Missouri Insurance Lawyer Blog

Insurance policies are complicated legal contracts between you, the policy holder, and the insurance company. Very often, when a policy holder makes a claim for damages they believe should be covered by their insurance policy, the insurance company will deny the claim citing a reason unknown or often misunderstood by the policy holder.
On December 27, 2011, the Missouri Court of Appeals, Eastern Division, decided an insurance case based on the disputed definition of "owned" and "resident". The case, Manner v. Schiermeier, et. al, and American Family Mutual Insurance Company and American Standard Insurance Company, Case No. ED96143, was a claim against the insurance companies for underinsured motorists coverage on four separate automobile insurance policies because of serious injuries suffered in a motorcycle collision.

The coverage on at least one of the insurance policies depended upon whether the injured Plaintiff "owned" the motorcycle which he was driving as that word was used in the policy. For purposes of the insurance policy, the Court of Appeals determined that even though the certificate of title was not yet in the Plaintiff's name, the undisputed facts demonstrated that the plaintiff held the motorcycle as his own possession, had paid for it, either in whole or in part; drove it; and was in the process of having title transferred to him; and had separately paid for liability and underinsured motorist insurance. Therefore the Court determined that the Plaintiff did indeed "own" the motorcycle for purposes of insurance coverage.

Continue reading "WHETHER OR NOT YOU RECOVER BENEFITS FROM YOUR AUTOMOBILE INSURANCE POLICY MAY DEPEND UPON THE DEFINITION OF A SINGLE WORD IN THAT POLICY" »

Many Missourians have experienced devastating losses as a result of the storms that have ravaged the southern portion of the state in recent weeks. Thousands of people will be filing insurance claims and we want to help make sure those claims are handled properly by explaining a few situations that could happen with your insurance claims. Here are just a few things to take into consideration:

1. Many insurance companies use a property damage estimating software program called Xactimate. Prices in the program are updated on a quarterly basis. When a large storm strikes it is not uncommon for labor and materials prices in the area of the storm to increase, sometimes rapidly. As a result the prices in the Xactimate program may be outdated at the time of the storm because of the sudden increase in prices. Check with your insurer who uses this or similar programs to determine if they have updated their prices to reflect the increase in the prices immediately following the storm. If not, ask that they do so; otherwise your repair estimate may not accurately reflect the exact cost of repairs.

2. Standard homeowner policies provide that you are entitled to the full replacement cost for the repairs to your home. However, the insurer is only required to pay you the actual cash value of your repairs until you replace or repair your property, and then when that is done you can collect the difference between the replacement cost and the actual cash value. This difference is called the hold back. The hold back is determined by subtracting depreciation from the replacement cost estimate for your repairs. Therefore, if your repairs are estimated at $10,000 for replacement cost value, and the insurer determines that $1,000 depreciation should be subtracted from the replacement cost repair estimate, the insurer will then pay you initially only $9,000 (less your deductible). The $9,000 payment is called the actual cash value payment. Depreciation is determined by considering several factors, such as the wear and tear, age and obsolescence of the item being repaired or replaced. Insurers use a variety of schedules to determine what should be depreciated and for how much. Ask your insurance adjuster how they arrived at the depreciation rate for each item depreciated and what the depreciation rate is based upon to make sure that the appropriate depreciation rate is being applied. Make sure the adjuster is aware of the age of items to be repaired or replaced so that the proper depreciation rate can be applied. For example, the expected age of interior paint may be ten years. If you painted the inside of your house only two years ago, then the depreciation rate that should be applied to the paint job should only be 20%. If the insurer charges a higher rate you should question their depreciation reduction. Also, several items should not be subject to depreciation, such as pure labor items (i.e., remove and replace light fixture to paint room, etc.) or other items (i.e., profit, overhead, and sales tax, etc.) because these items are not subject to wear, tear and obsolescence. Read the insurer's estimate carefully to make sure that such items are not being depreciated.

3. For large losses (anything over $10,000) always get your own estimate from a local licensed general contractor who will commit to doing the work for the amount of his estimate. It is preferable that your contractor prepare an estimate on the same kind of estimating program that the insurer uses so that the two estimates can be easily compared. If there are differences between the insurer's estimate and your contractor's estimate have your contractor meet with the insurer's representative at the house to discuss the differences and have the insurer's representative explain why there are differences. Regardless, once the insurer determines what the repairs are, the insurer must pay you that amount, even though there may still be a disagreement between you and the insurer over any additional amounts that can be owed.

4. If there is a dispute between you and the insurer over the amount of the repairs consider taking advantage of the appraisal provision in the policy which is there to resolve disputes over the amount of the loss. In appraisal, you select a qualified appraiser that you pay, the insurer selects their own appraiser, which they pay, and the two appraisers select an umpire, and you and the insurance company share the cost of the umpire. The appraisal panel then determines the amount of the loss which the insurer must pay. Appraisal has some advantages, in that it can be quicker and less expensive than litigation where there is a dispute over the amount of the loss. Nonetheless, you should be careful in selecting your appraiser, and you should consider getting advice from qualified and experienced attorney on your selection as well as to how best proceed with the appraisal.

All 50 states have been affected by a Tennessee based entity called the American Trade Association (ATA) plus other affiliated firms, which was selling fake health insurance. The program was supposed to work by the ATA taking out money directly from consumer's accounts. Consumer's thought they were saving hundreds of dollars each month on premiums until an issue with their health came up and they found out they were not insured.

Some consumer's have shared their stories through Smart Data Solutions where one person stated, "I tried to get prescriptions through my card and it is not covered. They say they are getting a new plan, but did not inform anyone. Their phone goes unanswered, or it is busy. Their website; http://www.myatabenefits.com doesn't work either. This is either an incredibly poor run organization, or a scam."

After investigations were held consumers found out that their money had actually been used to pay for personal items such as cars, real estate, and loan payments. Some claims were paid, but only the small ones to maintain the appearance of legitimacy.

The state of Maine actually ordered the American Trade Association to pay a $1.2 million penalty because of the unlicensed products sold to consumers, the unlicensed agents, and for not adequately paying for consumer's medical bills.

Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services describes how this is just the beginning. There will be more scammers out there because they know people are seeking cheaper insurance coverage.

Consumers who want to research a company can check with their State Department of Insurance. If you are scammed by insurance company or a company that promises to provide insurance and does not, you have legal rights. In Missouri an insurance company that does not honor its promise can be sued for breach of contract and in some circumstances for bad faith. If a company poses as an insurance company but is a fake, you can sue for damages for breach of contract, misrepresentation and fraud. If you have been scammed you should also report the company responsible to law enforcement.

Continue reading "Health Insurance Scam Affects 26,000 People Across the U.S." »

Great information on disability insurance from the New York Times.

Disability, the Insurance That Is Often Sadly Overlooked - NYTimes.com.

If you have disability insurance and have become disabled, but your insurance company won't pay you need and an attorney experienced in this area. The lawyers at Tatlow, Gump Faiella & Wheelan, LLC can help. Contact them at www.tgfwlaw.com

This New York Times Article points out some important considerations when purchasing disability insurance.

Variations on a Theme: Explore the Differences in What Policies Offer - New York Times.

If you have disability insurance but, your insurance company won't honor the promise they made when the took your money you need a lawyer experienced in insurance claims denials. Chris Faiella of the lawyer firm of Tatlow, Gump, Faiella & Wheelan, LLC may be able to help. Learn more at www.peoplesinsurancelawyer.com and tgfwlaw.com.

When an insurance company fails to express itself clearly its policy can be construed against it based upon an ambiguity. In Missouri ambiguity has been described as language which is fairly susceptible of more than one interpretation. It arises where there is duplicity, indistinctness or uncertainty in the meaning of the words appearing in the insurance contract. In other words an ambiguity is an expression in the contract, that when applied to a specific fact situation creates an uncertainty as to whether coverage does or does not exists based upon the agreement itself.
Ambiguity is only one possible theory to defeat an insurance companies denial of coverage. Anyone who has received an insurance coverage denial should consult with a Missouri attorney experienced in insurance law.

Missouri, Illinois Collateral Source Rules Affect Bodily Injury Claims Differently.

This is an interesting story reported by the Insurance Journal. Missouri changed its collateral source rule under tort reform in 2005. Since then the vague law has been applied differently by many circuit courts. Recently, a St. Louis judge declared the law unconstitutional.

A recent article in the LA Times demonstrates how insurance companies make life and death decisions. A man needing an organ transplant was approved by his insurance company to have the operation in California, but the wait list was very long. His doctor recommended having the operation in Indiana where he could get the organ sooner, but the insurance company denied the procedure to save money. Read the whole story hear.

Every contract has an implied covenant or promise of good faith and fair dealing. Insurance policies are merely contracts between the insurance company and the person who purchased the insurance and people who qualify for insurance benefits under the terms of the contract. Thus, every insurance policy in the United States has a promise imposed by law upon an insurance company to act fairly towards its policy holder and the beneficiaries in the performance of the contract. This is true whether or not such a clause is specifically include in the policy, because courts will read such covenant into the policy as a matter of contract law.
Insurance carriers must therefore meet the objective reasonable expectations of the policy holders and insurers must give equal consideration to the financial interest of its insurer as it does its own interest. Thus, when an insurance company does not have to put its interests behind that of its insured, it cannot protect itself while abandoning its policy holder.

In cases, commonly referred to as bad faith cases, the essential question is whether or not the insurance carrier met its duty of good faith and fair dealing in the situation presented by the performance of its contract obligations. Examples of bad faith include delaying payments, paying less than what is owned, denying benefits or coverage, or failing to settle claims within the policy limits. The insurance companies also have obligations imposed upon them including the duty to promptly investigate all claims, and where appropriate to defend their insured under the terms of the policy. Bad faith action insurance companies policies, practices, and customs will be at issue to show how the insurance company acted, to show its motive, intent, plan and knowledge concerning the particular facts of the case. It is not necessary to show that a insurer acted intentionally to cause harm. Bad faith is a state of mind and may be evidenced by both acts and circumstances on the part of the insurer, but amounts to more than a mistake.
Specific facts that may indicate bad faith on the part of the insurer include demand that the insurer contribute to the settlement, ignoring settlement advice, not disclosing policy limits to a claimant, failing to foresee probable excess verdicts, taking and employing hard line settlement tactics, and properly investigating a claim and properly evaluation a claim, failing to litigate a claim, failing to provide a proper defense, failing to consider settlement, ignoring setting advice, failing to communicate with the insured about the case, or failing to advice the insured about the potential of excess judgments, failing to advise the insured about the policy coverage, failing to advise the insured about existence of settlement offers, acting on behalf of one insured to the detriment of another insured.

It is clear that when people buy an insurance policy that they are seeking protection from the risks insured. If the insurer fails to satisfy their obligations to the policy holder, the policy holder will face the financial risks for which they had purchased protection, as well as the emotional distress as a result of the breach of the policy agreement. Policy holders and beneficiaries are obviously in a vulnerable position when they must rely on their insurance carrier to protect their interest, particularly if the insurance company does not share information, or take appropriate actions to protect the insured's interests, because an insurance company generally has superior knowledge concerning the facts and law, and in all cases where the insured is the wrongdoer, the insurance company is in control of the defense. Therefore, bad faith lawsuits promote not only compensation by injured policy holders and beneficiaries, but provide deterrence from insurance companies acting oppressively towards their customers.

Despite the hundreds of millions of dollars insurance companies spend on advertising to make us believe that insurance comapnies will do the right thing, their actions speak louder than words. So I will be posting stories and verdicts of insurance company fraud, insurance company bad faith, unfair claims denials so that personal injury victims, and consumers can check the fact from the fiction.
For a start read about Allstate's Bad Faith, or about HMO claims denials.

HMO claims-rejection rates trigger state investigation -- latimes.com.

Here is an interesting story from the LA times. That means 20% of all claims made are denied, despite a diagnosis and a doctor's orders.

UNH UnitedHealth Settles With New York Attorney General Over Database Unit.

UnitedHealth stacked the deck its own insureds in order to skimp on paying claims of the sick and injured. Insurance policies are contracts. Contracts are promises and insurance companies make a promise as a fiduciary when they take premium dollars for the performance of a promise to pay in the future. This story sheds some light on how private insurance companies game the system to cheat policyholders.

Underinsured motorist coverage (UIM) covers you and your passengers for damage caused by another motorist who has insufficient insurance to cover the damages caused.  This type of coverage compensates you or your passenger for the deficiency in the coverage of the motorist who caused the collision and injuries.  The definition of what is an underinsured motorist is defined by the policy and can be modified by state law.  Generally there are two ways insurance companies approach this definition, a less than approach or a damages approach.  Insurance companies that use a less than approach define underinsured motorist as someone who has less coverage than your auto insurance liability limits.  For example, if the driver that hit and injured you has $25,000.00 dollars of liability coverage and you have $100,000.00 of underinsured coverage the driver that hit you is an underinsured motorist.  If that driver had $100,000.00 in liability limits the other driver would not be an underinsured driver.  The other general approach is to define an underinsured motorist as someone who has limits that are insufficient to cover the insured's damages.  Thus, if the opposing driver had $100,000.00 of liability coverage and you had   $100,000.00 of underinsured coverage the opposing driver would be underinsured if you had more than $100,000.00 of damages.  Thus when purchasing underinsured motorist coverage insurance you should try to determine which approach your company has taken, as the damages approach is much more favorable to you, your family and passengers. 

If you have a claim where you have been hurt by another driver you need to look not only at the opposing drivers polices but at your own to insure policy to see if you can collect any benefits under your own policy.  If you need assistance contact Chris Faiella, with the law firm of Tatlow, Gump & Faiella at 1-800-264-3455 for a free, consultation.  Chris will help you determine your options and advise you as to the course of action that will best suit your individual situation.