Missouri Insurance Lawyer Blog

Last month, Governor Nixon signed two new laws into effect bringing additional insurance protections to consumers affected by damaging storms. The new laws provide consumers with better access to insurers and assign new rules for repair companies to avoid unscrupulous business practices.

Recently, some repair companies have begun calling themselves "insurance claims specialists" in hopes of gaining more business after a damaging storm. These repair companies offer to pay homeowner's deductibles and negotiate with the insurance companies on their behalf. The newly enacted Senate Bill 101 prohibits repair businesses from claiming insurance specialties, paying deductibles and negotiating with insurance companies.

The second new law, Senate Bill 132, guarantees insurance companies' ability to set up a mobile customer service center in storm damaged areas to help consumers get their claims filed faster. Earlier this year, insurance companies seeking to set up temporary centers were required by many cities, counties, and incorporated subdivisions and to purchase business licenses or special permits to set up their mobile centers. Thanks to the new law, Missouri insurance companies can now move quickly to set up mobile service centers wherever they're needed without bureaucratic hindrances.

For more information on these new laws, visit the Missouri Department of Insurance website.

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 As a result the prices in the Xactimate program may be outdated at the time of the storm because of the sudden increase in prices.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.

On Wednesday, April 27, 2011 the Supreme Court ruled that consumers can be bound by arbitration clauses in cellular phone and/or other contractual agreements even if state law permits class action law suits for claims arising out of such agreements. AT&T Mobility LLC v. Concepcion et ux. What the Supreme Court's ruling means for consumers is that if you agree to the terms of a contract, whether you read the contract or not, and that contract contains an arbitration clause stating that arbitration rather than the court system can decide the outcome of any grievance you have against the corporation with which you have contracted, you must use arbitration as your only means to obtain any compensation for damages suffered.

Arbitration is a way to resolve disputes without using the court system. During arbitration an arbitrator, a neutral third party, will decide the outcome of a case. The determination made by the arbitrator may based partially on law, but is usually based on the agreement and what the arbitrator determines is fair for all the parties. If you have agreed to an arbitration clause in a contract, the decision made by the arbitrator is then binding upon the parties and cannot be modified by the court system.

When entering into a contract for a cellular telephone or entering into a contract on-line be aware that arbitration clauses can and do exist in those contracts. Based upon this Supreme Court decision, should you sign a contract with an arbitration clause included, any dispute you may have against another party to the contract will be determined by arbitration which is binding and precludes you from seeking a remedy in a court of law.

Missouri, along with other states and the federal government, have reached an agreement with the Elan Corporation. The Elan Corporation's subsidiary, Elan Pharmaceuticals, INC.(EPI), marketed its anti- epileptic drug, Zonegran, for uses that were not approved by the FDA. EPI paid health care professionals to prescribe Zonegran for other uses such as obesity and headaches. EPI agreed to plead guilty to a federal misdemeanor and is to pay a criminal fine of $102 million dollars to the federal government. EPI will now be closely monitored because of a Corporate Integrity Agreement by the United States Department of Health and Human Services.

Many people assume that they don't need insurance if they don't own the building or house in which they live. But you should know that if you rent an apartment or home, your possessions are typically not covered by the building or home owner's insurance purchased by your landlord.

Most renter's insurance policies cover things like fire, theft, vandalism and other events that could damage your personal belongings. Like home owner's insurance, however, renter's insurance typically does not cover some natural disasters such as floods and earthquakes. It is important to read your renter's insurance policy carefully to determine what type of coverage you have.

Continue reading "Do You Really Need Renter's Insurance?" »

It was reported on Tuesday, September 21st by the Missouri Department of Insurance that eight companies and individuals have been accused of selling fake health plans. The fines against these companies and individuals is more than one million dollars.
The companies sold plans that were disguised as medical insurance. The plans were marketed through unsolicited faxes which at least 150 Missouri Consumers bought. The faxes said things such as "Dependent Coverage" and "Group Health Plan."

$130,000 in fines were imposed by regulators. Cease and desist orders were also issued for the following individuals and buisnesses:Thomas J. Sullivan; Richard Bachman; James M. Doyle; Bart S. Posey Sr.; Christopher Ashiotes; and Obed Kirkpatrick; Smart Data Solutions; Affinity Group Benefits Association Inc. Discount- plan marketers caught violating the court orders will likely face criminal prosecution.

Individuals who have been cheated by insurance companies have the right to sue the insurance company for damages. Government agencies police business but don't get compensation for the damages the consumer suffered. If an insurance company cheated you, you should speak to an experienced attorney about your legal rights

Continue reading "Fake Medical Insurance" »

If you're shopping for new insurance coverage, you should investigate the insurance companies you're considering before you decide to buy coverage from them. Missouri has an Insurance Complaint Index that shows you how insurance companies treat their policy holders and handle claims.

Each insurance company is given an index rating. Receiving a 100 is average. If a company receives a number lower than 100, they are below average on receiving complaints. For numbers above 100, they receive more than the average amount of complaints.

The Consumer Affairs Division (CAD) of the Missouri Department of Insurance mediates complaints. In 2009 the CAD returned a record $14 million to consumers who had been unfairly denied claims or overcharged on premiums.

Small business owners have to be many things, from salesman to maintenance to human resources and more, to run a successful business. One of the many things small business owner should be well informed on is insurance coverage. The National Association of Insurance Commissioners (NAIC) makes this challenge a little easier by offering a website, Insure U for Small Business, that is full of helpful information designed to make the small business owner's quest for the right insurance coverages a little easier.

The NAIC is the organization of insurance regulators from the fifty states, District of Columbia and U.S. territories.

When an insurance company goes broke, state government steps in to the gap to help protect policyholders. Unfortunately the state guarantee funds are only able to cover each claim up to a limited amount per claim. Amounts vary from state to state. This article from the New York Times discusses the fear many people have had about their own insurance company going broke.

Your Money - What Happens When Your Insurer Goes Under? - NYTimes.com.

Every day you are told how you can trust insurance companies on TV. However, nothing could be farther from the truth when you have suffered a personal injury. When you make a claim against another person's insurance you are the adversary of the insurance company. The adjuster you speak to may be polite but that doesn't mean they are looking out for your best interests. For example in Wood v. Robertson, the court found that the injured party was not allowed to rely on the statements made by the insurance claims adjuster to set aside a release, even though the adjuster statements mislead the claimant to sign a release of his claim. 245 S.W. 2d 80 (Mo. 1952). There was no fraud found when a claimant signed a release when they were falsely told that the company would take care of the medical bills later. Wolf v. St. Louis Public Svc., 357 S.W. 2d 950 (Mo. App 1962).

So the lesson is you have to be very careful and must read and understand any documents you sign when dealing with an insurance company. If you sign a release without understanding its legal meaning you may be signing away your rights to be compensated for the injuries and damages you suffered. Many small personal injury cases can be handled without a lawyer. See How to Handle Your Own Personal Injury Claim. However, you must carefully read and understand what you sign. If you don't understand the release or have suffered a serious injury you should speak with an experienced lawyer about your personal injury claim before you sign a release.

Umbrella insurance provides an extra level of protection for your home or business. Umbrella insurance provides protection against claims or lawsuits that exceed the coverage on your home, car and business liability insurance policy. Umbrella coverage is usually sold in $1,000,000.00 increments and is very cost effective. If you need additional coverage this is an inexpensive way to cover your risk and protect yourself or your business. The New York Times has written an excellent article on this topic that is well worth reading.

Umbrella Coverage for Preventing Your Ruin - NYTimes.com.

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.

Collision damage waiver (CDW) insurance covers the cost of damages to the rental car if you are involved in an accident. Technically, however, it is not insurance, it simply is a provision of the rental contract that addresses your liability for damages to the car. If you choose the collision damage waiver option and someone crashes into your car, you are not liable for the damage, nor or you liable for the lost profits the rental car company may claim they lost as a result of the car being out of service.

Whether or not you need this coverage depends upon your particular situation. To determine whether you need it, you should follow these guidelines. First, check with your own insurance company or read your auto policy before you rent a car. Many auto insurance policies will provide liability insurance if you injury someone else in an accident in a vehicle you have rented. However, rental cars that are damage may or may not be covered under your insurance policy depending upon the coverage you have selected. Many people believe they have full coverage, but this doesn't mean that you are in fact covered. You need to check the comprehensive and collision coverage portions of your auto policy to determine if the rental car will be covered. Furthermore, consider whether or not any damages the rental company would claim as a result of the vehicle being out of service.

Review your credit cards and member benefits from associations you belong to. Some credit cards and some associations provide benefits that will cover damages to a rental car in the event of a collision causing property damage to the vehicle. To be eligible under these programs you have to check the terms of the agreement with your credit card or the membership or association. Typically, you would decline the collision damage waiver as well as charge the full amount of the rental car on your credit card, or make your rental arrangement pursuant to your membership with the organization. Typically these memberships entitle you to a discount on the rental car in addition to any other services. Obviously, you must make sure that your credit card or member benefits provide this service. You should also fully investigate the exclusions under your credit card or membership agreement because sometimes they do not provide such services to any rental dealer, and may have limitations.

If you do not have appropriate coverage under a auto policy, or credit card or membership benefit, then you should strongly consider buying collision damage waiver insurance. Rental cars tend to be newer cars and the value of repair/replacement of the car could run into the tens of thousands of dollars. CDW damage pays for loss of use that is claimed by the rental car company. Most states do not cover loss of use under their auto insurance policies. In other words, your legislature and department of insurance do not force insurance companies to offer this coverage. There are a few states that are exceptions including Alaska, Connecticut, Louisiana, Minnesota, North Dakota, New York, Rhode Island and Texas. However, Missouri does not mandate loss of use under auto policy; therefore, it is likely that your policy does not provide it.

Think carefully if you are a Missouri resident before declining the collision damage waiver coverage.

Mr. Faiella is a member of the law firm of Tatlow, Gump, Faiella & Wheelan, LLC. If you are having problems with an insurance issue or injury you can contact him through his firms web site www.tgflaw.com.

The Business Week recently reported, Louisiana Insurance Commissioner Jim Donelon "said Monday that he'll support legislation to give the state's 'insurer of last resort' immunity against certain lawsuits, a proposal that could retroactively negate the firm's payout if it loses its appeal of a $95 million class-action. Donelon said he'll back such a bill in 2010 to protect Louisiana Citizens Property Insurance Corp. against lawsuits -- past and present -- that seek financial damages for failure to pay claims on time." Citizens "is appealing a ruling that the state-backed firm must pay $95 million to 18,573 policyholders because their Hurricane Katrina claims were not settled quickly enough." Donelon also intends to push for legislation "that would give the firm immunity against the requirement that a party post a bond while appealing a court's ruling."
Apparently, Donelon believes that insurance companies can break the rules, be held accountable in court and then should let of the hook for the "public good." Insurance companies that don not pay claims promptly, and fairly are in violation of industry standards and the law. Donelon should focus on forcing companies to pay legitimate claims timely and fairly. Instead he will insure there is an insurance company of last resort that does not have to follow the rules or pay claims fairly. Wow Jim great job!

In my earlier post, Policyholders, Don't Believ the Hype, You Are Not Friends I suggested that policyholders hold onto the promotional material used to sell the policy they purchase.  Insurance policyholder attorneys know from experience that the ads, and promises of the sale don't meet the reality of the insurance policy contract.  Recently I read a really excellent post, March Madness Makes It "Official": State Farm Embraces the Reasonable Expectations Doctrine and Rejects Linguistic Literalism by Jeffery Stemple. This blog addresses a recent series of ads by State Farm called the "Something's Missing" series.  These ads will, as Stemple suggests, help policyholders obtain the benefits they thought they had purchased.