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Seatback Failures
Front occupant seatbacks play a vital safety role in rear-end crashes, similar to the purpose of airbags and seatbelts in frontal impacts. In a rear impact, a front seat should be designed to absorb energy and contain the occupant in the front seating space. Weak, defective front seats can fail, collapse and cause front occupants […]
Know What Your Insurance Policy Covers this Holiday Season
The world of insurance can be incredibly tricky, and sometimes it can seem like there are more exclusions and restrictions than anything.
Fire insurance and renter’s insurance are no different from the rest in that regard, and it is incredibly important to know what your fire insurance can do for you, and what it can’t.
Around the holiday season, the number of house and apartment fires rises slightly, mostly due to Christmas tree fires and grease fires.
Thankfully, fires such as these are covered by most fire and renter’s insurance policies, as they fall under accidental damage due to fire. In addition, if you have any interior or exterior holiday lights that accidentally ignite, that should also be covered. However, if the fire or damage were caused by a pet running around the house, it would not be covered. There are specific policies that may cover this type of damage, but for the most part, it is excluded.
There are quite a few common holiday occurrences that are not covered by insurance, in fact. If any fights break out, any resulting damage will not be covered, and if there are any sewage backups due to grease being poured down a drain, that will also not be covered.
National studies have shown that the number of fire-and-accident-related insurance claims rises about 15% during the holiday season, but if you make sure you check your insurance policy, you will not be caught unawares, expecting damage to be covered by your insurance policy when it is not.
Auto Insurers Accused of Discriminatory Practices in Policy Pricing
To drive a vehicle on roadways in the United States, it must be insured. Although the type of automobile insurance required varies state by state – Arizona operates under a “fault” auto insurance model – every driver must carry insurance coverage on their vehicle and must also show proof of this insurance to the state’s Department of Motor Vehicles, as well.
It is common knowledge that certain areas of the country and certain age brackets have higher insurance rates than others. However, few people realize that many insurance companies also use education and occupation as categories to set rates for auto insurance coverage, as well.
The Consumer Federation of America (CFA) conducted a study to determine how this country’s ten top insurance companies priced their policies. In its study, CFA went online to receive quotes for two hypothetical customers – a factory worker with a high school diploma and a plant supervisor with a college degree – in ten major urban areas and found discriminatory practices in use by five of the top insurance companies in the study.
CFA discovered that these five insurance companies used education level and occupation as a criteria when setting rates. The quotes for liability insurance for the factory worker ranged from 9 percent to 45 percent more than for that of the plant supervisor. One insurance company would not even quote a rate for a high school graduate, but would quote a rate for a college graduate.
The director of CFA, Stephen Brobeck, said that these insurers are discriminating against lower income and less educated workers, workers who are faced with the choice of “paying these high, and often unaffordable rates, or breaking the law by driving without insurance.” He estimates that one-quarter to one-third of drivers earning less than $36,000 a year drive uninsured.
On its website, the Insurance Information Institute posted a response to the CFA study:
“No matter their station in life, dozens of auto insurers are competing for the business of every driver who resides in the cities CFA surveyed for its report. These market forces have created a favorable situation for the nation’s drivers when considering what they’ve had to pay for other products and services essential to their daily lives.”
If a driver is not satisfied with their auto insurer, the institute suggests the driver should “shop around.”
CFA believes that automobile insurance companies should only use factors related to risk – moving violations, accidents, miles driven, etc. – to price their policies, and asked lawmakers and insurance regulators to ban the use of using these two demographic factors, education and occupation, for setting insurance policy prices.
Role of Bad Faith Insurance Lawsuits in Improving Insurer Policies
When an insurance company unfairly refuses to pay an insurance policyholder for a legitimate insurance claim, the insurance policyholder can sue the insurer for damages that can potentially amount to much more than insurance benefits owed under the policy. Victims of insurance bad faith may be entitled to recover consequential damages, emotional damages, attorneys’ fees and, in some circumstances, punitive damages or other special damages. See Filasky v. Preferred Risk Nut. Ins. Co, 152 Ariz. 591 (1987); Rawlings v. Apodaca, 151 Ariz. 149, (1986); and A.R.S. § 12-341.01.
Some may see the extent of recoverable damages as a windfall for policyholders, but these damages actually play an important role in compensating victims of insurance bad faith and preventing insurers from cheating policyholders with legitimate insurance claims.
Allowing victims of bad faith lawsuits to collect damages above the amount of the benefits allowed pursuant to the insurance policy reflects the special nature of insurance contracts. Insurance agreements are not simple business contracts for the purchase of a mundane service. Insurance contracts are supposed to provide insurance consumers with peace of mind from losing their property due to accidental catastrophe; making them personal agreements.
Given the special relationship insurance companies have with insurance consumers, insurers also owe special duties to their insurance customers. An insurance company owes a duty of equal consideration, fairness, and honesty to the insurance policyholder.
Additionally, if insurance policyholders were only allowed to recover the amount rightfully owed to them, insurance companies would have little incentive to pay out legitimate claims. Many insurance companies would intentionally delay or low ball claims because at worst, the insurance company would need to pay the insurance benefits that it should have paid in the first place. These insurers would be more inclined to withhold payment of claims and make the insurance policyholder sue them to recover the insurance benefits owed under the insurance policy.
All these reasons highlight that a bad faith insurance lawsuit and damages help the insured recover what they are rightfully entitled to and also acts as a deterrent to bad faith acts by insurance companies.
Federal Court Says Bad Faith Insurance Denial Can be Brought Against Insurance Adjuster
A recent federal district court case tackled the issue of whether an Arizona insurance adjuster may be personally sued for bad faith insurance claim denial.
The case started on March 4, 2011 when Frank Gambrell collided with another vehicle on an Arizona freeway. Gambrell sustained serious injuries in the accident; his medical expenses totaled more than $87,000 and he lost more than $6,000 in wages from not being able to work. Gambrell filed a claim under multiple insurers, all of which accepted his claim except for his own personal auto insurer, IDS Property Casualty Insurance Co. After requesting reconsideration and being denied twice, Gambrell brought a lawsuit alleging bad faith denial of insurance coverage and breach of contract. Gambrell sued both IDS and the claims adjuster assigned to the case, Stacey Harrish. The defendants moved to dismiss the portion of the lawsuit against Harrish because it argued that the insurance adjuster could not be sued for a breach of the covenant of good faith and fair dealing.
Judge John W. Sedwick of the U.S. District Court for the District of Arizona ruled that Arizona law does not clearly allow or prevent an insured from bringing a claim for bad faith denial of insurance coverage. The judge noted that bad faith denial claims are based on the terms of an insurance contract to which only the insurer and insured are parties. However, the court noted that the Arizona Court of Appeals has held that the insurer and agent (the claims adjuster) are “engaged in a joint venture” which binds the adjuster to the same duties owed by the insurer. This case is helpful for policyholders because it potentially allows insureds to avoid diversity jurisdiction if the insurance claim adjuster is a citizen of Arizona and thus eliminates insurance carriers’ ability to remove bad faith lawsuits to the federal court system.
The case is IDS Property Casualty Insurance Co. v. Gambrell, Docket Number 2:12-cv-01227 .
Negligence Claims Against Insurance Agents Are Assignable in Arizona
Since 2008 professional negligence claims against insurance agents have been assignable to others in Arizona. In Webb v. Gittlen, 174 P.3d 275 (2008) the Arizona Supreme Court overturned the longstanding principal that professional negligence lawsuits cannot be assigned to others. In the Gittlen case, liquor store owners purchased liability insurance from a Hartford Casualty Insurance Agent, Victoria Gittlen. However, Gittlen failed to inform them that a special liquor liability coverage was necessary to protect against liability for selling alcohol. The business owners found themselves subject to a wrongful death lawsuit after they sold beer to a minor who accidently killed another minor during a car crash while driving intoxicated. Hartford refused to defend the wrongful death lawsuit because the business owners failed to purchase liquor liability coverage.
The business owners then settled with the parents of the deceased minor partly by assigning the rights to the lawsuit against Gittlen to the parents. The insurance agent was able to get the lawsuit dismissed in the trial court, but on appeal the Arizona Supreme Court ruled that there is no fiduciary duty that would prevent an insurance agent’s customer from selling or assigning the rights to their lawsuit to another.
Arizona Allows Accident Victims to Claim Liability and UIM coverage from Two Separate Policies Although With Same Insurance Company
Arizona law requires all insurers who provide motor vehicle liability coverage to also offer Uninsured (UM) and Underinsured Motorist Insurance (UIM) in the same amount as that provided by liability coverage. UIM coverage provides protection for automobile collisions and accidents in which the offending motorist does not carry enough coverage to pay the damages incurred by the personal injury victim.
The analysis becomes extremely complicated when the injury victim is a passenger in the at-fault driver’s vehicle. Can the insurance company preclude recovery from UIM coverage when the passenger-victim is also making a liability claim under the same driver’s auto insurance policy or can the injury victim recover both insurance benefits? Duran v. Hartford Ins. Co., 160 Ariz. 223, 772 P.2d 577 (1989) would seem to indicate that the insurance policy may preclude the recovery of UIM benefits so long as the claims related to the same tortfeasor and same insurance policy. However, in Taylor v. Travelers Indem. Co. of America, 198 Ariz. 310, 9 P.3d 1049 (2000), the Arizona Supreme Court allowed a passenger-victim to recover both under the liability coverage and UIM coverage from the same policy where multiple injury claimants reduced the available liability coverage to an amount less than the “each person” liability policy limit.
In a recent case American Family Mut. Ins. Co. v. Sharp, 640 Ariz. Adv. Rep. 43 (May 31, 2012), the Arizona Supreme Court mentioned but did not completely revisit this issue. In Sharp a woman was injured as a passenger on her husband’s motorcycle. The husband had a policy on the motorcycle of $100,000 by American Family, the woman also had a separate liability insurance on her separate car issued by American Family. The woman’s car policy had a $100,000 UIM limit. The woman settled with her husband’s policy for the full $100,000 and reserved the right to pursue her own UIM coverage. However, American Family denied her claim to her own UIM coverage under Duran supra because the policy had an anti-stacking provision that prohibited her from receiving both liability payments and UIM payments from the same policy or insurance company. American Family brought a declaratory judgment in federal court against its own insured. Its insured counter-sued American Family for breach of contract and bad faith denial of a claim.
American Family argued that subsection H of ARS § 20-259.01 states that if multiple polices are purchased an insurer can limit coverage so that only 1 policy can be applicable to an accident. However, the Arizona Supreme Court held that this only applied to cases where a person owned multiple cars and took separate policies out on each car to get multiple UIM coverage for the same incident. Because Sharp was making a UIM claim under her own auto insurance policy as opposed to her husband’s motorcycle insurance policy, she was entitled to receive liability coverage under her husband’s policy and UIM coverage under her own insurance policy regardless of whether or not they were both American Family insurance policies.
Legal Remedies for Dealing with Insurance Misrepresentation
Although rare, sometimes insurance agents mislead consumers into thinking that their insurance covers more than it actually does. Insurers do this hoping that the insured will never have to make a claim. However, when the insured tries to make a claim on the insurance that they were fraudulently induced to buy, the insurer will often refuse full payment. If this happens, the insured will have several options which would include filing a complaint with Arizona’s Department of Insurance at http://www.id.state.az.us/forms/cad_complaint_form.pdf.
Arizona law allows an insured to bring a declaratory judgment action in court in order for a declaration as to whether the insurance company was legally bound to provide coverage for the harm the insured experienced. The downside of such actions is that they do not in and of themselves require any party to do anything and requires no compensation for damages; it just affirms what the parties’ true legal rights and obligations are.
The insured can also bring a claim for breach of contract. Winning a judgment based on breach of contract does allow an insured compensation for certain damages limited to the terms of the contract plus attorneys’ fees in the discretion of the court. Another strategy is to file a case based in the tort of insurance bad faith including a cause of action for misrepresentation or an insurance producer malpractice lawsuit which would allow for a much broader recovery of damages including compensation for general (pain, suffering, etc.) damages.
The decision as to whether either breach of contract or tort claims can be filed is complex and depends on the circumstances of each case. These claims may be brought forward for a wide variety of cases including: insurance agent or broker neglect, improper failure to pay claims, failure to settle within policy limits, intentional delay of payment, improper investigation of claims, and refusal to defend lawsuits.
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The Arizona personal injury, accident, and insurance bad faith dispute lawyers at the Law Offices of Shane L. Harward PLC represent insurance, personal injury and accident victims throughout the state of Arizona (AZ) including, but not limited to, Phoenix, Scottsdale, Mesa, Tempe, Chandler, Glendale, Gilbert, Sun West, Sun City, Tucson, Flagstaff, Kingman, Bullhead City, Yuma, Lake Havasu, Fountain Hills, Anthem, Ahwatukee, Carefree, Cave Creek, Gold Canyon, Bisbee, Sierra Vista, Cochise, Paradise Valley, East Valley, Maricopa, Pima, Pinal, Gila, White Mountain, Heber, Payson, Prescott, Forest Lakes, Apache Junction, Avondale, Queen Creek, Benson, Black Canyon City, New River, Buckeye, Casa Grande, Coolidge, Cottonwood, Douglas, Florence, Gila Bend, Goodyear, Greer, Glendale, Lakeside, Guadalupe, Holbrook, Huachuca City, Oro Valley, Overgaard, Avra Valley, Parker, Peoria, Pinetop, Pine, Prescott Valley, Quartzite, Strawberry, Safford, Show Low, Sun City West, Sun Lakes, Superior, Surprise, Snowflake, Tombstone, Wickenburg, Winslow, Wilcox, Williams, Young, Youngtown, and surrounding areas.