A Video Explaining the Unethical Insured

The Unethical Insured

See the full video at https://youtu.be/Cc7DfiN9dBI

On rare occasions, an insured will act unethically in his, her or its relations with an insurer. When they do, if discovered by the insurer or its claims person, the right to indemnity may be lost. As you read about the decision from the United States Supreme Court below consider how the insured acted unethically to the insurer and why the Supreme Court decided to deprive the insured of his right to indemnity.

Although hoary with age this case still states the law of the United States with regard to unethical and fraudulent conduct by an insured and the insured’s obligation to appear for and testify honestly at an examination under oath.

In Claflin & Others v. Commonwealth Insurance Company.; Same v. Western Assurance Company.; Same v. Franklin Insurance Company, Supreme Court Of The United States 110 U.S. 81; 3 S. Ct. 507; 28 L. Ed. 76; 1884 U.S. LEXIS 1661 Argued and submitted October 16, December 17, 1883. January 14, 1884 the U.S. Supreme Court eliminated coverage for an unethical insured.

An ethical insured who applies for fire insurance on a dwelling that burns to the ground between the time of the application and the inception of the policy, as required by the Stipcich decision, must advise the insurer of the change and allow it the opportunity to renegotiate its obligations since the contingent event it was asked to insure was no longer contingent but was a certainty.


© 2020 – Barry Zalma

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.

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