Evidence of what the Insured Wanted Not Sufficient to Prove Negligence
It is amazing to me that no one actually reads their insurance policy until after a loss. Then, when they find it did not provide the coverages they needed the insured sues the broker or agent for not acquiring the insurance the insured should have ordered except the insurance actually ordered.
In Emer’s Camper Corral, LLC v. Michael A. Alderman, Alderman, Inc. D/B/A Jensen-Sundquist Insurance Agency and Western Heritage Insurance Company, Appeal No. 2018AP458, State of Wisconsin in Court of Appeals District III (March 19, 2019) Camper Corral was a very unlucky business that suffered multiple sets of hail damage to their stock of campers and RVs.
Camper Corral alleged that Alderman, its insurance agent, breached his duty by procuring a policy for Camper Corral that contained a $5000 per-unit deductible for hail damage claims, instead of a policy with a $1000 per-unit hail damage deductible and an aggregate hail damage deductible of $5000. The case proceeded to a jury trial, and the circuit court ultimately granted Alderman’s motion for a directed verdict on two grounds: (1) Camper Corral failed to present an expert witness to testify regarding the standard of care; and (2) Camper Corral failed to establish that Alderman’s alleged negligence caused its damages.
Camper Corral is a business that sells new and used campers. In May 2011, Camper Corral’s inventory sustained approximately $100,000 in damage during a hail storm. Camper Corral made a claim and General Casualty paid the claim.
In the summer of 2012, Camper Corral’s inventory again sustained approximately $100,000 in hail damage. Camper Corral submitted a claim to General Casualty for that damage, which General Casualty paid. Twice bitten, General Casualty subsequently provided Camper Corral with a notice of non-renewal of its policy. Alderman searched the insurance market and contacted Emer to inform her that Western Heritage Insurance Company was willing to insure Camper Corral’s inventory, but with a hail damage deductible of $5000 per unit. Emer agreed to accept that policy.
Emer testified that Alderman called her in August 2013 and informed her that Western Heritage had agreed to renew Camper Corral’s policy for the 2013-14 policy year with a hail damage deductible of $1000 per unit, capped at $5000 total. Emer agreed to accept the renewed policy on those terms.
Emer testified she first received a copy of Camper Corral’s 2013-14 policy after the September 3, 2014 hail storm. She subsequently learned that the policy actually included a hail damage deductible of $5000 per unit, rather than $1000 per unit, and it did not include an aggregate hail damage deductible. Emer testified twenty-five campers were damaged during the September 2014 storm, and the total deductible therefore amounted to $125,000. After subtracting that amount from Camper Corral’s recovery, Western Heritage ultimately paid Camper Corral approximately $65,000.
Camper Corral unhappy with the deductible caused shortfall sued the broker asserting a single claim against Alderman for negligence. Because he “knew that [Camper Corral] wanted insurance coverage without a $5,000 hail deductible.”
The case then proceeded to a jury trial. Alderman moved for a directed verdict challenging the sufficiency of the evidence. The circuit court agreed with Alderman and granted a directed verdict in his favor. A plaintiff can succeed only if they are able to show that they would have been protected from the damages by an insurance policy that could have been purchased in the insurance market at the time the alleged breach occurred.
The court concluded Camper Corral had presented no evidence demonstrating that, absent Alderman’s alleged negligence, Camper Corral would have been able to obtain a policy containing a hail damage deductible less than $5000 per unit for the coverage period at issue. The court therefore dismissed Camper Corral’s negligence claim against Alderman, and Camper Corral now appeals.
Camper Corral failed to introduce expert testimony regarding the standard of care or any evidence that there was coverage availed to it in the insurance marketplace with the deductibles wanted.
A negligence claim requires a plaintiff to establish four elements: (1) the existence of a duty of care on the part of the defendant; (2) a breach of that duty of care; (3) a causal connection between the defendant’s breach and the plaintiff’s injury; and (4) actual loss or damage resulting from the injury.
The circuit court concluded Alderman was entitled to a directed verdict on Camper Corral’s negligence claim because Camper Corral had failed to prove that Alderman’s conduct caused its damages. In addition, the circuit court concluded there was no evidence in the trial record to support a finding that, absent Alderman’s alleged negligence, Camper Corral would have been able to obtain a policy containing a hail damage deductible less than $5000 per unit. Without such evidence, the court concluded Camper Corral could not prove that Alderman’s conduct in failing to obtain a policy with a lower deductible caused Camper Corral to sustain any damages.
The test for determining causation is whether the conduct at issue was a substantial factor in producing the plaintiff’s injury. Here, Camper Corral’s alleged injury was that its total deductible for the September 2014 hail damage claim was significantly higher than what Camper Corral anticipated. If Camper Corral could not have done so, then Alderson’s conduct had no effect on the ultimate amount of Camper Corral’s deductible for the September 2014 claim and, consequently, was not a substantial factor in producing that result.
Camper Corral’s complaint alleged a single cause of action against Alderman for negligence. Camper Corral never filed an amended complaint asserting additional claims for breach of contract or strict responsibility misrepresentation.
In order to prevail on its negligence claim, Camper Corral was required to establish that, absent Alderman’s alleged negligence, it would have been able to obtain an insurance policy containing a hail damage deductible of less than $5000 per unit for the coverage period at issue. The circuit court reasonably concluded there was no credible evidence at trial to support a finding that Camper Corral could have obtained such a policy.
This is another failure to read a policy as written, a failure to communicate with the insurance agent/broker, and a failure to present sufficient evidence to prove the cause of action. One could only assume that any expert insurance agent or broker asked to testify would, if called, have testified that after two major hail losses in a short period of time no prudent insurer would have taken on the risk posed by Camper Corral without a high per unit deductible. As my dearly departed father would always say: “you only get what you pay for.”
© 2019 – 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 firstname.lastname@example.org.
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.
Passover Seder for Americans
Passover is one of the many holidays Jewish people celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and wonder how did all these wonderful things come into being?
All Jewish fathers are required to teach their children, at least once a year at the Passover holiday, about the exodus from slavery in Egypt. For American Jews who have difficulty understanding Hebrew and complicated books describing the Exodus, my wife and I wrote this book to use for our own Seder where each member of the family reads part of the book.