Articles Posted in Insurance Coverage

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Earlier this month, a federal appellate court issued a written opinion stemming from a car accident involving a drunk driver, his passenger, and the company that insured both of them. In the case, Peden v. State Farm, the court reversed a lower court’s ruling that had held State Farm did not unreasonably delay payment to Ms. Peden. As a result of the court’s decision, the case was remanded back to the trial court to proceed toward trial.

Parked VanThe Facts of the Case

Mr. Graf had just bought his fiancée a new van for her birthday. To celebrate the occasion, the couple gathered friends for a small party, where alcohol was served. The plaintiff, Peden, was one of the couple’s friends.

At some point during the evening, Peden and several others got into the van so that Mr. Graf could take a picture of the group in the new van. However, Mr. Graf then got into the driver’s seat and took the car on a joy ride. He crashed the van, seriously injuring Peden, who then filed a personal injury lawsuit against Graf.

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Florida drivers are required to carry certain levels of auto insurance in order to legally drive on public roads. The idea behind this requirement is that when an accident happens, and the person who causes the accident is not able to financially cover the costs incurred by the victim, the insurance company will cover the accident victim’s costs. However, insurance companies are not always willing to cover all the costs associated with an accident, or they may deny a claim altogether. When this is the case, the accident victim is permitted to file a lawsuit against the insurance company, asking the court to require the insurance company to hold up its end of the bargain.

Damaged CarA Recent Example of the Difficulties of Dealing with an Insurance Company After an Accident

In a recent case, Etherton v. Owners Insurance Company, an appellate court upheld a $2.25 million verdict in favor of the plaintiff after his attempted negotiations with his own insurance company were fruitless. The award consisted of the requested amount of $750,000 for the plaintiff’s injuries, as well as $1.5 million for the insurance company’s failure to settle the claim in a timely manner.

The Facts of the Case

Etherton was involved in an accident with another motorist, who happened to have very low limits on his insurance policy. Etherton settled with the other motorist’s insurance company for $250,000, but since he sustained serious injuries that required three surgeries, he sought additional compensation through his own insurance company under the underinsured motorist provision of his insurance contract.

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Insurance companies like to put on a good face in their marketing, explaining that they cover their customers in times of need and help them get back to where they were before their accident. However, make no mistake, insurance companies are for-profit companies that can only survive by taking in more revenue than they pay out in claims. Thus, individual insurance adjusters are motivated to deny even the most meritorious claim, and people who are not denied are often offered low-ball settlement offers to make the claim go away.

School BusIt is important to keep in mind, however, that an accident victim is not stuck with what an insurance company offers them. And in cases in which an insurance company denies a claim outright, that is not necessarily the final word on the matter. Courts can, and often do, get involved between accident victims and insurance companies to make sure that the insurance policy is honored.

Insurance policies are contracts, by which the insurance company agrees to compensate the insured for certain expenses and injuries. In the case of motor vehicle insurance, the insurance company agrees to compensate the insured if they are involved in a qualifying accident. This coverage extends not only to the insured but also to anyone injured by the insured. A recent case out of Delaware is a good example of how an insurance company may try to escape paying out a valid claim.

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Earlier this month, the Florida Supreme Court issued an opinion upholding a trial court’s ruling in favor of a plaintiff who filed a bad-faith claim against his insurance company after the insurance company initially refused to settle the plaintiff’s claim. In doing so, the court reversed the intermediate appellate court, which had held that the insurance company’s after-the-fact confession of judgment was binding against the plaintiff.

car-wrecked-845143_960_720Fridman v. Safeco Insurance Company of Illinois: The Facts

The accident giving rise to the case occurred in 2007, and involved the plaintiff and an underinsured motorist. Because the at-fault motorist was not adequately insured at the time of the accident, the plaintiff filed a claim with his own insurance company, under the “underinsured motorist” provision of the policy.

Initially, the insurance company failed to pay the claim. The plaintiff followed up, and by 2009 he had still not received a response. He then filed a bad-faith claim against the company pursuant to a state statute. The specific statute at issue allowed for an award to be issued in excess of the policy limit. However, the plaintiff still offered to settle the case for $50,000. The insurance company did not respond.

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settlement propIf you have been involved in an automobile accident, you would prefer to settle your case outside court rather than proceed to trial. This is a common sentiment because, of course, a settlement puts money into the hands of a crash victim considerably faster than a jury verdict does.

There are several reasons for this. First of all, it takes a lot of time to prepare a case for trial. Discovery and pre-trial procedures can take months or, in complex cases involving multiple parties, even years. Also, there can be a long wait for a trial date if the court has a backlog of pending cases. There is also the chance that the opposing party may file an appeal, prolonging the case even longer.

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palm trees2As we discussed in a recent post, an injured person does not usually have the right to sue the insurance company of the person or business that caused the injury. There is a small exception to this rule, however. In situations when an injured person (or, in the case of death, his or her family) has filed a lawsuit against the negligent person or business and obtained a judgment, but the insurance company refuses to pay the injured person the money to which he or she is entitled under the judgment, the injured person may be able to sue the insurer directly.

In the case of Morales v. Zenith Insurance Company, the family of a man who was killed on the job filed suit against the man’s employer.  According to the family’s complaint, the man was killed by a falling palm tree while working for a landscaping firm. The family filed a wrongful death lawsuit in state court in 1999, alleging that the landscaping firm’s negligence had caused the man’s death. A default judgment was entered against the firm. Later, a jury trial was held to assess damages, with the family ultimately being awarded $9.525 million.

The Workers’ Compensation Settlement

Meanwhile, the family accepted workers’ compensation benefits from the landscaping firm’s insurance company, which insured the firm for both workers’ compensation (“Part I”) and employer liability insurance (“Part II”). The employer liability insurance provision contained an exclusion to the effect that there would be no coverage for any obligation under workers’ compensation law. In 2003, the insurance company made a “final lump sum payment” to the family in exchange for a settlement agreement that purported to constitute an election of remedies by the man’s estate with respect to both the employer and the carrier. Including the lump sum, the family received a total of $100,000 in workers’ compensation benefits.

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802348_69751285.jpgA dispute over insurance coverage has developed between a Florida homeowners’ association (HOA) and its insurer after the mother of slain 17 year-old Trayvon Martin claimed compensation for the death of her son. Martin was shot and killed by a resident in the neighborhood represented by the HOA. The insurance company filed a declaratory action in an Orlando federal court asking the court to declare that it is not responsible for covering the HOA on the mother’s claim.

The Trayvon Martin case has become well-known and highly controversial. Martin was visiting his father, who lived in a gated community in Sanford. The teenager was allegedly walking home from the store on the night of February 26, 2012, when he was shot and killed by 28 year-old George Zimmerman, a neighborhood watch volunteer who claimed that he acted in self-defense. Martin’s family says that Zimmerman singled their son out because he was African-American, followed him through the neighborhood, and incited an altercation. Police arrested Zimmerman forty-four days after Martin’s death and charged him with second-degree murder. Zimmerman has entered a plea of not guilty and is out of jail with a $1 million bond.

Martin’s mother, Sybrina Fulton, filed a claim with Travelers Insurance, which covers the Retreat at Twin Lakes HOA. She requested in excess of $75,000 in damages for Martin’s death. She also filed a claim with the Florida Bureau of Victim Compensation, and was approved in March for a payment from the Crimes Compensation Trust Fund. Her claim to Travelers drew a quick response.

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The family of a former Polk County commissioner who was killed in an auto accident last year has filed a wrongful death suit, the Lakeland Ledger reported Jan. 13. According to the article, Marlene Duffy Young was killed in May when an oncoming driver crossed the center line and hit her vehicle head-on. The driver, William Boyd Johnson, was also killed, and Young’s husband and adult daughter were hurt. Blood tests on Johnson revealed that he had a BAC of .077 (just under the legal limit), as well as Valium and cough medicine in his body.

The wrongful death lawsuit names Johnson’s wife as a defendant, but it also names State Farm, the Young family’s auto insurer, and their insurance agent. According to the article, the Youngs are suing State Farm and the agent because the agent allegedly ignored their request for “stacked” underinsured motorist auto insurance. The Johnsons did not have enough insurance to cover the costs of the accident, and the Youngs contend that State Farm is wrongfully refusing to make up the difference, as it would be required to if the insurance had been stacked as they had requested.

“Stacking” your auto insurance means that the upper limit of your insurance policy increases by the number of cars you are insuring. For example, let’s say you have uninsured/underinsured motorist coverage with limits of 50,000/100,000. If you have two cars and you do not choose to stack, the limit is 50/100 on each car. But if you choose to stack, the insurance limits double to 100/200. If you have three cars, they would triple to 150/300. This increases your premium, of course. As you can see, this could make a substantial difference to a family like the Youngs, who had three of its members in the hospital at the same time after the accident. The cost of treating even one very serious injury can easily reach six figures.

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