Monthly Archives: February 2006

Good Fences, Bad Neighbors

John F. Ames, a Virginia man, and his insurance company paid $100,000 to settle a wrongful-death lawsuit after Ames shot and killed a neighbor in a property line feud. (The insurer paid, probably, because a jury in Ames’ criminal trial found that he acted in self-defense). Fueling the dispute was a $45,000 lien Ames had filed in 1989 on the neighbor’s property after Ames built a fence around his 670-acre farm, and under an old state law, billed his neighbors half the cost. The lien wasn’t taken care of in the settlement and the dispute over it continues.

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Filed under Duty to Indemnify

Parents’ Liability For Son’s Shooting Spree Is Covered Under Homeowners’ Policy

One of the most astonishing things about insurance law to many people is that injured parties frequently file lawsuits claiming a vicious criminal negligently injured them. After all, it seems obvious to most people that the attack was intentional, which is why it was a crime in the first place. However, insurance does not cover liability for intentional hurting someone, thus the claim of negligence. Before anyone is tempted to think the claims of the victims are deceptive, in that they are obviously fine-tuned to try to implicate insurance coverage, remember that these people did not ask to be attacked or hurt and are often doing their best to put their lives back together.
That being said, insurance contracts are not built on compassion for third parties but rather on a defined obligation between insurer and insured as stated in the policy. In Donegal Mutual Ins. Co. v. Bauhammers, 2006 Wl 362537 (Pa.Super. February 17, 2006), the question was whether a homeowners’ policy and an umbrella policy covered liabilities of the parents of a man, Richard Bauhammers, who went on a shooting spree in April 2000, killing five people in Scott Township, Pennsylvania, and seriously injuring another. The trial court ruled the primary policy covered the parents’ liabilities, but the excess policy did not. The appeals court agreed.

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Misrepresentations On Insurance Application

It may sound strange, but while public policy doesn’t encourage people to lie on insurance applications, it also recognizes that it is more important for society that insurance coverage is settled than that the truth prevail in every instance. That’s why almost every state has a two-year period after which life insurance policies can’t be contested for misrepresentations made on the application. Most states also have statutes that forbid insurers from voiding a policy based on an insurance application unless the application is attached to the policy and given to the insured when the policy is issued. They also have statutes that preclude insurers from voiding a policy based on misrepresentations that are not material to the insurer’s risk.
That is also why cases about misrepresentations on policy applications continue to be litigated in large numbers, and why cases like Stafford v. Allstate Insurance Co., 2006 Wl 335588 (W.D. Tenn. February 13, 2006) continue to be decided. The case is about whether misrepresentations on a homeowners’ policy were material to the insurer’s risk. The homeowners’ argument is an old one: if they had given full disclosure, the insurer still would have issued the policy, just at a higher premium. Courts seldom buy this argument, and this court was no exception. As the judge said, the misrepresentations were material to the risk not because the insurer would have refused to issue a policy at all, but because they increased the insurer’s risk.

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Filed under First Party Insurance

Federal Court Declines To Find Exclusive Federal Jurisdiction For Flood Lawsuits

The U.S. District Court for the Eastern District of Virginia ruled last week that federal courts do not have exclusive jurisdiction over lawsuits against insurers who write federal flood insurance policies. The case is Dugdale v. Nationwide Mutual Fire Ins. Co., 2006 WL 335628 (February 14, 2006).
In the case, a woman whose home had been damaged by a hurricane in 2003 sued an insurer who sold her a federal flood insurance policy. All flood insurance is underwritten by the federal government, and most is obtained directly from the government, although the government allows some private insurers to sell federal policies through a “Write Your Own,” or WYO, program. There is a split in the U.S. circuit courts of appeal whether federal courts have exclusive jurisdiction over WYO lawsuits, in that they are in essence suits over federal monetary responsibilities. The circuit in which the deciding court sat, the Fourth Circuit, has not settled the issue, and the District Court returned the case to state court.

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Negotiating Settlements Through Cage Matches?

This post by Major John has a certain “Beyond Thunderdome”-esque appeal, but I doubt it will catch on in the insurance field. Major John’s blog, Miserable Donuts, which chronicles his military service as well as his job as an insurance company employee, is a good read.

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Filed under Industry Developments

Former UCLA And NFL Quarterback Suing Insurers

Cade McNown, who had a brief career with the Bears, Dolphins and 49ers, is suing two insurers over their failure to pay out on his $5 million sports injury policy.

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Filed under First Party Insurance

Supermarket Clerk Talking About Customer: “As A Reflex, I Punched Her In the Nose And Made Her Bleed”

At first I thought this post was just someone putting on the experts, but when I re-read it, it has the authentic ring of stupidity you can see displayed on “Cops.” It’s not out of the realm of possibility the insurer will defend him in the lawsuit, depending on if some sort of negligent conduct is alleged, but it does hurt that he has already entered a plea of guilty to assault. The supermarket is almost certainly being sued as well.

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Walking The Streets: A Traffic Warden’s Diary

Bill Sticker, who describes his chief interests as “walking and sarcasm,” spends most of his day as a traffic warden in the UK trying not to get sued or fired. Scroll down to the post from February 16.

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Jury Verdict Against Insurer Is $36 Million In Case Over $1 Million Life Insurance Policy

It’s not easy being an insurance company in Mississippi.

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Insurer Sues For Declaration That Policy Doesn’t Cover Inappropriate Touching

This story takes me back to my days as a newspaper reporter. It’s pretty tough to be told to turn out a quick story when you have absolutely no idea what is going on. From what I can tell in reading the story, an insurer is seeking a declaratory judgment that it has no duty to defend or indemnify a doctor who allegedly engaged in improper touching of female patients. My guess is what’s at issue is a professional liability policy, and the insurer claims touching patients inappropriately is outside the definition of professional services, even if it occurred in a medical office.
For a further explanation of how courts analyze unprofessional behavior under a professional liability policy, read this Washington Court of Appeals case about a dentist who outfitted an anesthetized patient with fake pig tusks, pried her eyes open, took pictures and later told her she could have the tusks as “a trophy.”

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