course covers the following:

  1. All of the Special Investigation Unit Regulations imposed by – as an example – the California regulations.
  2. The need to train integral anti-fraud personnel in how to recognize potential insurance fraud.
  3. The need to create a special fraud investigation unit.
  4. Training by the special investigation unit.
  5. Training of all claims personnel in recognizing insurance fraud.
  6. How to train claims personnel to recognize the red flags of fraud.
  7. Understand the function of an SIU.
  8. Statutes that require a fraud investigation unit or SIU.
  9. Understand the Insurance Fraud Prevention Acts.
  10. Learn about immunities provided to fraud investigators.
  11. Learn the red flags of fraud.

Compliance with Good Faith Settlement Practices Regulations

The Course covers the following:

  1. All of the Good Faith Claims Settlement Practices Regulations.
  2. The California Regulation are a model for settlement practices regulations across the country.
  3. The Regulations were created to allow insurers to understand the minimum claims handling conduct to conform to the Fair Claims Settlement Practices.
  4. The Regulations were designed to punish an insurer who failed to treat an insured with good faith and fair dealing.
  5. The regulations do no provide an exclusive definition of all unfair claims settlement practices.
  6. The meaning and practice of a claims investigation.
  7. How policy terms and conditions are explained to an insured after a loss.
  8. The duties imposed on claims personnel.
  9. Standards for Prompt, Fair and Equitable Settlements
  10. Standards for Prompt, Fair and Equitable Settlements of various types of insurance.
  11. Whether the State Department of Insurance Has Power to change the meaning of a statute.

Rescission – An Equitable Remedy

The Course covers the following:

  1. An explanation of the equitable remedy of rescission.
  2. How rescission can be used as a means to defeat insurance fraud.
  3. The historical basis of the equitable remedy of rescission.
  4. The elements required to prove it is appropriate to rescind a policy of insurance.
  5. What an insurer must prove to rescind a policy of insurance.
  6. How to detect the difference between a true and false representation.
  7. How to determine that a misrepresentation or concealment is material.
  8. What must be done to rescind a policy of insurance.
  9. A review of particular court decisions that resulted in an effective rescission.
  10. A discussion of claims of post loss underwriting and why it is an oxymoron.
  11. What an insurer must do before electing to rescind a policy of insurance.

The Obligations of a public insurance adjuster

The Course covers the following:

  1. The licensing of a public insurance adjuster.
  2. The reason for the existence of public insurance adjusters.
  3. How a public insurance adjuster is remunerated.
  4. The difference between a public insurance adjuster and an independent insurance adjuster or an insurance company employed adjuster.
  5. The ethical requirements imposed by the National Association of Public Insurance Adjusters.
  6. The service(s) provided by public insurance adjusters.
  7. How a person can be licensed as a public insurance adjuster.
  8. What a public adjuster may not do.
  9. How a public adjuster helps an insured prepare and present a claim to an insurer.
  10. Why the public adjuster should always be reasonable, professional, honest, forthcoming, prompt and knowledgeable.
    17. Wrap Up
    a. The course that summarizes and wraps up the Preamble and 15 courses in the program where a necessary asset to every business and every insurer.
    i. The Course covers the following:
    (1) The ability to work with management to assist in what is necessary to deal with an insurance adjuster in presenting a claim to the insurer.
    (2) Determine if the business needs, to deal with a claim, the assistance of claims counsel, a public insurance adjuster, or an insurance consultant.
    (3) Explain to management its rights, duties, and obligations with regard to a policy of insurance.

© 2020 – Barry Zalma

The Master of Property Claims Program is available for a live presentation by Barry Zalma or as an on-line program. If you are interested in a live presentation contact me by e-mail or at 310-390-4455.

As the author, Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

How to Deal With Claims About Construction Defects and/or Mold

Construction Defects and Mold Claims

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it for insurers and their claims staff to become insurance claims professionals.

Construction Defects and Insurance

Construction Defects and Insurance Volume One: The Structure, The Construction Contract, and Construction Defect InsuranceBarry Zalma has updated and re-edited his seminal work Construction Defects Coverage Guide into is the latest addition to Barry Zalma’s insurance claims series of books and articles that will form the most thorough, up-to-date, expert-authored insurance claims guide available today eight Kindle or Paperback Volumes at reasonable prices.

Thorough, yet practical, this series of books form the ideal guide for any professional who works in or frequently interacts with the insurance industry.

Claims professionals, risk managers, producers, underwriters, attorneys (both plaintiff and defense), and business owners will benefit greatly from the ten volume guide. It is also the perfect resource for insurance educators, trainers, and students whose role requires an understanding of insurance law.

The Eight volumes include:


Mold Claims

This series of books is the latest addition to Barry Zalma’s insurance claims series of books and articles that will form the most thorough, up-to-date, expert-authored insurance claims guide available today.Mold Claims Volume One: Understanding insurance claims and litigation concerning mold, fungi, and bacteria infestations.

Written by nationally-renowned insurance coverage expert Barry Zalma, a semi-retired insurance coverage attorney, consultant, expert witness and blogger, Mold Claims provides in-depth explanations, analysis, examples, and detailed discussion of:

•Mold; •FungMold Claims Volume Two: Understanding insurance claims and litigation concerning mold, fungi, and bacteria infestations.i; •Bacteria; •Mold, fungi and bacteria claims; and
•Mold, Fungi, Bacteria litigation.

Thorough, yet practical, this series of books form the ideal guide for any professional who works in or frequently interacts with the insurance industry or is involved in litigation. Claims professionals, risk managers, producers, underwriters, attorneys (both plaintiff and defense), and business owners will benefit Mold Claims Volume Three: Understanding insurance claims and litigation concerning mold, fungi, and bacteria infestations.greatly from the mold volumes. It is also the perfect resource for insurance educators, trainers, and students whose role requires an understanding of insurance law as it relates to mold, fungi and bacterial infestations.

The author has provided checklists, sample procedures, form letters, tables and information and references to model statutes, state statutes, administrative Mold Claims Volume Four: Understanding insurance claims and litigation concerning mold, fungi, and bacteria infestations.regulations, and requirements of insurance departments nationwide.

 

 


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

Posted in Zalma on Insurance | Leave a comment

Extrinsic Evidence Resolves Ambiguity in Policy Interpretation

Stacked Excess Policies Over a Self-Insured-Retention and Deductible Resolved by Application of Extrinsic Evidence

Insureds who face major liabilities often buy layers of liability insurance coverage. When all of the layers are involved in one or more case disputes require help from the courts to resolve disputes over who owes what to whom. If the policy language is ambiguous it will usually be interpreted against the drafter unless extrinsic evidence is allowed to help understand the true agreement of the parties.

In Lexington Insurance Company and National Union Fire Insurance Company Of Pittsburgh, Pa v.  RLI Insurance Company, No. 19-1426, United States Court of Appeals For the Seventh Circuit (JANUARY 27, 2020) the Seventh Circuit followed Illinois law that allowed it to use extrinsic evidence to resolve a dispute over the meaning of insurance policy language.

FACTUAL BACKGROUND

Two insurers of New Prime, Inc., a trucking company, accuse a third insurer of not paying its share toward two multimillion-dollar personal injury settlements. Plaintiffs Lexington Insurance Company and National Union Fire Insurance Company contend that defendant RLI Insurance Company underpaid according to the policy it sold to New Prime, leaving National Union to make up the difference.

Lexington and National Union sought a declaratory judgment as to the meaning of the RLI Policy and equitable contribution of $2.5 million from RLI toward the settlements in question. The district court granted summary judgment to RLI, relying exclusively on contract language that it found unambiguous.

As a large commercial trucking company, New Prime faces substantial risks of tort liability. In the relevant years, New Prime managed and covered its own liability without insurance for the first $3 million of exposure per occurrence. To protect itself from unusually large claims, New Prime bought excess liability insurance from three different companies: RLI, Lexington, and National Union. (Lexington and National Union are referred to as AIG their parent).

The two tragic accidents occurred in 2015 when New Prime was covered by the RLI, Lexington, and National Union policies. On March 4, 2015, a New Prime tractor-trailer drifted into the median of Interstate 80 in Mercer County, Pennsylvania. The truck struck and severely injured Daniel Montini, who was changing a flat tire. In February 2018, Montini settled his lawsuit against New Prime for $16 million. On December 28, 2015, near Santa Rosa, New Mexico, a New Prime tractor-trailer rear-ended a sedan driven by Katherine and Samuel Herrera. Both were killed. In March 2018, the Herreras’ estates settled their claims against New Prime for $20 million.

THE DISPUTE

The dispute is over how much RLI needed to contribute first to the Herrera settlement and then to the later Montini settlement, which were so large as to trigger the excess insurance policies. The parties agree that, starting from the first dollar, New Prime itself was required to cover $3 million of costs or losses for each occurrence because of the so-called “Self-Insured Retention” built into the RLI Policy. Excess insurance coverage attaches only after a predetermined amount of primary insurance or self-insured retention has been exhausted.

AGGREGATE CORRIDOR DEDUCTIBLE

The RLI Policy provided the next layer of coverage but came with a feature called the “Aggregate Corridor Deductible” or “ACD” added to the RLI policy by endorsement to the Policy with the ACD providing: “The Insured [i.e., New Prime] shall respond to, investigate, adjust, defend, and dispose of by payment or otherwise all losses and claims for losses covered by the Policy for which the total claim is greater than the $3,000,000 Self Insured Retention (SIR) until the Aggregate Corridor Deductible of $2,500,000 has been satisfied. Once the Aggregate Corridor Deductible has been exhausted by payment for one or more losses & ‘costs’, the Insured is only responsible for losses and ‘costs’ up to [the] Per Occurrence Self Insured Retention.” (Emphasis in original)

The endorsement also specified that the ACD amounts to “$2,500,000 excess of the $3,000,000 Self Insured Retention.” Although not a model of clarity, this endorsement obligated New Prime to pay out an additional $2.5 million above its Self-Insured Retention of $3 million per occurrence before RLI began to pay. But while the Self-Insured Retention applied to each covered incident, the $2.5 million ACD applied only once per year, so New Prime needed to pay that additional amount only once per policy year.

The dispute, however, is whether New Prime’s payments toward the Aggregate Corridor Deductible diminished the amount that RLI owed on any claims. RLI argued that the ACD sat within RLI’s $2 million layer, leaving RLI with no responsibility for making any payment on any claim until New Prime had both (a) paid $3 million per occurrence and (b) paid the year’s ACD total on losses between $3 million and $5 million per occurrence. If that is correct, then New Prime and RLI would together owe at most $5 million on any claim: the $3 million Self-Insured Retention plus the $2 million RLI Policy.

At the time of the Herrera and Montini settlements, RLI insisted on its view of the Aggregate Corridor Deductible. It paid none of the Herrera settlement and only $1.5 million of the Montini settlement. AIG reserved its rights to recoup the alleged deficit of $2.5 million from RLI. Because the settlements exhausted Lexington’s policy layer on any view of the RLI Policy, it is National Union that seeks equitable contribution through this lawsuit.

AMBIGUITY

The basic problem is that the RLI Policy failed to define the custom-tailored Aggregate Corridor Deductible feature or to describe its mechanics with precision.  The Seventh Circuit explained that a self-insured retention differs from a deductible in that a SIR is an amount that an insured retains and covers before insurance coverage begins to apply. Once a SIR is satisfied, the insurer is then liable for amounts exceeding the retention, less any agreed deductible. In contrast, a deductible is an amount that an insurer subtracts from a policy amount, reducing the amount of insurance.

Extrinsic Evidence

The Seventh Circuit concluded that undisputed evidence of the negotiations between New Prime and RLI, and between New Prime and AIG, resolves the ambiguity in RLI’s favor. Illinois courts may consider extrinsic evidence upon a finding of ambiguity. Under federal procedural law, if uncontested facts clarify the meaning of a contract, an appellate court may decide the issue as a matter of law at summary judgment.

Although the district court here ruled only on textual grounds, the parties submitted extensive evidence and briefing regarding the history of the insurance contracts at issue. We may affirm summary judgment “on any ground that finds support in the record,” so long as that ground was “adequately presented in the trial court so that the non-moving party had an opportunity to submit affidavits or other evidence and contest the issue.” Box v. A & P Tea Co., 772 F.2d 1372, 1376 (7th Cir. 1985).

CONCLUSION

RLI was entitled to summary judgment because emails and underwriting files presented to the court show that New Prime, RLI, and AIG itself all intended the combined liability of New Prime and RLI to be capped at $5 million per occurrence, so that AIG’s liability would begin at $5 million per occurrence, not at $7 or $7.5 million. As a matter of Illinois law and common sense, the parties’ statements during negotiations and their conduct afterward carry more weight than legal interpretations offered in the run-up to litigation.

Illinois courts clarify ambiguous contract language based on general circumstances around contract formation but only actual conduct subsequent to formation.. All of New Prime’s concrete actions, in contrast, were consistent with RLI’s position in this lawsuit.

New Prime’s conduct supported RLI’s interpretation of the ACD. The language of the RLI Policy was ambiguous as applied to this dispute, but the extrinsic evidence compeled summary judgment in favor of RLI.

ZALMA OPINION

Illinois allows a court to consider extrinsic evidence when interpreting an insurance policy. Other states only allow their courts to consider the wording of the policy and the allegations of the suit – the four corners or eight corners – states. Those who refuse extrinsic evidence in the need to interpret an insurance policy should reconsider their position. Had Illinois been a four corners state the intent of RLI and the insured would have been ignored and justice would not have been done.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

Posted in Zalma on Insurance | Leave a comment

The Comprehensive Insurance Claims Series of Books

Ten Volumes Comprising A Comprehensive Group of Materials on Property & Casualty Insurance Claims

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it for insurers and their claims staff to become insurance claims professionals.

Insurance claims professional and expert witness Kevin Quinley said about the following ten volumes: “Zalma’s series of books is a terrific blend of both the legal underpinnings and the practical implications for the claim practitioner.

Insurance Maven Bill Willson said: “Zalma On Insurance Claims” is a tour de force, an indispensable tool that should be a part of every claims training program in America and in the library of every claims professional for quick and frequent reference. This comprehensive guide belongs in the library of every insurance defense AND policyholder law firm. It should be a part of every claims training program of carriers, independent adjusting firms, and public adjusters. Many of these parts should be part of the training or reference programs for non-claims personnel, from agents to underwriters to risk managers.”

This series of books is the latest addition to Barry Zalma’s insurance claims series of books and articles that will form the most thorough, up-to-date, expert-authored insurance claims guide available today. Thorough, yet practical, this series of books form the ideal guide for any professional who works in or frequently interacts with the insurance industry. Claims professionals, risk managers, producers, underwriters, attorneys (both plaintiff and defense), and business owners will benefit greatly from the ten volume guide. It is also the perfect resource for insurance educators, trainers, and students whose role requires an understanding of insurance law. A Comprehensive Review of insurance, insurance claims, the law of insurance policy interpretations, the practicalities of Property, Casualty and Liability Insurance Claims.

Zalma on Insurance Claims Volume 101 – Second Edition

A Comprehensive Review of insurance, insurance claims, the law of insurance and policy interpretation Paperback – July 17, 2019

This volume covers

  1. WHAT IS INSURANCE?
  2. THE HISTORY OF INSURANCE,
  3. ACQUISITION OF THE POLICY,
  4. CLAIMS PERSONNEL,
  5. KINDS OF INSURANCE POLICIES,
  6. THE LIABILITY POLICY.

The author has provided checklists, sample procedures, form letters, tables and information and references to model statutes, state statutes, administrative regulations, and requirements of insurance departments nationwide.

Available as a paperback

Available as a Kindle Book

Zalma on Insurance Claims Part 102 – Second Edition

This the second edition of the second volume in the latest addition to Barry Zalma’s insurance claims series of books and articles is part of the most thorough, up-to-date, expert-authored insurance claims guide available today. Zalma on Insurance Claims, part 102 provides in-depth explanations, analysis, examples, and detailed discussion of: •  Other Insurance Clauses; •   Trigger of Coverage; •    Underwriting; •    Conditions, Warranties and Exclusions

The author has provided checklists, sample procedures, form letters, tables and information and references to model statutes, state statutes, administrative regulations, and requirements of insurance departments nationwide.

Available as a Kindle book

Available as a paperback 

Zalma on Insurance Claims Part 103 Second Edition

A Comprehensive Review of the law and Practicalities of Property, Casualty and Liability Insurance Claims. Insured, Insurer, adjusting.

The Implied Covenant of Good Faith and Fair Dealing

The principle on which insurance has existed for the last three to four centuries is that insurance business is conducted with the utmost good faith (uberrima fides). The principle, called a covenant of good faith and fair dealing, must be followed religiously by both the insurer and the insured. This means, simply, that both parties to the insurance contract must treat each other in such a way that neither will deprive the other of the benefits of the contract.

This, the third part of Zalma on Insurance Claims and includes materials concerning:
This is part 103 of Zalma on Insurance Claims and will deal with:

•The Covenant of Good Faith and Fair Dealing
•Duties of the Insured and the Insurer
•Declaring a Policy Void
•Processing a Claim
When read with Part 101 and Part 102, this volume works to take the reader to a complete understanding of insurance and insurance claims.

Available as a Kindle Book

Available as a paperback

Zalma on Insurance Claims Part 104

This, the fourth volume of Zalma on Insurance Claims and includes materials concerning:

  1. Investigation of First Party Property Claims
  2. Rescission
  3. The Mortgage Clause
  4. Fortuity & Other Issues
  5. Determine the Amount of the Loss
  6. The Claim File

When read with Part 101, Part 102, and Part 103, this volume works to take the reader to a complete understanding of insurance and insurance claims.

Available as a Kindle Book

Available as a paperback

Zalma on Insurance Claims Part 105

This, the fifth volume of Zalma on Insurance Claims and includes materials concerning:

  1. Investigation – Liability
  2. Claims Made and Reported Policies
  3. The Notice Prejudice Rule.
  4. Types of Torts
  5. The Liability Claims File
  6. Discovery of the Insurance Claims File
  7. Tests for Determining Duty to Defend
  8. Appendices – forms for the claims person

When read with Insurance 101, Insurance 102, Insurance 103 and 104, this volume works to take the reader to a complete understanding of insurance and insurance claims.

Available as a Kindle Book

Available as a paperback

Zalma on Insurance Claims Part 106 Second Edition

A Comprehensive Review of the law and Practicalities of Property, Casualty and Liability Insurance Claims Paperback 

This latest addition to Barry Zalma’s insurance claims series of books and articles is part of the most thorough, up-to-date, expert-authored insurance claims guide available today. Written by nationally-renowned insurance coverage expert Barry Zalma, an insurance coverage attorney, consultant, expert witness and blogger.

Thorough, yet practical, this book is the ideal guide for any professional who works in or frequently interacts with the insurance industry. Claims professionals, risk managers, producers, underwriters, attorneys (both plaintiff and defense), and business owners will benefit greatly from this multiple volume guide. It is also the perfect resource for insurance educators, trainers, and students whose role requires an understanding of insurance law.

The author has provided checklists, sample procedures, form letters, tables and information and references to model statutes, state statutes, administrative regulations, and requirements of insurance departments nationwide.

This is the sixth part of “Zalma on Insurance Claims” and will deal with:

  1. Property Insurance & the Tort of Bad FaithChapter
  2. Grounds for Finding Bad FaithChapter
  3. Avoiding Charges of Bad FaithChapter
  4. Punitive DamagesChapter
  5. Bad Faith & Liability Insurance.
  6. Defenses to the Tort of Bad Faith

The appendices also include full text of important insurance law cases and statutes

Available as a Kindle book

Available as a paperback 

Zalma on Insurance Claims Part 107 – Second Edition

This is the seventh part of “Zalma on Insurance Claims” and will deal with:

1.Evaluation and Settlement – Property
2.Evaluation and Settlement – Liability
3.Subrogation
4.Salvage

When read with Part 101, Part 102, Part 103, Part 104, Part 105 and Part 106 this volume works to take the reader to a complete understanding of insurance and insurance claims.

Available as a Kindle book

Available as a paperback 

Zalma on Insurance Claims Part 108 -Second Edition

This, the eighth part of Zalma on Insurance Claims, includes materials concerning:

1.Preparing a case for trial
2.Interviewing Techniques
3.The art of the Interview
4.Interview General Principles
5.The Interviewer
6.Preparing for the Interview
7.Beginning the Interview
8.Control Of The Interview
9.Dealing with Witness Types
10.Approaches the Work
11.Dealing with the Nervous Person
12.Bluffs
13.The Mutability Of Memory
14.The Examination Under Oath

When read with Part 101, Part 102, Part 103, Part 104, Part 105, Part 106 and Part 107 this volume works to take the reader to a complete understanding of insurance and insurance claims.

Available as a Kindle book

Available as a paperback

Zalma on Insurance Claims Part 109 Second Edition

This, the ninth part of Zalma on Insurance Claims, includes materials concerning:

•Identifying Insurance Fraud
•Professional Conspiracies
•Multiple Types of Insurance Fraud
•How to Join the Fraud Fight
•Case Studies of Successful Fraud Investigations
•Checklist 1 – Types of Insurance Fraud
•Checklist 2 – Training Adjusters
•Checklist 3 – Red Flags of Fraud – Property Insurance
•Checklist 4 – Red Flags of Fraud – Liability Insurance
•Appendix A – Commonly Used Medical Acronyms and Abbreviations
•Appendix B – Glossary of Medical Terms

When read with Part 101, Part 102, Part 103, Part 104, Part 105, Part 106, Part 107 and Part 108 this volume works to take the reader to a complete understanding of insurance and insurance claims.

Available as a Kindle book

Available as a paperback

Zalma on Insurance Claims Part 110 Second Edition

This, the tenth part of Zalma on Insurance Claims, includes materials concerning:

•Responses to Fraud
•Grounds for Rescission.
•The Fight Against Fraud
•Checklist 1—Responses to Fraud
•Checklist 2 – The Fight Against Fraud

When read with Part 101, Part 102, Part 103, Part 104, Part 105, Part 106, Part 107, Part 108 and Part 109 this volume works to take the reader to a complete understanding of insurance and insurance claims.

Available as a Kindle book

Available as a paperback

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To Obtain Rescission an Insurer Must Prove the Result is Fair to All

Rescission is an Equitable Remedy that Must be Fair to All Effected

Rescission is an equitable remedy. It does not allow for payment of damages. It requires that a court act fairly to all involved.

In Citizens Insurance Company Of America v. Pioneer State Mutual Insurance Company, and Allstate Insurance Company, No. 346360, State Of Michigan Court Of Appeals (December 19, 2019) a reimbursement action for no-fault benefits by an assigned claims insurer, plaintiff Citizens Insurance Company of America, on appeal sued Pioneer Mutual Insurance Company and obtained a favorable judgment. Pioneer challenged the trial court’s decision to deny its motion for summary disposition and grant defendant Allstate Insurance Company’s motion for summary disposition.

BACKGROUND

In November 2015, Brittany Baumgart was injured in a pedestrian-motor vehicle accident while she was crossing a road. She was taken to McLaren Macomb Hospital for treatment. At the time of the accident, Brittany was living with her father, Jeffry Baumgart, who was insured under a no-fault policy issued by Pioneer. The motor vehicle involved in the accident was insured by Allstate. The two insurers disputed coverage.

Pioneer is in the highest order of priority because it insured Brittany’s resident relative, Jeffry, at the time of the accident. However, Pioneer rescinded Jeffry’s policy on the basis of alleged material misrepresentations made in his insurance application. Specifically, in his October 2013 application Jeffry effectively represented that he was the only resident in his household. Jeffry explained at deposition that he did not identify Brittany as a household resident because at the time of the application she was incarcerated. He explained that even though Brittany had a room in his house and received mail there, she stayed there only sporadically between her frequent incarcerations. Testifying in 2017, Jeffry estimated that Brittany had been incarcerated for at least 8 out of the past 10 years.

Jeffry cashed the premium refund check sent by Pioneer after its rescission.

INNOCENT THIRD PARTY RULE

Before the trial court issued its decision, the Michigan Supreme Court decided Bazzi v Sentinel Ins Co, 502 Mich 390, 396; 919 NW2d 20 (2018), which held that the “innocent-third-party rule,” precluded an insurer from rescinding an insurance policy procured by fraud when there was a claim involving an innocent third party. However, the Court clarified that rescission was an equitable remedy, and that insurers did not have an “automatic” right to rescind an insurance policy with respect to third parties.

The trial court issued an opinion and order granting Allstate summary disposition. The court first determined that Jeffry did not make a false statement in his insurance application. The court noted Pioneer’s position that Brittany was domiciled with Jeffry even when she was incarcerated, but it was properly unpersuaded that “domicile” is the same as “household resident” or “living with” especially as it relates to a layperson filling out an application for insurance. Finding no intent to deceive the trial court determined that equity did not favor rescission with respect to Brittany.

ANALYSIS

The thrust of Pioneer’s argument is that Allstate should not be able to contest Pioneer’s decision to rescind the policy because Jeffry, the insured, has not done so. However, even when an insurance policy is declared void ab initio, the trial court must determine whether rescission is equitable as to third parties claiming benefits under the policy.

In Bazzi, the insurer successfully argued that the policy was procured by fraud and obtained a default judgment rescinding the policy. On appeal, the sole issue was the viability of the innocent third-party rule. The Supreme held that the doctrine had been abrogated but clarified that the equitable remedy of rescission does not function by automatic operation of the law. Thus, even though the policy between the insurer and the insured was void ab initio due to the fraudulent manner in which it was acquired, the trial court still needed to determine whether, in its discretion, rescission of the insurance policy is available as between the insurer and the claimant.

The Court of Appeal concluded that the fact the policy had been rescinded with respect to the insured is not dispositive of whether rescission is warranted as to a third party’s claim for benefits. Because the PIP statute directs the circuit court to resolve the coverage dispute, the disputing insurers, who are mandatory parties to the action, plainly have standing to make arguments relevant to that dispute.  The no-fault act does not define the term “interested party,” but clearly the injured person qualifies.

RESCISSION

Regardless of who initiated the claim, this action concerned who would be responsible for reimbursement to Citizens for payments made on her behalf and who would have priority over any future claim for PIP benefits that she might make. Equitable remedies, like rescission, must adapt to the circumstances of each case. Equity jurisprudence molds its decrees to do justice amid all the vicissitudes and intricacies of life. Equity allows complete justice to be done in a case by adapting its judgments to the special circumstances of the case.

The trial court determined that rescission would be unjust and inequitable given the lack of evidence showing that Jeffry made false statements in the application or that he intended to defraud Pioneer. To the degree an innocent misrepresentation may be considered grounds to rescind as to the policyholder, making an innocent misrepresentation is less culpable behavior than actual fraud and so weighs against rescission as to a third party. Courts are not required to grant rescission in all cases.

Even assuming that Pioneer made reasonable investigation efforts, it was still in a better position than Allstate to investigate Jeffry’s application. In sum, the trial court considered the nature of the alleged misrepresentations and determined that rescission would not be just as to the injured party.

When there is no evidence that the insured acted with fraudulent intent and the third party was not involved in the alleged misrepresentations, the trial court did not abuse its discretion in determining that rescission was not warranted.

ZALMA OPINION

Rescission must result in fairness to all. Although the rescission as to the named insured was proper because he misrepresented a material fact, it was not fair to the victim who was injured and had no involvement in the application for insurance. The result in this case was fair to everyone but the insurance company: Jeffrey’s policy was rescinded and he was entitled to keep the return premium. The no-fault law allowed Brittany to receive the no-fault benefits and indicates a need to revise the no fault law.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | 1 Comment

The EUO and the Homeowners Policy – Books for Anyone Interested in Insurance

Everything Needed by the Insurance Claims Professional from Barry Zalma

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it for insurers and their claims staff to become insurance claims professionals. Read about these and other insurance books by Barry Zalma and more than 3000 posts at https://zalma.com/blog.

The Insurance Examination Under Oath Second Edition

A Tool Available to Insurers to Thoroughly Investigate Claims and Work to Defeat Fraud

A Tool Available to Insurers to Thoroughly Investigate Claims and Work to Defeat Fraud.

The insurance Examination Under Oath (“EUO”) is a formal type of interview authorized by an insurance contract. It is taken under the authority provided by the agreement of the insurer, when he, she or it acquires a policy of insurance, to submit to a condition of the insurance contract that compels the insured to appear and give sworn testimony at the demand of the insurer. Failure to appear and testify is considered a breach of a material condition.

The EUO is conducted before a notary and a certified shorthand reporter who is present to give the oath to the person interviewed. The reporter will record the entire conversation and prepare a transcript to be read, reviewed, corrected and signed by the witness under penalty of perjury or by an oath taken before a notary or judge.

The EUO is a tool only sparingly used by insurers in the United States. A professional insurer will only require an insured to submit to an EUO when a thorough claims investigation raises questions:.about the application of the coverage to the facts of the loss, the potentiality that a fraud is being attempted, or to assist the insured in the obligation to prove to the insurer the cause and amount of loss.

Although seldom used the EUO is an important tool needed by insurers when there is a question of coverage, destruction of evidence needed to prove a compensable loss or the amount of loss or evidence indicating the potential that a fraud is being attempted.The EUO and Legal Action provisions in an insurance policy are conditions precedent to an insured’s ability to file suit, and that since the insured failed to substantially comply with the terms of those provisions, the appropriate remedy is dismissal without prejudice. The insured’s failure to comply with these conditions does not bar his ability to bring suit to recover, but merely suspends his ability to bring suit until he has fully complied with those conditions.

Available as a paperback here  Available as a Kindle book here

THE HOMEOWNERS INSURANCE POLICY

HOW TO BUY AN APPROPRIATE HOMEOWNERS POLICY AND SUCCESSFULLY MAKE A CLAIM TO THE INSURER

Insurance is a contract between a person seeking insurance and an insurer. It is obtained by making contact with the insurer as a prospective insured seeking insurance. The homeowners policy is a specialized policy of insurance that protects the homeowner from certain risks of loss to the real and personal property at the home, the exposure the insured faces for injury to a household employee, and the exposure the insured faces to liability for bodily injury or property damage caused to third parties. The book explains how to buy a homeowners policy and how to collect on any claim made to the homeowners insurer.

Paperback Book     Kindle Book

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Insurer may Rescind a Policy based on a Misrepresentation by an Insurance Broker

Material Misrepresentation Allows for Rescission Defense of Suit Against Insurer

California allows rescission of an insurance policy for misrepresentation or concealment of a material fact, even if made innocently with no intention to deceive the insurer. An insurer may not sue to obtain an order confirming rescission if the insured sues first. The insurer may then, only, assert rescission as a defense.

In Endurance American Specialty Insurance Company v. Bennington Group, LLC et al., B285909, Court Of Appeal Of The State Of California Second Appellate District Division Five (January 31, 2020) Bennington Group, LLC (Bennington), Bennington Group West, Inc. (Bennington West), Abul Shah,  and NRG Delta, LLC (NRG)  sought payment on an insurance policy issued to Bennington by Endurance American Specialty Insurance Company (Endurance). Endurance sought to rescind the insurance policy, contending that Bennington had made material misstatements in its application for insurance. The trial court granted Endurance summary judgment on its affirmative defense of rescission and the Bennington defendants and NRG appealed.

BACKGROUND

Shah formed Bennington West in order to pursue recovery projects in California. Sometime after he formed Bennington West, Shah asked NRG if it would agree to transfer the Project to Bennington West. NRG declined.

Shah contacted an insurance broker (broker) for assistance in obtaining commercial general liability insurance for Bennington West.  The broker (a person who transacts insurance with, but not on behalf of, an insurer) forwarded an email, without comment, to Arrowhead Wholesale Insurance Services, LLC (Arrowhead), a wholesale insurance broker.

Lai contacted the broker and requested that it procure commercial general liability insurance for Bennington instead of Bennington West. The broker did not “go back through” the application to determine if any of the responses needed to be changed although the applicant was Bennington rather than Bennington West. The broker provided Bennington’s insurance application to Arrowhead who forwarded the application to Endurance’s managing general underwriter, Freberg Environmental Insurance (Freberg). Bennington signed the application, representing that the answers were true. But the application contained a number of misstatements, including Bennington’s response to questions in the section entitled “Company History.”

On demand from the insurer Shah wrote to the underwriter “[w]e have had no known general liability losses in the last 5 years. [¶] Please let us know if you need additional information.” Thereafter, Endurance issued an insurance policy to Bennington for the period of July 16, 2010, to July 16, 2011 (Insurance Policy). The Insurance Policy included $7 million commercial general liability coverage, $1 million contractor’s pollution liability coverage, and $1 million professional liability coverage.

On December 23, 2010, NRG terminated the NRG-Bennigton Contract and barred Bennington from working on the Project. On January 3, 2011, Bennington filed a complaint against NRG, alleging numerous causes of action including conversion and quantum meruit (NRG-Bennington Lawsuit). Bennington later added a cause of action for breach of contract. On April 11, 2016, the trial court entered judgment against Bennington and Bennington West for approximately $10.9 million.

Summary Judgment on Rescission

On January 17, 2017, Endurance filed its motion for summary judgment on its rescission cause of action, arguing that it was entitled to rescind the Insurance Policy as a matter of law because Bennington had made material misstatements on the insurance application. In support of its motion, Endurance submitted Bennington’s insurance application as well as a declaration from Renee Miller, chief underwriting officer at Freberg.

The trial court found that Bennington’s misstatement about its date of establishment was material because “[a] new business with no track record for the underwriter to evaluate is a fundamentally different risk (albeit an applicant with certain risks associated with its very newness) from the risks associated with a going business with a potential claims history worthy of inquiry and evaluation.” The trial court also concluded that a number of other misstatements in the insurance application were material.

The trial court entered judgment in favor of Endurance and against the Bennington defendants and NRG.

DISCUSSION

When a policyholder conceals or misrepresents a material fact on an insurance application, the insurer is entitled to rescind the policy. Each party to a contract of insurance shall communicate to the other, in good faith, all facts within his knowledge which are or which he believes to be material to the contract. (Ins. Code, § 332.) A rescission effectively renders the policy totally unenforceable from the outset so that there was never any coverage and no benefits are payable. (Imperial Casualty [& Indemnity Co. v. Sogomonian (1988)] 198 Cal.App.3d [169,] 182 [(Imperial Casualty)].) and (LA Sound USA, Inc. v. St. Paul Fire & Marine Ins. Co. (2007) 156 Cal.App.4th 1259, 1266-1267 (LA Sound).]

An insurer may rescind a contract based on a misrepresentation made by an insurance broker on behalf of the insured. (Superior Dispatch, Inc. v. Insurance Corp. of New York (2010) 181 Cal.App.4th 175, 192.) Moreover, an insurer may rescind a policy even if the misrepresentation was unintentionally made. An insurer may also raise rescission as an affirmative defense in an answer to an insured’s complaint for breach of contract.

An insurer has no obligation to verify the accuracy of the representations in an insurance application.

Endurance met its burden of demonstrating that it was entitled to the affirmative defense of rescission based on Bennington’s material misrepresentation as to its date of establishment. The Bennington defendants and NRG did not meet their burden of raising a triable issue of material fact as to that defense.

Endurance therefore was, therefore, entitled to summary judgment.

ZALMA OPINION

It is strange, especially in California, that a businessman would misrepresent or conceal material facts when applying for insurance. Since California allows rescission even if the facts misrepresented or concealed were made innocently and without an intent to deceive. Bennington misrepresented multiple material facts, not the least of which was its time of existence, were sufficient to allow the policy to be rescinded from its inception.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

 

 

 

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Barry Zalma Insurance Books from Major Publishers

Books from Full Court Press, the ABA and Thomson Reuters

Full Court Press

Zalma on Property and Casualty Insurance

The earnings of almost every civil lawyer in the United States are funded by the insurance industry. Insurance can best be described as the mother’s milk of the law profession. The civil defense lawyer is paid by an insurer for each hour he or she works. The civil plaintiffs’ lawyer is usually paid by taking a percentage of any judgment entered in favor of the plaintiff, which judgment is usually paid by the defendant’s insurer.

In almost every situation in which a civil lawyer practices law the funds for that work come, either directly or indirectly, from insurance. Consequently, lawyers must use their wits and energies to avoid or to pursue litigation to the benefit of the client. Both sides understand that an insurer will eventually pay one or both sides in the dispute. Insurance is important to every civil dispute and even some that fall within the criminal courts.

Every lawyer retained to prosecute or defend a civil suit should begin the representation with a serious effort to find insurance coverage for the benefit of the client or the defendant the client is suing. Without that knowledge, the lawyer will find he or she is litigating with duct tape firmly self-placed across his or her mouth.

Insurance Law DeskbookZalma

Learn the insurance basics that are essential to every civil practitioner.

California Insurance Law Deskbook

California has long led the way when it comes to insurance jurisprudence in the United States, and few know more about California insurance law than Barry Cal LawZalma.

Insurance Bad Faith and Punitive Damages Deskbook

Understand the relationship between insurance, the tort of bad faith, and why punitive damages are awarded to punish insurers.

An annual subscription to secondary content on the Fastcase BadFaithplatform includes new editions and updates published by the author as they are rolled out, so you can rest assured that your research is up to date. Go to fastcase.com for more detail and how to use the material on-line as part of your legal or insurance research or as stand-alone e-books.

All available at fastcase.com.

The American Bar Association

The Commercial Property Insurance Policy Deskbook

How to Acquire a Commercial Property Policy and Present and Collect a First-Party Property Insurance Claim

By Barry Zalma

The Commercial Property Insurance Policy Deskbook is a comprehensive resource on acquiring a commercial property policy and presenting and collecting first-party property insurance claims. The book looks at the fundamentals of insurance and a wealth of topics including rules of construction of a policy of commercial property insurance, the commercial first party property insurance policy, different types of property losses, conditions and limitations,specific and blanket coverages, mortgage clauses, the need for a prompt notice of claim, the commercial property claim, adjusting the commercial property loss, the sworn statement in proof of loss, the adjustment of the commercial property loss, subrogation and salvage, and common law bad faith.

Also included are five appendixes of forms, letters, and other documents.

Available from the American Bar Association at: http://shop.americanbar.org/eBus/Default.aspx?TabID=251&productId=214624; or  orders@americanbar.org, or 800-285-2221.

The Insurance Fraud Deskbook

Author: Barry Zalma

Sponsor(s):  Tort Trial and Insurance Practice Section, Publisher(s):   ABA Book Publishing

ISBN: 978-1-62722-676-9
Product Code: 5190506
2014, 638 pages, 7 x 10

Product DetailsThis book is written for individuals who are focused on the effort to reduce expensive and pervasive occurrences of insurance fraud. Lawyers who represent insurers, claims personnel, prosecutors and their investigators can all benefit from this exhaustive resource.

The Insurance Fraud Deskbook is a valuable resource for those who are engaged in the effort to reduce expensive and pervasive occurrences of insurance fraud. It explains the elements of the crime and the tort to claims personnel, and it provides information for lawyers who represent insurers, so they can adequately advise their clients. Prosecutors and their investigators can use this book to determine what is required to prove the crime and win their case.

The full text of decisions from courts of appeal and supreme courts across the country are provided so the reader can understand what happens after the investigation is completed and can apply that information to undertake their own thorough investigations. It allows claims personnel and their lawyers to understand what errors would cause a defeat or a not-guilty verdict.

The effort to reduce insurance fraud requires the assistance of both civil and criminal courts. The Insurance Fraud Deskbook can help the prudent fraud investigator, insurance adjuster, insurance attorney, insurance Special Investigation Unit, and insurance company management to attain the information needed to deal with state investigators and prosecutors.

Available from the American Bar Association at: http://shop.americanbar.org/eBus/Default.aspx?TabID=251&productId=214624; or  orders@americanbar.org, or 800-285-2221.

Diminution in Value Damages

How to Determine the Proper Measure of Damage to Real and Personal Property

ISBN: 978-1-63425-295-8
Product Code: 5190524
2015, 235 pages, 7 x 10, Paperback

This book was written to provide sufficient information to those who became interested in the issue since the Georgia Supreme Court decided State Farm Mutual Automobile Insurance Co. v. Mabry, 274 Ga. 498, 556 S.E.2d 114 (Ga. 11/28/2001) and includes cases dealing with the use of diminution in value as a method of determining the amount of loss incurred by a plaintiff seeking indemnity for damage to real or personal property.

Because confusion has reigned across the United States concerning the proper measure of damages for property damage to property that has been repaired, Diminution In Value Damages assists the reader in answering the questions concerning the proper measure of damage in each of the fifty United States and federal United States jurisdictions

This edition has been totally rewritten and expanded, providing the most extensive and detailed coverage of the issue and a thorough explanation of how to apply diminution in value damages to losses to property.


Co-Author(s):Property Investigation Checklists: Uncovering Insurance Fraud, 12th Michael H Boyer  &  Barry Zalma

Property Investigation Checklists: Uncovering Insurance Fraud provides detailed guidance and practical information on the four primary areas of any investigation of suspicious claims:

• Recognizing suspicious claims

• Proper investigation procedures

• Analysis of laws concerning fraudulent personal and real property claims

• Evaluating and settling claims.

The book also examines recent developments in areas such as arson investigation procedures, bad faith, and extracontractual damages. The appendix includes the NAIC Insurance Information and Privacy Protection Model Act.

Read about these and other insurance books by Barry Zalma at http://zalma.com/blog/insurance-claims-library/

 

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A Brutal, Senseless Physical Altercation is not an “Accident”

Battery, With Intent to Injure, is not an Insurable Event

Trinity Carr, with malicious intent, beat, kicked and slammed Amy Joyner-Francis to the ground causing her unexpected death. Carr sought indemnity from her homeowners insurer claiming her actions resulted in the accidental death of Amy because she suffered from a pre-existing heart condition.

In USAA Casualty Insurance Company v. Trinity Carr,  No. 273, 2019, Supreme Court Of The State Of Delaware (January 29, 2020) USAA Casualty Insurance Company (“USAA”) sought a declaratory judgment in the Superior Court that it was not obligated to defend, indemnify, or provide insurance coverage for claims made in two lawsuits against Trinity Carr, the daughter of a USAA homeowner’s-insurance policyholder. The plaintiffs in the underlying lawsuits sought money damages from Carr and others for personal injuries and wrongful death suffered by Amy Joyner-Francis the physical altercation—described in both complaints as a “brutal, senseless, forseeable [sic] and preventable attack”— between Joyner-Francis and Carr and her friends.

USAA argued that the incident—whether it be labeled an altercation, an attack, or otherwise—was not an “accident” and therefore not a covered occurrence under the policy and that, even if it were, the purported liability was excluded from coverage. The Superior Court disagreed and entered summary judgment in favor of Carr.

FACTS

Amy Joyner-Francis suffered sudden cardiac death after she was assaulted by Trinity Carr in their high school bathroom. Joyner-Francis’s autopsy revealed that she had a “large atrial septal defect and pulmonary hypertension,” which, in addition to the emotional and physical stress from the fight, caused her heart failure. The assault, which consisted mostly of “awkward punches . . . grappling[,] and kicking” on the floor, was a contributing cause of Joyner-Francis’s death even though her death was not a risk of which Carr should have been aware.

After Carr’s criminal prosecution, two civil lawsuits by Joyner-Francis’s estate and by her parents were filed. Carr demanded a defense and indemnification from USAA, which had a homeowner’s insurance policy (“Policy”) covering Carr’s mother and potentially Carr as a resident relative.

The Policy defines “Occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results . . . in . . . bodily injury; or property damage.” The Policy also includes an exclusion of coverage for bodily injury “which is reasonably expected or intended by an insured even if the resulting bodily injury . . . is of a different kind, quality[,] or degree than initially expected or intended” (“Exclusion Clause”). [emphasis added]

ANALYSIS

The interpretation of an insurance policy is a question of law. The parties’ dispute concerns the meaning of the word “accident,” although they agree that the meaning incorporates some form of unforeseeability. The central questions are “what must be unforeseeable?” and “to whom?”

On appeal, USAA contended that whether an incident is an accident must be determined from the insured’s standpoint rather than the victim’s. According to USAA, because Carr intended for the fight, which unexpectedly caused Joyner-Francis’s death, to happen, the fight was not an accident.

The Coverage Clause provides that the bodily injury—in this case, Joyner-Francis’s death—must be caused by an accident, not that the nature or extent of the injury itself must be an accident. Even from Joyner-Francis’s viewpoint, the question is whether the events that caused her death were accidental, not whether the death itself was an accident.

The Supreme Court of Delaware determined that contrary to lower court rulings, whether an incident is an “accident” in the context of homeowners’ insurance policies must be determined from the viewpoint of the insured. It concluded that to hold otherwise would be to distort the ordinary meaning of the word “accident” and subvert the “well-established common law principle that an insured should not be allowed to profit, by way of indemnity, from the consequences of his own wrongdoing.”

Joyner-Francis’s death was caused by a combination of her medical conditions and the emotional and physical stress from the assault. The medical conditions were preexisting conditions. And the assault was not an “accident”—as noted evidence showed Carr “bragging that [she and her friends] intended to ‘get’ [Joyner-Francis],” and Carr was the aggressor in the fight.

The Supreme Court concluded that because, from Carr’s perspective, the fight that caused Joyner-Francis’s death was not an accident, the Policy does not provide coverage for her litigation expenses or legal liabilities.

Even if Joyner-Francis’s death was caused by an “accident,” coverage is excluded under the Exclusion Clause.

Separately, albeit unnecessarily, the Policy’s Exclusion Clause provides USAA relief even if the Coverage Clause does not. The Supreme Court noted that the intent of the Exclusion Clause is clear: USAA sought to exclude coverage where the insured intended to cause bodily injury, even if the resulting injury was more or less serious or of a different kind than intended.

The Exclusion Clause clearly excluded coverage. Carr intended some bodily injury; she initiated the assault on Joyner-Francis, beat and kicked her viciously.  That intention alone triggers the Exclusion Clause. That the resulting injury was not initially expected or intended is irrelevant.  It was just such a situation the Exclusion Clause is meant to exclude.

ZALMA OPINION

The Delaware Supreme Court set the interpretation of an insurance policy clearly and without ambiguity. To label an intentional assault an “accident” is to disregard the ordinary, everyday meaning of the term “accident.” Whether an assault is an “accident” is determined by the intent of the insured, and not by the viewpoint of the victim. Even though Carr may not have intended to cause Francis’s death, she certainly intended to cause injury to her.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

 

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Rescission of Insurance and Random Thoughts

What Happens When an Insured Breaches the Covenant of Good Faith & Fair Dealing

The book on Rescission of Insurance provides insurers, their claims personnel and lawyers with information needed to defeat breaches of the covenant of good faith and fair dealing by an insured when acquiring insurance. Although seldom used the equitable remedy of rescission is an important tool to avoid insurance fraud.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it for insurers and their claims staff to become insurance claims professionals.

Rescission of Insurance – 2nd Edition

Newly updated and expanded, “Rescission of Insurance – 2nd Edition” provides the insurance coverage lawyer, policyholder lawyer and claims professionals with everything needed to understand and enforce the equitable remedy of rescission. Everyone involved in or with the business of insurance must understand that rescission is an equitable remedy as ancient as the common law of Britain. When the United States was conceived in 1776 the founders were concerned with protecting their rights under British common law. They adopted it as the law of the new United States of America modified only by the limitations placed on the central government by the U.S. Constitution approved in 1789.

The viability and ability to enforce contracts was recognized as essential to commerce. Courts of law were charged with enforcing legitimate contracts. Courts of equity were charged with protecting contracting parties from mistake, fraud, misrepresentation and concealment since enforcing a contract based on mistake, fraud, misrepresentation or concealment would not be fair. The common law developed rules that courts could follow to refuse to enforce the terms of a contract that was entered into because of mutual mistake of material fact, a unilateral mistake of material fact, the breach of warranty (a presumptively material promise to do or not do something), a material concealment, or a material misrepresentation. The remedy – called rescission – created a method to apply fairness to the insurance contract and allow an insurer to void a contract and allowed courts to refuse to enforce such a contract entered into by misrepresentation or concealment of material facts.

Available as a paperback.

Available as a Kindle book.

Random Thoughts on Insurance

Product DetailsAfter more than 52 years acting as a claims person and insurance coverage lawyer I enjoy reading court decisions concerning insurance. The idea of this blog is to find new cases that are interesting to me and then write a summary. Some of the cases reviewed will be important. Some may be of first impression. Others will be totally unimportant. All will be interesting.

The case digests and articles from 2010 to the present, in the six volumes summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

 


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

 

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The Covenant of Good Faith Applies Equally to the Insured

Presenting a False Application Allows Insurer to Rescind Policy

Much is written about the tort of bad faith. Usually claiming an insurer did something improperly to deprive an insured of the benefits of an insurance policy. Almost never reported is when an insured acts to deprive an insurer of the benefits of the insurance policy since the public is never told that the duty to deal fairly and in good faith applies equally to both parties to the policy of insurance.

In Hanover Insurance Company v. Aramount Financial Services, d/b/a Tax Tiger; Partricial Lanning; Ramil Abratique; Caryl Griffith-Abratique; Charlotte Hancey; Stephanie Hurst; Robert Kleeman Jr.; Law Ofice Of Michael E. Cain L.L.C.; Brian Michaud; Scott Reed; Laura Reed; Catherine Repp; Rafael Rodriguez; David Sanders Marsha Sanders; Roger Scott; Stephen Strong; Shari Strong; Particia Taylor; and Ronaldwoodcock, Civil Action No 18-cv-02149-RBJ, United States District Court For The District Of Colorado (January 28, 2020) Hanover Insurance Company sought rescission of an Accountants Professional Liability Insurance Policy that it had issued to Paramount Financial Solutions.  Hanover moved for summary judgment in order to obtain a judicial ruling that the policy is void.

BACKGROUND

On June 5, 2017 defendant Patricia Lanning, as Chief Financial Officer of Paramount Financial Solutions Inc., d/b/a Tax Tiger, executed a renewal application for an Accountants Professional Liability Insurance policy for the period June 25, 2017 to June 25, 2018. Among other things Ms. Lanning represented that after inquiry of all owners, partners, officers and professionals of the firm and affiliates, she had no knowledge of any incidents or circumstances that might result in a claim being made against Tax Tiger.

In reliance on the representations made in the application Hanover issued the policy. The Plaintiff proved that Ms. Lanning began accepting upfront fees for services from clients but not performing any professional services for those clients. In February 2018 Ms. Lanning caused Tax Tiger to cease conducting the business of Tax Tiger and closed the office location. Since that time Hanover received notices of claims from various clients of Tax Tiger who contend that they paid Tax Tiger fees for tax services that were never performed.

Hanover sued claiming that it is entitled to rescind the policy due to the misrepresentations and omissions in the application. Alternatively, it seeks a declaration that it has no obligation to defend or indemnify the insured against any of the clients’ claims.

FINDINGS AND CONCLUSIONS

No defendant has disputed the fact that Ms. Lanning, on behalf of Tax Tiger, knowingly and intentionally misrepresented material facts and omitted to disclose material facts in the application to renew the policy, i.e., that, she was taking payments from clients but was not providing professional services to them.

The court concluded that Hanover properly rescinded the policy and that even if the policy was not voided by the insured’s conduct, that conduct would eliminate coverage under the policy for claims based on that conduct.

ZALMA OPINION

When an insured obtains a policy of insurance based upon a knowing misrepresentation of a material fact – and I can’t think of anything more material than an accountant who takes fees and fails or refuses to do the work – allows for rescission. The business of insurance is a business of utmost good faith. Obtaining a policy based upon one or more material lies is fraud and allows the insurer to declare that the policy never existed.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

 

Posted in Zalma on Insurance | Leave a comment

Utah Insurance Statute Changes Common Law Defense

A Person Who Becomes Unforseeably Incapacitated Cannot be Found Liable in Tort

When I was a young lawyer a client severely injured a young man when my client had a seizure while operating a motor vehicle and drove it into a Safeway store where the young man worked. I proved the seizure and the young man recovered nothing because there was no tort, no negligence, no breach of duty. It was sad but it was a proper application of the law.

Recovery of damages from an automobile accident are based in tort. That means, to recover damages, the injured person must prove that the defendant breached a duty, that the breach of the duty caused the injury and damaged a person. Tort law has, for many centuries, concluded that when a person is unforseeably incapacitated: a heart attack, a stroke, a seizure, or even a sneeze, that results in an automobile accident, the accident is not due to a breach of duty. As a result there can be no liability imposed on the person incapacitated.

In Lancer Insurance Company v. Lake Shore Motor Coach Lines, Inc., Janna Crane, Elizabeth Hutchison, Mette Seppi, Tiffany Thayne, No. 20160244, Supreme Court of Utah, (February 15, 2017) the United States District Court for the District of Utah asked the Supreme Court of Utah whether Utah statutes that require motor vehicle liability insurance policies to “cover damages or injury resulting from a covered driver of a motor vehicle” who suddenly and unforeseeably becomes incapacitated is enforceable.

FACTS

The personal injury claims at issue in the underlying federal case arose out of a bus accident. The bus was driven by Debra Jarvis and owned by Lake Shore Motor Coach Lines, Inc. Jarvis experienced a sudden and unforeseeable loss of consciousness while driving back to Utah from a high school band competition in Idaho. Her loss of consciousness caused the bus to leave the roadway, hit a ravine, and roll over. Several passengers were injured in the crash.

The injured passengers filed separate lawsuits in Utah seeking damages for their injuries. The plaintiffs filed motions for partial summary judgment, asserting that Lancer Insurance Co. (Lake Shore’s insurer) was strictly liable for the passengers’ injuries under the Utah Code. The trial court held that the statute preserved the common-law “sudden incapacity” defense, under which Jarvis would not be liable for her sudden loss of consciousness and the injured parties could recover only upon a showing of fault.

In a federal case brought by Lancer the insurer sought a declaratory judgment confirming the state district court’s interpretation of the Utah Code reinforcing the conclusion that this provision preserves the common-law “sudden incapacity” defense and thus requires proof of fault to sustain liability in this case.

The federal district court appropriately certified the following two questions to the Supreme Court:

  1. whether Utah Code section 31A–22–303(1) imposes strict liability on an insured driver for damages to third parties resulting from the driver’s unforeseeable loss of consciousness while driving; and
  2. if so, whether the driver’s liability is limited by the applicable insurance policy or by the applicable minimum statutory limit.

ANALYSIS

Utah Code section 31A–22–303(1) requires that “a policy of motor vehicle liability coverage … shall … cover damages or injury resulting from a covered driver of a motor vehicle who is stricken by an unforeseeable paralysis, seizure, or other unconscious condition and who is not reasonably aware that paralysis, seizure, or other unconscious condition is about to occur to the extent that a person of ordinary prudence would not attempt to continue driving.” UTAH CODE § 31A–22–303(1)(a)(v). It further provides that “[t]he driver’s liability under Subsection (1)(a)(v) is limited to the insurance coverage.”

Many years before the statute was enacted the Supreme Court embraced the “sudden incapacity” defense. That defense precludes liability for a person driving an automobile who is suddenly stricken by an illness that makes it impossible for the driver to control the car and that the driver has no reason to anticipate because the sudden incapacity was not a tortious act.

The Supreme Court interpreted section 303(1) to override the common-law “sudden incapacity” defense and to impose strict liability (at least in circumstances in which the driver has a liability policy with the coverage mandated by the statute).

The statute announces two key premises: a requirement of insurance coverage (for “damages or injury resulting from a covered driver of a motor vehicle who is stricken by an unforeseeable paralysis, seizure, or other unconscious condition,” UTAH CODE § 31A–22–303(1)(a)(v) ), and a limitation of liability (confining the “driver’s liability” to the “insurance coverage,” id . § 31A–22–303(1)(b) ).

The Supreme Court viewed these provisions as overriding the common-law “sudden incapacity” defense—at least in a case in which the insurance coverage provided by statute is in place —and thus as subjecting a covered driver (and by extension the insurer) to strict liability. The principal mandate of the statute is a requirement of insurance coverage, not an express articulation of a duty or standard of liability in tort.

The required insurance coverage overlaps precisely with the common-law sudden incapacity defense. The express requirement of insurance coverage is, according to the Supreme Court, best understood as an implicit repudiation of the common-law doctrine of sudden incapacity (and an imposition of strict liability). The Supreme Court concluded that Utah Code section 31A–22–303(1) overrules the common-law doctrine of sudden incapacity in a manner imposing strict liability on a driver (and by extension, the driver’s insurer), at least in a case in which the mandated coverage is present and concluded that an injured party has a claim for strict liability under the terms of the statute.

That leaves the second question certified by the federal district court—whether the insured driver’s liability is limited to the amount of insurance coverage available under the driver’s liability policy or instead to the minimum amount of coverage mandated by the general policy limit statute. This question has a straightforward answer in the terms of the statute. By statute, the driver’s liability is expressly “limited to the insurance coverage.”

Utah Code section 31A–22–303(1) overruled the common-law doctrine of sudden incapacity to only a limited extent—to the extent of available insurance coverage.

ZALMA OPINION

The Supreme Court interpreted the statute to impose strict liability on an insured driver, and to limit the driver’s liability to the coverage of the applicable insurance policy. In so doing the state of Utah changed the common law by first requiring all automobiles to be insured and that if a person is injured by an unforeseeable incapacity of the driver the insurer is obligated to pay the injured for their damages up to the amount of available insurance. It is now clear, in Utah, an insurer is obligated to pay for injuries caused by a person incapacitated by an unforeseeable event although the insured could not be held for tort damages.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

Posted in Zalma on Insurance | Leave a comment

Zalma’s Insurance Fraud Letter – February 1, 2020

 ZALMA’S INSURANCE FRAUD LETTER

February 1, 2020

Standing to Rescind Insurance Fraud Prevention Act Fails

Standing to Rescind Insurance Fraud Prevention Act Fails

Dr. Harshad Patel and Richard Arjun Kaul, M.D. v. Richard Crist, et al., Civil Action No. 19-8946, United States District Court District Of New Jersey (January 7, 2020) filed suit seeking to have the New Jersey Fraud Prevention Act repealed by suing Allstate Insurance Company, Richard Crist and Benjamin Hickey (collectively, the “Allstate Defendants”) and the State of New Jersey, Office of the New Jersey Attorney General, Office of the Commissioner of the New Jersey Department of Banking and Insurance, and Office of the Insurance Fraud Prosecutor (collectively, the “State Defendants”), moved to dismiss a suit brought by the Plaintiffs for making their ability to practice medicine difficult.
INTRODUCTION
Plaintiffs Dr. Harshad Patel and Richard Arjun Kaul, M.D., sought to have the New Jersey Insurance Fraud Prevention Act (“IFPA”), N.J.S.A. 17:33A-20, et seq., repealed. Plaintiffs allege that the IFPA is unconstitutional and, among other things, seek a declaratory judgment stating that all judgments and settlements entered against healthcare providers pursuant to the IFPA are null and void.
In their opposition, Plaintiffs state that the IFPA is unconstitutional and attached a spreadsheet listing damages and punishments that are permissible under the IFPA that are not available under presumably similar insurance fraud prevention statutes in other states.

The Need of a Fraud Investigator to Understand the Mutability of Memory

During my time as a trainee investigator at the Army Intelligence School at Fort Holabird, Maryland, a classroom lecture on interviewing was interrupted by a man dressed in a clown mask, a tuxedo, swim fins, a cowboy hat, and a purple cummerbund. He ran into the room, screamed epithets, fired a weapon into the ceiling, and ran out. The teacher instructed each member of the class to write down a description of the intruder. None of our descriptions were accurate, and we were all shocked when the shooter was brought back into the class. The noise he made, the firing of a weapon, and the fear the incident engendered made it almost impossible to recall him accurately. Some even described him as having been female.
The professional recognizes that some EUO techniques can cause honest subjects – those who are innocent but “just trying to be helpful” – to “misremember” and provide unreliable, even false, information.
In fact, it has long been known that false memories can be implanted by a process of suggestion, especially when used by skillful but unscrupulous attorneys or interviewers.
Leading questions-where a desired answer is suggested by the way the question is phrased-are a dangerous impediment to fact finding. The true professional, impartial and seeking only the truth, must guard against even inadvertently leading a subject to creating false memories.

Arson – A Violent and Deadly Form of Insurance Fraud

Arsonist Gets 12 Years of Hard Labor and Fails in Attempt to Obtain A Shorter Sentence

Unlike the rest of the country the State of Louisiana takes arson and insurance fraud seriously. When a person who admitted to setting fire to his home in an attempt to kill his disabled wife and defraud his insurer only injured the wife and killed her service dog, appealed his sentence as excessive.
In State of Louisiana v. Kenneth Fulford, No. 53,141-KA, Court of Appeal Second Circuit State of Louisiana (January 15, 2020) the defendant, Kenneth Fulford, pleaded guilty to aggravated arson and aggravated cruelty to animals. He was sentenced to concurrent sentences of 12 years at hard labor, a $500.00 fine and court costs for aggravated arson, and 4 years at hard labor for aggravated cruelty to animals, with no fine or costs.

FACTS

Kenneth Fulford was charged with aggravated arson, attempted first degree murder, aggravated cruelty to animals and insurance fraud. A fire set by Fulford to his mobile home that was occupied at the time by Fulford, his disabled wife, Lisa, and her service dog. Fulford lit a paper towel on fire and placed it in the spare bedroom while his wife was watching television. When Mrs. Fulford smelled smoke, Fulford went outside with the dog to check it out and returned stating he did not find anything burning. Once smoke began to fill the mobile home, Fulford stood outside at the door and told his wife to come to his voice to get out. Mrs. Fulford sustained third degree burns to her back and shoulder area. Mrs. Fulford’s service dog perished in the fire and was found in the hallway near the master bedroom.

Zalma on Insurance

The Zalma on Insurance blog has posted over 2850 digests of insurance appellate decisions and other important insurance materials and articles published five days or more a week and are available at http://zalma.com/blog.

The videoblog is adapted from my book, Zalma on Insurance Claims available at the Zalma Insurance Claims Library
Barry Zalma, Inc.
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ClaimSchool, Inc.
4441 Sepulveda Boulevard
CULVER CITY CA 90230-4847
310-390-4455
Fax: 310-391-5614
Insurance claims consultant and Expert Witness
zalma@zalma.com

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Insurance is a Contract of Personal Indemnity

No Insurable Interest No Coverage

Insurance is a contract of personal indemnity. No one can buy a policy of insurance on the risk of loss or real or personal property in which the person insured has no insurable interest. That is, the person insured will not be damaged if the property is damaged or destroyed.

In Housing Enterprise Insurance Company, Inc. v.  South Ridge Housing, LLC, Case No. 19-5422, United States Court Of Appeals For The Sixth Circuit (January 28, 2020) the Sixth Circuit was faced with a claim made by South Ridge over the purported assignment of an insurance policy.

Housing Enterprise Insurance Company (HEIC) provided commercial property-insurance coverage to One South Place, LP (One South), the owner of a residential apartment complex. The insurance policy was renewed on an annual basis beginning in 2012.

One South sold the apartment complex to South Ridge Housing, LLC (South Ridge) in 2016. As part of the sale documents One South assigned the insurance policy to South Ridge as part of the sale, but it did so without the knowledge or consent of HEIC. The apartment complex was subsequently damaged in a fire.

HEIC filed suit in federal court, seeking a declaratory judgment that the insurance policy had become void as a result of the assignment made without its consent. The district court granted HEIC’s motion for summary judgment. South Ridge appealed.

BACKGROUND

One South owned a residential apartment complex in Knoxville, Tennessee. The apartment complex was the sole property covered by the HEIC insurance policy, and One South and HEIC renewed the policy on an annual basis on September 20 of each subsequent year. Among the policy’s provisions was a common anti-assignment clause, which stipulated that the policy may not be assigned without HEIC’s written consent.

There is no common ownership between the One South and and South Ridge. The agreement provided that One South would transfer its “right, title and interest in and to any and all insurance policies . . . related to the . . . property.”  The closing documents confirmed that One South had transferred to South Ridge “[a]ll policies of title insurance, fire or other hazard insurance, all surety agreements or guaranties, and all rights which have accrued or may accrue thereunder.”

Neither One South nor South Ridge let HEIC know about the purported assignment nor did either request HEIC to assign the insurance policy before the commencement of the litigation. One South did not own legal title to the property after September 29, 2016, but it remained the sole named insured under the policy. South Ridge was, as far as HEIC knew, a stranger to the policy.

One South provided HEIC with notice of a claim for property damage caused by a fire two days earlier. HEIC, in investigating this claim, determined that the ownership of the covered property had been transferred from One South to South Ridge during the relevant period of coverage. HEIC declared the insurance policy “void for lack of insurable interest.” HEIC also sent One South a check representing a pro rata return of One South’s insurance premium.

ANALYSIS

Insurance policies in Tennessee, like other contracts, are enforced according to their plain terms, and the language used must be taken and understood in its plain, ordinary and popular sense. Because insurance contracts are drafted by the insurer, however, courts in Tennessee construe any ambiguities in such contracts in favor of the insured.

Tennessee law makes clear that the purported assignment in the 2016 sale of the apartment complex was invalid without HEIC’s consent. Anti-assignment clauses in contracts are enforceable under Tennessee law and elsewhere since the language is clear and unambiguous. A purported assignment of an insurance policy without the insurer’s consent is void when the policy contained an anti-assignment clause as did the HEIC policy. An insurance company may refuse to honor an assignment made without its permission.

The contract of insurance is purely a personal contract between the insured and the insurance company. To validate the assignment of an insurance policy despite the presence of an anti-assignment clause and without the consent of the insurer would thus contradict this basic principle.

HEIC further contends that the insurance policy became void after One South lost its insurable interest in the property. Under Tennessee law, and the law of every other state, it is essential to the validity of a contract of insurance that the insured have an “insurable interest” in the property insured; otherwise, the contract amounts to no more than a wager and is void because of violation of public policy.

The insurance policy, under HEIC’s theory, became an impermissible “wager” contract once One South transferred all of its interest in the apartment complex.

ZALMA OPINION

HEIC was deprived of the opportunity to underwrite the risk of loss to the apartment structure once One South lost all interest in the property and South Ridge (a completely different entity) took over ownership. Since insurance is a contract of personal indemnity the HEIC policy only insured the risk of loss faced by One South it only insured. Since One Sourth had no insurable interest in the property it faced no loss, potential or actual. The contract was void and South Ridge, the entity with an insurable interest, did nothing to insure the risks it faced and could not change the policy it ignored when it bought the property.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

Murder And Insurance Fraud Don’t Mix

A Fictionalized True Insurance Crime Book

The following is the introduction to my book “Murder and Insurance Fraud Don’t Mix” available at amazon.com at the following links Available as a Kindle book  and Available as a paperback.

It explains how an intelligent person became an insurance investigator and deals with how he resolved a mysterious faked armed robbery, a false insurance claim and coincidentally solved a murder.

My name is Marion Orpheus Montague. My friends, and some enemies, call me “MOM.” It is not a designation of my ability to nurture my clients. I have never been, nor will I ever be, maternal. I accept the play on my initials because it causes adversaries to underestimate me.

I am 66-years-old. My grayish blond hair is thin and my full beard is a bit scraggly. My face is round and often tinged with red. My nose is full, my eyes green and my cheeks bulge out to the sides trying to emulate the belly that precedes every other part of my body as I walk. People see me and do not believe that I am a private investigator. Seeing me they often think that I am on leave from my winter work as a Macy’s Santa Claus.

I like being underestimated. It makes my job as an investigator easier. Since graduating from Bradley University in Peoria, Illinois with a degree in Horology I have lived and worked in California. I started my career at the Tiffany’s in Beverly Hills as an junior watch-maker and repairer. I enjoyed working with the fine watches and clocks brought in by the customers of Tiffany’s and earned a fair living for a new watchmaker and repairer.

I became involved in investigations of insurance claims by accident. A claims person for – the now defunct – Resolute Insurance Company of Stockton came into the store and asked my boss for a person who could act as an expert with regard to a damaged Rolex President watch. Since I was the newest and least important watch repairer at the store the manager referred the adjuster to me. After explaining that my boss gave me permission to inspect a watch for a fee to explain the cause of the damage, I readily agreed since he was willing to pay me $25 a day to do the work, a sum half my weeks wages in 1965.

“What exactly do you want me to do, sir?”

“I need you to come with me to the home of a person who is making a claim saying his Rolex wrist watch was destroyed when someone accidentally poured wine on it at a dinner party.”

“But the President is a water-tight watch – how could that cause damage?”

“You are the expert on watches, a horologist, aren’t you?”

“I have a Bachelors of Arts degree in horology, that is true.”

“Then please come with me and examine the watch. Take whatever tools you will need.”

I confirmed with my boss that I could accompany the adjuster, packed my loupe (a ten power jewelers magnifying glass) and my watchmaking tools so I could open the watch case carefully. I followed the adjuster out and he drove with me up Rodeo Drive north into the Beverly Hills to a house on Canon Drive that was big enough to house four or five families. We were let into the house by a servant and placed in a library. The owner of the house, a gentleman with grey hair and dressed in an English cut blue suit with wide pinstripes, a bright yellow shirt, a red and blue striped tie wingtip shoes and canary yellow stockings.

The adjuster introduced me as Mr. Montague of Tiffany’s. The owner did not offer to shake my hand, he merely nodded his head and brought from his pocket a Rolex President wrist watch and laid it on the leather writing pad on the library desk. He was totally silent and I returned the favor.

The adjuster looked at me and said:

“Mr. Montegue would you please conduct your examination?”

“I will, thank you.” I replied as I sat down at the desk, turned on the desk lamp, opened my kit and carefully examined the watch. I saw no damage or stains on the exterior which was yellow gold with diamonds on both the face and the band. With the appropriate tools I opened the case, examined the watch carefully with my loupe, and used a pair of fine tweezers to remove a lemon pip from the spring. I put the pip in a small glassine envelope that was in my kit, closed up the watch, and said:

“Thank you, gentlemen. I have completed my inspection.”

The adjuster and I left the premises and drove to Nate and Al’s deli in Beverly Hills where we sat in a booth eating lox on a toasted bagel with cream cheese.

“Mr. Montague,” the adjuster said with a look of surprise and concern on his face, “you are a man of few words. What can you tell me about the watch?”

“It was not damaged in an accident as you were told.”

“No. How was it damaged?”

“A watchmaker of little skill tried to do a cleaning while having lunch. He squeezed a lemon into his salad and a pip from the lemon lodged itself in the works. As you know a Rolex is a fine watch with a very fine mechanism. A lemon pip in the works will cause it to stop. I removed the pip and the watch is now operating perfectly. You have no claim. And, by the way, there was no evidence of liquid in the watch works or on the exterior of the watch.”

“I’ll be damned” the adjuster said.

We had a pleasant lunch. I earned $25 dollars and learned about the insurance adjusting profession. It paid the same as my job as a watch maker and was much more interesting. I would receive a company car, a 1965 Plymouth, and be able to travel all over Los Angeles County. Since I could not afford a car on my salary the use of an automobile was a raise in pay I could not resist. I asked for, and on the strength of my performance, received a job with Resolute Insurance Company.

I worked for Resolute until it went bankrupt. I opened an independent adjusting and investigation business: M. O. Montague & Associates, Adjusters, Surveyors and Investigators. That business has kept me in comfort and added to my girth for more than forty years. My clients included dozens of domestic and foreign insurers as well as members of private industry who are self-insured or who operated with a high dollar amount self-insured-retention.

I am now  the biggest private investigator in California. I don’t mean I’m important or famous, just big. At six-foot-four inches and 325 pounds no one comes close to my size.

I work out of a small office in the Culver Hotel, in Culver City, California a small bedroom community on the west side of Los Angeles County. The hotel is located where Culver and Washington Boulevards join in a triangle shaped pattern in the area euphemistically called Downtown Culver City, California. The hotel is famous for housing all of the little people who played the Munchkins in the “Wizard of Oz” and as the home of Ronald Reagan during World War II. Now, it houses executives from Sony Pictures Entertainment who bought out the old MGM and DesiLu Studios. The Hotel has been rebuilt, repainted and reconstituted. It is still funky and the elevator has a difficult time getting my bulk up to my third floor office furnished in the various left overs from 1930’s MGM musicals. Since I first rented my office in 1965 on a long term lease that has been adopted through various owners, I am currently the only business tenant of the hotel.

I like being underestimated. It makes my job as an investigator easier.

Get the full story and see how a fake robbery at a jewelry store led to murder and prison.

Available as a Kindle book.

Available as a paperback


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

Insurance Fraud and the Equitable Remedy of Rescission

Everything Needed by the Insurance Claims Professional from Barry Zalma

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it for insurers and their claims staff to become insurance claims professionals.

There are more jobs available in the United States than there are people looking for work. When an insurance company is able to hire a person to be an insurance claims handler it is not unusual to find that person knows nothing about insurance or insurance adjusting. It is essential that every insurer train its personnel – both the new and the experienced – to keep them all providing professional service or lose business to those insurers that provide excellent, fast, fair, and professional claims service.

As people enter the claims profession they need to know about how the law deals with information gathered as part of a claims investigation. When the adjuster learns that the insured has concealed or misrepresented material facts when the policy was acquired it becomes essential that the claims person understands the law of insurance fraud and the equitable remedy of rescission.

Insurance Fraud – Volume I & Volume II

In Two Volumes

Insurance fraud continually takes more money each year than it did the last from the insurance buying public. No one knows the actual amount with any certainty because most attempts at insurance fraud succeed. Estimates of the extent of insurance fraud in the United States range from $87 billion to more than $300 billion every year.

Insurers and government backed pseudo-insurers can only estimate the extent they lose to fraudulent claims. Lack of sufficient investigation and prosecution of insurance criminals is endemic. Most insurance fraud criminals are not detected. Those that are detected do

so because they became greedy, sloppy and unprofessional so that the attempted fraud becomes so obvious it cannot be ignored.

No one will ever be able to place an exact number on the amount lost to insurance fraud. Everyone who has looked at the issue knows – whether based on their heart, their gut or empirical fact determined from convictions for the crime of insurance fraud – that the number is enormous.

When insurers and governments put on a serious effort to reduce the amount of insurance fraud the number of claims presented to insurers and the pseudo-government-based or funded insurers drops logarithmically. Since the appointment of Attorney General Sessions, the effort to stop insurance fraud against Medicare and Medicaid has increased.

This book contains appellate decisions regarding insurance fraud from federal and state appellate courts across the country and full text of many insurance fraud statutes.

It is available as both a legal research tool and a product to assist insurers, insurance company personnel, independent insurance adjusters, special investigation unit investigators, state fraud investigators and insurance lawyers to become effective persons involved in the attempt to defeat or reduce the effect of insurance fraud.

Volume One available as a Kindle book and a paperback.

Volume Two Available as a Kindle book and a paperback

Rescission of Insurance – 2nd Edition

Newly updated and expanded, “Rescission of Insurance – 2nd Edition” provides the insurance coverage lawyer, policyholder lawyer and claims professionals with everything needed to understand and enforce the equitable remedy of rescission. Everyone involved in or with the business of insurance must understand that rescission is an equitable remedy as ancient as the common law of Britain. When the United States was conceived in 1776 the founders were concerned with protecting their rights under British common law. They adopted it as the law of the new United States of America modified only by the limitations placed on the central government by the U.S. Constitution approved in 1789.

The viability and ability to enforce contracts was recognized as essential to commerce. Courts of law were charged with enforcing legitimate contracts. Courts of equity were charged with protecting contracting parties from mistake, fraud, misrepresentation and concealment since enforcing a contract based on mistake, fraud, misrepresentation or concealment would not be fair. The common law developed rules that courts could follow to refuse to enforce the terms of a contract that was entered into because of mutual mistake of material fact, a unilateral mistake of material fact, the breach of warranty (a presumptively material promise to do or not do something), a material concealment, or a material misrepresentation. The remedy – called rescission – created a method to apply fairness to the insurance contract and allow an insurer to void a contract and allowed courts to refuse to enforce such a contract entered into by misrepresentation or concealment of material facts.

Available as a paperback.

Available as a Kindle book.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

Posted in Zalma on Insurance | Leave a comment

Fair Claims Settlement Practices Regulations

The Reasons Behind the California Fair Claims Settlement Practices Regulations

The following is adapted from the Introduction to my book, California Fair Claims Settlement Practices Regulations Available as a Kindle book. and Available as a paperback.

Every Insurance Claims Person Must Certify Knowledge of the Regulations By September the first of every calendar year.

In 1993 the state of California determined that the insurance industry needed to be regulated to stop insurers from treating the people insured badly and without good faith. It created a set of Regulations called the “California Fair Claims Settlement Practices Regulations” (the “Regulations) to enforce the mandate created by the California Fair Claims Settlement Practices statute, California Insurance Code Section 790.03 (h) in response to the direction of the California Supreme Court.

In so doing the California Department of Insurance (CDOI) attempted to micro manage the business of insurance claims and create a method to punish those insurers who failed to comply with the Regulations. Some of the Regulations asserted what had always been recognized by the insurance industry and good faith and proper claims handling. Others imposed draconian mandates on what and when to do everything in the claims process.

The Regulations also provided a guide to insureds, public insurance adjusters and policyholders’ lawyers to assert any violation of the Regulations to be evidence of an insurer’s breach of the implied covenant of good faith and fair dealing.

All insurers doing business in California must comply with the requirements of the Regulations or face the ire of, and attempts at financial punishment from, the CDOI. That punishment is now questionable and limited because some courageous insurers fought the CDOI and succeeded before an administrative law judge who limited the right to punish.

Regardless of difficulties in assessing punishment the state of California requires all who are involved in the claims process — even if only tangentially — to be trained with regard claims handling in compliance with the Regulations and attest to completion of such training under oath. To avoid the annual training the claims person can submit a sworn document that avers that he or she has read and understood the Regulations. Reviewing this book and the Regulations set forth below should be sufficient to comply with the training requirements of the Regulations.

It is necessary that insurance personnel who are engaged in any way in the presentation, processing, or negotiation of insurance claims in California be familiar with the Regulations. Counsel for insurers and policyholders should also be familiar with the Regulations since they set a minimum standard for claims handling in the state.

The insurer’s lawyer will need to know, and establish, that the insurer fulfilled the requirements of the Regulations since it will show to a trier of fact that the insurer fulfilled the minimum standards required. A knowledge of the Regulations can assist the lawyer in evaluating the exposure faced by an insurer.

Similarly, the lawyer representing a policyholder client needs complete knowledge of the Regulations to use them to prove that the insurer failed to fulfill the minimum standards set by the Regulations. The compliance with the Regulations is important to the evaluation of a claim for breach of the covenant of good faith and fair dealing and evaluation of a claim of damages resulting from the tort of bad faith.

Knowledge of the requirements of the Regulations is important to everyone involved in the business of insurance whether as an insurance adjuster, insurance claims management, public insurance adjuster, policyholder, defense lawyer, insurance coverage lawyer, and policyholder’s lawyer.

Fair Claims Settlement Practices Regulations

In 1993, the California Department of Insurance started the regulatory process to control, through regulatory micromanagement, claims handling in the state of California. The first version of what was then called the “Unfair Claims Settlement Practices Regulations” and were issued to comply with the direction of the California Supreme Court made as part of the ruling in a case known as Moradi Shalal that concluded: “Neither section 790.03 nor section 790.09 was intended to create a private civil cause of action against an insurer that commits one of the various acts listed in section 790.03, subdivision (h).” The Supreme Court concluded that enforcement was the obligation of the CDOI.

The CDOI, five years after receiving instruction from the California Supreme Court, issued the first version of the Regulations in 1993 and modified the Regulations in 1996, 1997, 2004, 2007, 2009 and 2012. The 1997 changes renamed the Regulations the “California Fair Claims Settlement Practices Regulations,” which name remains.

The Regulations imposed on all insurance personnel a detailed laundry list of actions the CDOI considered wrongful or in violation of the Fair Claims Practices Act, California Insurance Code Section 790.03(h).

The Regulations impose on all insurance claims personnel the requirement that they read and understand the Regulations or attend an annual training program no later than September 1 of each year. Insurers are compelled to ascertain that every employee involved in any way in the claims process is trained about the Regulations or has submitted a sworn statement that he or she has read and understands the Regulations. The Regulations even require that the insurance claims managing executive attest, under oath, that each employee has been trained with regard to and/or understands the Regulations. This requirement must be complied with in order to avoid the possibility of administrative penalties upon the insurer or prosecution of the officer for perjury.

Use California Fair Claims Settlement Practices Regulations

California Fair Claims Settlement Practices Regulations and its Appendices, should be used by insurers, their insurance claims personnel, and their trainers, educators, or lawyers to effect compliance with the Regulations by:

  1. Providing training annually for all claims personnel; or
  2. Assisting the claims personnel in their obligation to read and understand the Regulations.

California Fair Claims Settlement Practices Regulations can also be used by policyholders, public insurance adjusters, and lawyers representing policyholders to assist their clients in presenting and resolving claims made to insurers whether by negotiation or litigation.

The Appendices include an outline for use by insurance claims personnel in presenting a training seminar to insurance company claims personnel. Reading the book alone should give the reader sufficient information to declare under the penalty of perjury that he or she has read and understands the Regulations if a training class is unavailable or inconvenient. In addition, the insurer who presents the training materials should be able to ascertain that each of the insurer’s employees who need to be trained was adequately trained.

Insurers must understand that every claims employee must be trained annually in accordance with the requirements of the Regulations no later than September 1 of each calendar year, and insurers must be ready to prove to the CDOI compliance with that requirement. Failure to provide evidence of compliance with the Regulations can cause the CDOI to assess major fines against the insurer.

Those found in violation can be fined up to $55,000 for each violation and may even lose their certificate of authority to do insurance business in California. For example, an insurer with 100 employees who have not been trained could, but probably will not, face a fine of $1 million or more.

Revisions in the Regulations, not noted by the insurer, may increase the number of technical violations.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

 

Posted in Zalma on Insurance | Leave a comment

Ethics for Lawyers and Insurance Professionals

Ethics are Important to Everyone

The concept of ethical behavior refers to well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues, all of which are essential to the lawyer.

Ethics, for example, refers to those standards that impose the reasonable obligations to refrain from murder, rape, theft, assault, slander, and fraud. Ethical standards also include those that imply virtues of honesty, compassion, and loyalty.

Read about these and other insurance books by Barry Zalma at https://zalma.com/blog/insurance-claims-library/ and 2950 posts at my blog, Zalma on Insurance, at https://zalma.com/blog.

The Little Book on Ethics for the American Lawyer

The practice of law demands more than knowledge of statutory and case law. It requires more than technical proficiency in the nuts and bolts of legal practice. A lawyer is an officer of the legal system whose conduct should conform to the requirements of the law, both in professional service to clients and in the lawyer’s business and personal affairs.

The practice of law requires that every lawyer treat each client, each adversary, and the court ethically and in good faith.

The practice of law is different from other professions because it requires that the lawyer act for his or her client, not him or herself, only if the actions for the client are ethical and in good faith.

What is Ethical Behavior?

There are rights presumed to exist such as those described in the Declaration of Independence submitted to King George of England in 1776 that held: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of happiness.” The unalienable rights also include the right to life, the right to freedom from injury, and the right to liberty. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons.

Ethics, for example, refers to those standards that impose the reasonable obligations to refrain from murder, rape, theft, assault, slander, and fraud. Ethical standards also include those that imply virtues of honesty, compassion, and loyalty.

There are rights presumed to exist such as those described in the Declaration of Independence submitted to King George of England in 1776 that held: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of happiness.” The unalienable rights also include the right to life, the right to freedom from injury, and the right to liberty. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons.
Ethics also refers to the study and development of one’s standards of conduct.

Feelings, laws, and social norms can deviate from what is ethical. It is necessary, especially to people involved in the practice of law, to constantly examine one’s standards to ensure that they are reasonable and well-founded conduct that ethically treats a client, an adversary, and the court with the utmost good faith.

There is no single answer to the question of what is ethical behavior by a lawyer. Ethical behavior is subjective and fact dependent.

Available as a Kindle book here.

Available as a paperback here.

Ethics for the Insurance Professional

Methods for Insurers and their Personnel to Act with the Utmost Good FaithProduct Details

Ethics is a process of systematically applying, using, defending and recommending concepts of right and wrong behavior. Ethical behavior is required of both parties to a contract of insurance for the system to work. Ethics is the essence of insurance. Ethical behavior is required of both parties to a contract of insurance for the system to work. If any party to the insurance contract acts unethically the ability of insurance to work effectively and profitably will fail. Ethics is the essence of insurance. Since insurance was first created it has been a business of utmost good faith. As a result, the insured and the insurer are expected to treat each other ethically.

Available as a paperback.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

 

Posted in Zalma on Insurance | Leave a comment

Arson – A Violent and Deadly Form of Insurance Fraud – Real Punishment

Arsonist Gets 12 Years of Hard Labor and Fails in Attempt to Obtain a Shorter Sentence

Unlike the rest of the country the State of Louisiana takes arson and insurance fraud seriously. When a person who admitted to setting fire to his home in an attempt to kill his disabled wife and defraud his insurer only injured the wife and killed her service dog, appealed his sentence as excessive.

In State Of Louisiana v. Kenneth Fulford, No. 53,141-KA, Court Of Appeal Second Circuit State Of Louisiana (January 15, 2020) the defendant, Kenneth Fulford, pleaded guilty to aggravated arson and aggravated cruelty to animals. He was sentenced to concurrent sentences of 12 years at hard labor, a $500.00 fine and court costs for aggravated arson, and 4 years at hard labor for aggravated cruelty to animals, with no fine or costs.

FACTS

Kenneth Fulford was charged with aggravated arson, attempted first degree murder, aggravated cruelty to animals and insurance fraud. A fire set by Fulford to his mobile home that was occupied at the time by Fulford, his disabled wife, Lisa, and her service dog. Fulford lit a paper towel on fire and placed it in the spare bedroom while his wife was watching television. When Mrs. Fulford smelled smoke, Fulford went outside with the dog to check it out and returned stating he did not find anything burning. Once smoke began to fill the mobile home, Fulford stood outside at the door and told his wife to come to his voice to get out. Mrs. Fulford sustained third degree burns to her back and shoulder area. Mrs. Fulford’s service dog perished in the fire and was found in the hallway near the master bedroom.

Fulford was a volunteer fireman and, during the investigation, admitted that he had previously started fires twice at two of his residences and to his truck because he was tired of making payments on it. Fulford admitted setting the fire.

Fulford pled guilty to aggravated arson and aggravated cruelty to animals in exchange for the state’s dismissing the remaining charges of attempted first degree murder and insurance fraud. After pre-sentence investigation Fulford was sentenced.

DISCUSSION

Fulford contended that, as a first-felony offender, his concurrent sentences of 12 and 4 years at hard labor were excessive. The state claimed Fulford intentionally set fire to his home occupied by his disabled wife, with the intent to murder his wife and killed her service dog.

An appellate court utilizes a two-pronged test in reviewing a sentence for excessiveness:

  1. the record must show that the trial court took cognizance of the criteria set forth in statute and the trial judge is not required to list every aggravating or mitigating circumstance so long as the record reflects that he adequately considered the guidelines of the article. Where the record clearly shows an adequate factual basis for the sentence imposed, remand is unnecessary. The important elements which should be considered are the defendant’s personal history like age, family ties, marital status, health, employment record, prior criminal record, seriousness of the offense, and the likelihood of rehabilitation.
  2. the court must determine whether the sentence is constitutionally excessive.

A trial judge is in the best position to consider the aggravating and mitigating circumstances of a particular case, and, therefore, is given broad discretion in sentencing.

The appellate court concluded that the trial court adequately complied with the statute. Regarding constitutional excessiveness, these mid-range concurrent sentences were found to not be disproportionate to the severity of the offenses, nor did they shock the appellate court’s sense of justice.

At sentencing, the trial court stated that it had reviewed the presentence investigation report. The trial court found that it was “clearly and undeniably” foreseeable that human life would be endangered and that the service dog was tortured to the point of death by fire and smoke. It found a lesser sentence would deprecate the seriousness of this offense.

In addition, the appellate court found that Fulford benefited enormously from the dismissal of an attempted first degree murder charge, especially in light of his admission that he was trying to end his wife’s suffering. Fulford, knowledgeable and experienced in fires and arson, intentionally set fire to his home while his barely mobile wife sat watching television. He did not enter the trailer and help her escape; rather, he waited at the door calling to her and when she, amazingly, appeared, Fulford pulled her from the home he set ablaze and abandoned. Fulford knew that his wife’s service dog was inside the trailer and made no attempt to save it.

Finally, the appellate court concluded that concurrent sentences of 12 and 4 years at hard labor, plus the nominal fine of $500 were not excessive and affirmed the sentences.

ZALMA OPINION

Arson is an egregious violent crime that often, as did the fire set by Fulford, that injures or kills the innocent. To try to kill his wife by letting her burn slowly to death or die from smoke inhalator marks him as an vicious and evil person who deserves every day of hard labor. When the arson fire is also set by a firefighter – who admitted to three additional arson fires – the seriousness of the crime is amplified. The state of Louisiana, unlike other states, takes the crime of arson seriously and kindly only sentenced Fulford to 12 years of hard labor. The sentencing guidelines in Louisiana, in my opinion, should be adopted by other courts making certain that arsonists spend many years breaking big rocks into little rocks.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

 

Posted in Zalma on Insurance | Leave a comment

Do You Want Professional Claims Handlers – Educate Them!

Education is Essential to Every Claims Operation

There are more jobs available in the United States than there are people looking for work. When an insurance company is able to hire a person to be an insurance claims handler it is not unusual to find that person knows nothing about insurance or insurance adjusting. It is essential that every insurer train its personnel – both the new and the experienced – to keep them all providing professional service or lose business to those insurers that provide excellent, fast, fair, and professional claims service.

Excellence in Claims Handling from Barry Zalma

The Excellence in Claims Handling program provides everything a person or entity presenting a claim needs to effectively present the claim and provides the insurance claims person with everything he or she needs to properly represent the insurer.

The insured, risk manager, or corporate counsel will be able to present a first party property claim – whether a fire, theft, or windstorm or some other insured against cause – with little difficulty and professionalism and present a sworn proof of loss acceptable to an insurer.

The insurance claims person completing the course will be able to conduct a thorough investigation of the policy and claim. The insurance claims person will also be able to assist an insured to fulfill all of the promises made by the insured to the insurer and the insurer to provide the indemnity promised by the insurance policy.

The series of courses was designed so that the student can obtain the needed information easily while he or she sits down in the morning for a first cup of coffee or any other time in the day in short, easy to consume lessons. For instance, “Insurance and Claims” is made up of three modules and 27 lectures while “Investigating the Property Claim” is made up of four modules and 65 lectures. You can review each course, each module and each lecture at the links below.

Each person completing the course will be able to claim that he or she is a professional first party property claims person ready to provide excellence in claims handling and be ready to resolve any claims problem that arises for the benefit of the insurer and the policy holder.

The materials are available from Zalma’s Insurance Claims Library or will be presented by Barry Zalma to your people live or by webinar based on the books in the Claims Library.

The Compact Book of Adjusting Property Insurance Claims – Second Edition

A Manual for the First Party Property Insurance Adjuster

The insurance adjuster is not mentioned in a policy of insurance. The obligation to investigate and prove a claim falls on the insured. Standard first party property insurance policies, based upon the New York Standard Fire Insurance policy, contain conditions that require the insured to, within sixty days of the loss, submit a sworn proof of loss to prove to the insurer the facts and amount of loss.

The policy allows the insurer to then, and only then, respond to the insured’s proof of loss. The insurer can then either accept or reject the proof submitted by the insured.

The Compact Book of Adjusting Property Claims -- Second Edition: A Primer For The First Party Property Claims Adjuster.Technically, if the wording of the policy was followed literally the insurer could sit back, do nothing, and wait for the proof. If the insured was late in submitting the proof the insurer could reject the claim. If the insured submits a timely proof of loss the insurer could either accept or reject the proof of loss. If the insurer rejected the proof of loss the insured could either send a new one or give up and gain nothing from the claim. Suit on the policy would be difficult because the policy contract limited the right to sue to times when the proof of loss condition had been met.

Insureds and insurers were not happy with that system. It made it too difficult for a lay person to successfully present a claim. The system, as written into the standard fire policy seemed to run counter to the covenant of good faith and fair dealing that had been the basis of the insurance contract for centuries. Most insurers understood that their insureds were mostly incapable of complying with the strict enforcement of the policy conditions. To fulfill the covenant of good faith and fair dealing insurers created the insurance adjuster to fulfill its obligation to deal fairly and in good faith with the insured.

The Second edition adds new material from 2018 and 2019, is easier to use and more compact than the original.

Available as a Kindle book.

Available as a paperback.

The Compact Book on Adjusting Liability Claims, Second Edition

A Handbook for the Liability Claims Adjuster

This Compact Book of Adjusting Liability Claims is designed to The Compact Book Of Adjusting Liability Claims Second Edition: A Handbook for the Liability Claims Adjusterprovide the new adjuster with a basic grounding in what is needed to become a competent and effective insurance adjuster. It is also available as a refresher for the experienced adjuster.

The liability claims adjuster quickly learns that there is little difficulty with a claimant (the person alleging bodily injury or property damage against a person insured) if the claim is paid as demanded. The insured may be unhappy if the claimant’s claim is paid as presented since most do not believe they did anything wrong or fear an increase in premiums charged for subsequent policies.

The adjuster must be prepared to salve the insured’s emotions, explain why in the law and the policy it was appropriate to pay the claimant and that the settlement is in the best interest of both the insured and the insurer the adjuster represents.
The adjuster knows, and must be prepared to explain to an insured, that if a claim is resisted or denied the claimant will be unhappy, will probably file suit. If not promptly settled the claimant’s lawyers will rake the insured over the coals to prove that the insured is liable for the claimant’s injuries. The litigation will take time, effort, and money to establish the extent of the injuries and who is responsible for the injuries. Failure to settle promptly can cost the insured his or her reputation and will certainly cost the insurer much more than the claim could have been resolved for had it been resolved before the claimant retained a lawyer.

Available as a Kindle book

Available as a paperback.

California Fair Claims Settlement Practices Regulations

A Guide to Insureds, Public Insurance Adjusters, and Lawyers to Properly Investigate and Adjust Insurance Claims

This book was designed to assist insurance personnel who do business in the state of California. It will assist all insurance claims personnel, claims professionals, independent insurance adjusters, special fraud investigators, private investigators who work for the insurance industry, the management in the industry, the attorneys who serve the industry, public insurance adjusters, policyholders and counsel for policyholders working with insurers doing business in California. All insurers doing business in California must comply with the requirements of the Regulations or face the ire of, and attempts at financial punishment from, the CDOI. That punishment is now questionable and limited because some courageous insurers fought the CDOI and succeeded before an administrative law judge who limited the right to punish. Regardless of difficulties in assessing punishment the state of California requires all who are involved in the claims process — even if only tangentially — to be trained with regard claims handling in compliance with the Regulations and attest to completion of such training under oath. To avoid the annual training the claims person can submit a sworn document that avers that he or she has read and understood the Regulations. Reviewing this book and the Regulations set forth below should be sufficient to comply with the training requirements of the Regulations. It is necessary that insurance personnel who are engaged in any way in the presentation, processing, or negotiation of insurance claims in California be familiar with the Regulations. Counsel for insurers and policyholders should also be familiar with the Regulations since they set a minimum standard for claims handling in the state.

Available as a Kindle book.

Available as a paperback.

 


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

Posted in Zalma on Insurance | Leave a comment

A Masterpiece of Patience from the Fifth Circuit

If You Don’t Pay Premium You Have no Coverage

The Fifth Circuit Court of Appeals, in probably one of the shortest decisions ever rendered by an appellate court, made a simple, clear and obvious result in Jesse Clarence Brown, Sr. Estate; Rene Felippe Brown; Delicia Carrie Marshall; Danna Derrell Brown; Jesse Clarence Brown, Jr. v. New York Life Insurance Company, No. 19-30443, United States Court Of Appeals For The Fifth Circuit (January 15, 2020)

Plaintiffs appeal the entry of summary judgment in an insurance-coverage dispute. The district court had subject-matter jurisdiction because the defendant properly removed the case under 28 U.S.C. § 1441. The court held plaintiffs are not entitled to life-insurance benefits because the policy owner stopped paying the premiums fifteen years before he died. After carefully considering the eight issues raised in the plaintiffs’ briefs, the record, and the applicable law, the Fifth Circuit agreed with the district court. (Emphasis added)

ZALMA OPINION

Often, cases come to appellate court that should never have been brought. In this case the Fifth Circuit gave the case a decision it deserved: one short paragraph. Why they didn’t sanction the plaintiffs reveals a masterpiece of patience.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

Posted in Zalma on Insurance | Leave a comment

The Four Corners Rule Strikes Again

Extrinsic Evidence not Allowed to Interpret Coverage

When pleading a lawsuit in Colorado, a four corners or eight corners state, it is necessary for the suit to include sufficient information for the court to determine a potential for coverage under the policy. Colorado refuses to allow extrinsic evidence to determine coverage. Therefore, failure to effectively plead facts sufficient to determine coverage, will result in a dismissal.

In Georgiana Chavez, as assignee of Marlena Whicker v. Arizona Automobile Insurance Company, No. 18-1473, United States Court Of Appeals Tenth Circuit (January 17, 2020), Marlena Whicker, while driving a car insured by Arizona Automobile Insurance Company, rear-ended a taxi and injured its passenger, Georgiana Chavez. Chavez sued Whicker in Colorado state court and won a default judgment when neither Whicker nor Arizona entered a defense. Whicker assigned her rights against Arizona to Chavez, who then sued  Arizona in federal court for failure to defend Whicker in the underlying state court action. Her theory was that Arizona had a duty to defend Whicker under Colorado law because Arizona knew that she was a driver covered under its policy. The district court disagreed with Chavez and granted Arizona’s motion to dismiss.

BACKGROUND

No one disputes that Whicker was at fault for the incident. At the time of the accident, Whicker was living with the vehicle’s owner but was not related to him. The vehicle was insured by Arizona, and both the vehicle and owner were named in the policy. The owner was one of three named insureds, but Whicker was not. Because she was not a named insured, the insurance policy did not automatically provide coverage for Whicker’s use of the covered vehicle. The policy did cover drivers of the vehicle who used it with a named insured’s permission, making those users insured in their own right.

Arizona denied coverage because it was unable to reach the named insured and could not verify that Whicker had the permission of the owner to operate the auto.

Chavez sued Whicker in state court seeking damages for the accident and sent notice to Arizona of the suit. Neither Whicker nor Arizona defended the suit, and a default judgment was entered against Whicker for over $700,000. Whicker was unable to satisfy this judgment and assigned Chavez the right to pursue bad faith claims that she had against Arizona in lieu of payment. Chavez then sued as assignee of Whicker against Arizona in order to recover the damages.

Arizona moved to dismiss the suit against it, arguing the complaint did not trigger any duty on its part. The district court granted the motion because the complaint in the underlying suit never properly alleged that Whicker was insured under the policy.

ANALYSIS

Chavez argued Arizona had a duty to defend Whicker because it knew she might have used the covered vehicle with a named insured’s permission and therefore might have been covered by the policy.

The Complaint Rule

Colorado has adopted the so-called “complaint rule” as a pleading requirement in such cases to determine when the policy is implicated and, by extension, when the duty to defend arises. In a case challenging the failure to defend, the court applies the complaint rule to determine whether the insurer’s duty to defend was properly triggered in the underlying litigation and therefore breached by the insurer’s failure to provide a defense.

Under the Colorado complaint rule, a complaint must allege facts that would plausibly yield insurance coverage. When deciding whether the complaint makes a claim covered by the policy, the court looks only within the four corners of the complaint and the four corners of the policy. The Colorado complaint rule is sometimes referred to as the four-corners rule and, less commonly, the eight-corners rule.

The complaint rule can, therefore, be used offensively, as Chavez tries to use it here, to trigger a duty to defend, but it can also be used defensively to demonstrate that no duty was ever created. The complaint rule is a mechanism meant to further the Colorado legislature’s public policy rationale underlying the duty to defend. Still, some instances arise in which plaintiffs so thoroughly fail to properly allege any facts or claims that they do not trigger any duty, and insurers have successfully used the rule to avoid defending claims against insureds.

The Colorado Supreme Court has stated multiple times that an insurer can be forced to consider only the allegations in a complaint when avoiding the duty to defend. That court has also held that an insured cannot rely on extrinsic evidence to show that a duty to defend exists.

Chavez’s Complaint

To establish that the complaint did, it must have alleged:

(1) Whicker was covered in her capacity as a driver of the covered vehicle when she caused the accident and

(2) the damage itself is the sort of damage covered by the insurance policy.

The policy provides that: “No person shall be considered an insured if that person uses a vehicle without the permission of the owner or uses the vehicle as a converter.”

Because Whicker was not named in the relevant policy, simply mentioning her name would not automatically satisfy the requirement that the insured be identified as an insured. Still, Whicker could have been identified as an insured by a statement that her permissive use of the covered vehicle made her an insured for these intents and purposes. The complaint did not identify her as a covered driver. Nowhere in the complaint did Chavez identify the vehicle that Whicker was driving such that she might have at least demonstrated the defendant was driving a covered vehicle.

Chavez’s suit against Whicker, as a result of its lack of allegations setting up coverage, failed to create a duty for Arizona to defend her.

Neither the Colorado Supreme Court nor Colorado’s lower courts have thus far recognized any exceptions to this rule.

Chavez’s complaint failed to trigger a duty for Arizona to defend Whicker in the underlying suit because it failed to state on its face any facts that could have even plausibly given rise to a claim covered by the Arizona policy. Therefore, the district court’s order dismissing the case, was affirmed.

ZALMA OPINION

Whether this case was dismissed because of inadequate pleading by Chavez or the inability to obtain and use extrinsic evidence to bring the accident within coverage, Chavez lost the chance to collect her $700,000 judgment. She is not, however, without a remedy – she can always sue her lawyers for failing to allege sufficient facts to avoid the problem raised by the four corners rule.


© 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

Subscribe to e-mail Version of ZIFL, it’s Free!

Read last two issues of ZIFL here.

Go to the Barry Zalma, Inc. web site here.

 

Posted in Zalma on Insurance | Leave a comment