Missouri Insurance Lawyer Blog

One of the duties insurance companies owe to their insureds is the duty to defend if a claim is made against a person or entity insured by the policy.
In a case handed down this week by the Missouri Court of Appeals, Eastern District, the Appellate Court determined that the allegations of property damage stated potentially covered claims, and the insurance company did have a duty to defend those allegations. Cook's Fabrication & Welding, Inc. v. Mid-Continent Casualty Co. and Greystone, Inc., E.D. 96465.

The duty of an insurance company to defend a claim arises whenever there is a potential or possible liability to pay based on the facts at the outset of the case. This duty is measured by the policy language and the allegations in the plaintiff's petition. The insurer must consider not only those allegations, but also the facts the insurance company knew or could have reasonably ascertained. The duty arises when the facts indicate that a claim is potentially covered, not just when a claim is obviously covered by the policy. To be relieved of this duty, the insurer must demonstrate that there is no possibility of coverage.

In this case, Mid-Continent asserted that the insurance company had no duty to defend based solely on the insurance company's assertion that it did not have to pay the claim because of a particular policy exclusion. Ultimately, the court determined that the exclusion relied on by the insurance company did not apply and the insurance company should have defended the claim.

Continue reading "Insurance Company Must Hire Attorney To Defend A Lawsuit If There Is Potential Liability To Pay Based On The Facts At the Outset Of The Case" »

An insurer is hopeful that they can use an Alabama state law governing deceptive trade practices to stop Google from prominently displaying negative websites about their company. American Income Life Insurance Company has filed suit in the Jefferson County, Alabama with charges that Google (along with several other websites) are violating state law by "intentionally disparaging the goods, services, or business of the plaintiff by false and misleading representations of fact."

At issue in the suit are several websites that appear on the first Google page of search results regarding the company which contain contents condemning the insurer's business practices. One such website, scam.com, displays a heading of "American Income Life is a Scam."

Alabama attorney Richard Baxley, in his letter to Google executives, said the sites are scams that are targeted to hurt the insurer by making anonymous charges under the guise of being "whistleblowers" performing a public service. As a result, Baxley says, the company has sustained significant financial damage. Additionally, he says that these anonymous websites have figured out how to game Google's algorithm to ensure that their sites rank high in search results.

Consistently, the courts have ruled in Google's favor in similar cases. Read more here

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" »

On August 12, 2006, James Reppy was seriously injured in a head on vehicle collision with the defendant Gary Winters. Attorneys for Reppy sent a letter to defendant's automobile insurance carrier, Farmers Insurance Group, demanding settlement and left the demand open for 90 days. The demand indicated that if it was not accepted, it would be withdrawn. The offered release would have completely immunized Winters from any further claims in exchange for the policy limits.

The reply of the insurer through counsel indicated that the policy limits offer was accepted, but imposed an additional condition that Reppy's counsel and Reppy would indemnify Winters and his insurance company and their attorney from liability for any type of medical lien.

Continue reading "INSURER'S DEMAND FOR INDEMNITY OF MEDICAL LIENS IS A COUNTER OFFER, NOT ACCEPTANCE OF SETTLEMENT DEMAND" »

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.

When you pay your insurance premiums, it might seem far fetched to imagine that your money may eventually end up in the hands of a prostitute, but that is exactly what happened with Munich Re, the world's largest reinsurance company.

Munich Re is an insurance company for other insurance companies, also known as reinsurance. In 2007, to reward their top 100 salesmen, board directors and executives, the company held a spa party where they provided 20 prostitutes to provide an array of sexual services. To read more about this news story, see the BBC article, "German Insurer Held Orgy for Salesmen."

Governor Jay Nixon has extended his executive order providing emergency protections for the insurance coverage of Joplin- area residents. Under this new executive order these provisions will stay in effect:
• Insurance companies must provide copies of policies at no charge to consumers who request them;
• Public adjusters must show their state license to prospective clients;
• Public adjusters may not charge customers to pay a fee in advance; and
• After signing a contract with a public adjuster, consumers have 14 days to cancel.
John M. Huff, director of the Department of Insurance says consumers should work with their insurance companies themselves to settle claims first. If a consumer reaches a point where they cannot work with their insurance company then a consumer complaint should be filed with the department. Consumers also have the option of hiring a public adjuster to represent them.

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.

A handful of U.S. states are revamping their insurance rules to become more attractive to insurance companies. Vermont, Utah, South Carolina, Delaware and Hawaii are attempting to become destinations of choice for special insurance subsidiaries called captives. See this NY Times article to read more about this unsettling development in insurance laws and regulations.

Do you have a judgment against an insurance company that is refusing to pay? You can obviously follow the general law and practices for executing on your judgment to collect the proceeds from the insurance company's assets. However, you should be aware of an alternate source of collection. Missouri Revised Statute Section 375.490 specifically provides that some or part of the judgment may be satisfied against funds held by the Missouri Department of Insurance. In the normal course of business insurers have to comply with the financial regulations and laws necessary to do business. Under these laws, depending upon the type of insurer, and the business they are engaged may have to deposit security in order to do business in Missouri. If a plaintiff has a partially or wholly unsatisfied execution, upon three days notice to the Director of Insurance, an execution may be served on the Director and the Director must dispose of said assets at the best price possible to satisfy said judgment. While this method is limited to any securities that are on deposit at the time, it is an often overlooked source for collecting funds against insurers. Almost every state in the union has a similar version of this statute which allows execution of a judgment against an insurer on funds held by the Department of Insurance as security for conducting business.

If you have an uncollected judgment against an insurance company you should be aware of these special provisions and how they can assist you in collecting what you are owed from the insurance company.

Continue reading "COLLECTING JUDGMENTS AGAINST INSURANCE COMPANIES" »

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" »

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." »

Insurance companies doing business in Missouri will soon face tighter oversight thanks to a new law that takes effect on August 28, 2010. The Missouri Department of Insurance explains that the new law will give the state's insurance regulators the power to step in sooner when an insurance company is in enough financial trouble that it may not be able to pay it's customers' claims. To read more about this new law, visit the Missouri Department of Insurance website press release.

Life insurance is a critical financial tool for many families in the United States. As a recent Missouri case illustrates, the failure of an insured to give true answers on a life insurance application can result in a loss of the insurance policy when it comes time to collect the life insurance. In the case of Adams v. Stonebridge Life Insurance Company, the 8th Circuit Court of Appeals held that where a man who purchased life insurance policy gave false and misleading answers on application in response to questions regarding whether or not he had a pre-existing mental disorders, the company could rescind the policy. The court noted that the insurance company justifiably relied on the man's application answers and therefore the claim for benefits to the beneficiaries after the applicant's death was proper.

This underscores two important points. First, that the application is very important in the process of obtaining life insurance and will be relied upon by the insurance company in determining whether or not to insure a person, and the amount of premium that will be paid if the application is accepted. Second, while subject to certain statutory limitations, an insurance company generally has the right to rescind the policy when the application answers were falsely made by the applicant. Most states, including Missouri have a non-contestability clause, under which after a certain period of time has passed answers will no longer form the basis for rescission. However, as no one ever knows when they will die, it is important practice to only provide correction information when applying for life insurance, so that the benefit will actually be there when it is needed.