Insurance Dispute Lawyer Blog

Previously on our network of blogs, we have discussed uninsured/underinsured motorist ("UM") coverage in auto policies. The statutory requirement for UM insurance "embodies a strong public policy to give full recovery for automobile accident victims." Duncan v. U.S.A.A. Insurance Co. So strong is this public policy preference, in fact, that "the requirement of UM coverage is an implied amendment to any automobile liability policy, even when not expressly addressed, as UM coverage will be read into the policy unless validly rejected.” If a policyholder wishes to reject UM coverage, he must do so by filling out a form that is issued by the state commissioner of insurance. The Louisiana Supreme Court has explained that completing the form is no simple, routine matter; the insurance company must see that the insured: (1) initials the line in the form that sets out the rejection of UM coverage; (2) prints his name; (3) signs his name; (4) fills in the policy number; and (5) fills in the date. (The same requirements for declining UM coverage would apply to an official representative of a corporate entity that owns a vehicle.) Moreover,

"in order for the form to be valid, [the information] must be completed before the UM selection form is signed by the insured, such that the signature of the insured ... signifies an acceptance of and agreement with all of the information contained on the form. An insurer who is unable to prove that the UM selection form was completed before it was signed by the insured simply cannot meet its burden of proving ... that the UM selection form is valid." Gray v. American National Property & Casualty Co.

Indeed, even when an insurance company uses the official form and confirms that it is properly completed, it will only "receive[] a presumption that the insured’s waiver of coverage was knowing" (emphasis supplied), which can be rebutted.

The effectiveness of a UM waiver was at the center of a recent decision by the Third Circuit Court of Appeal in Melder v. State Farm. On March 1, 2007, Naddia Melder was driving a 2006 Nissan pickup truck that belonged to her employer, Grimes Industrial Supply, LLC ("GIS"), in Alexandria. She was involved in a collision with another vehicle in which she sustained serious injuries. After the accident, Melder filed a suit against State Farm seeking to recover under the UM coverage provision of the policy which GIS maintained on the vehicle. State Farm filed a motion for summary judgment asserting that when Floyd Grimes, the owner of GIS, obtained the insurance policy on the Nissan, he rejected UM coverage. After a hearing, the trial court granted the motion and dismissed the action against State Farm. Melder appealed, alleging that genuine issues of material fact about the validity of the UM waiver existed. The Third Circuit agreed with Melder. It cited the inconsistent evidence in the record about Mr. Grimes's authority to execute the UM waiver. The policy indicated that the Nissan was owned by Floyd Grimes and his brother, Frank Grimes. But other evidence pointed to the corporate entity, GIS, as the owner of the truck. The court concluded, "the record contains no evidence of the authority by which Mr. Grimes executed the UM rejection, either on behalf of the ... company or the apparently non-existent partnership between himself and Frank Grimes." Thus, the court held that a genuine, material issue existed about whether the waiver, though properly completed, was valid. It reversed the trial court's granting of summary judgment for State Farm and remanded the case for trial.

The Melder case shows Louisiana's strong policy toward including UM coverage in all auto policies. The significant steps required to waive UM coverage are intended to prevent unintentional or mistaken waivers by policyholders. Even though State Farm followed the requirements diligently, it failed to verify something even more fundamental--whether the person signing the form possessed the legal authority to make a decision about waiving coverage.

Continue reading " Court Details Steps Required to Decline Uninsured Motorist Coverage in Rapides Parish Car Accident Case " »

In a prior post, we reviewed the Johnson v. Louisiana Farm Bureau Casualty Insurance Co. case. The case concerned the undelivered notice from Farm Bureau to Janice Johnson that the company would not renew her homeowner's insurance policy. The case centered around the state law that requires notice of the intent not to renew:

"An insurer that has issued a policy of homeowner's insurance shall not fail to renew the policy unless it has mailed or delivered to the named insured, at the address shown in the policy, written notice of its intention not to renew. The notice of nonrenewal shall be mailed or delivered at least thirty days before the expiration date of the policy." La. R.S. 22:1335, formerly La.R.S. 22:636.6.

In the Johnson case, the Third Circuit interpreted the "mailing or delivery" requirement to mean that the notice must actually be received by the homeowner. During the trial, the jury found that Farm Bureau had properly mailed the notice. But Johnson's testimony that she always opened every piece of mail she received (except for bank statements) convinced the jury that she had not, in fact, received Farm Bureau's letter. Since the Third Circuit regarded the conclusion about delivery to be a matter of "the credibility of the witnesses," and could not find "manifest error in the jury’s credibility determination nor in their determination that the notice of non-renewal was not delivered," it affirmed the trial court's award of damages to Johnson.

Farm Bureau appealed this decision, which so happened to contrast directly with a recent decision from the Fourth Circuit. The Fourth Circuit case, which featured very similar facts, reached the following conclusion:

"[t]he mailing of a notice of nonrenewal to the insured’s address, as listed on the policy, at least thirty days before the expiration of the policy satisfies the burden placed upon the insurer." Collins v. State Farm (La.App. 4 Cir. 1/26/11).

The Louisiana Supreme Court sided with the Fourth Circuit, finding that "the key is that the statute requires only mailing, not proof of receipt." Because "the plain language of the statute requires only that such notice be mailed," in the court's view "any evidence of non-delivery is relevant only as far as it is evidence of non-mailing or improper mailing." The court determined that the jury's fact-finding duty extended no farther than determining that Farm Bureau had properly mailed the notice, which was "all that [Farm Bureau] was required to do under [the statute] in order to give notice of nonrenewal of [Johnson's] insurance policy." Accordingly, the Supreme Court reversed the Third Circuit and declared that "Farm Bureau did not provide homeowner’s coverage to [Johnson] at the time of the loss." As a result, Johnson was denied the $296,500 payment she expected from Farm Bureau.

The purpose of the nonrenewal notice is to provide an insured homeowner sufficient time to obtain new insurance with another company before the existing policy expires. While the law placed a specific burden on insurance companies to send such a notice, customers in Louisiana are now clearly warned that the failed delivery of a properly mailed notice will not obligate an insurer to extend coverage, even if the consequences are catastrophic to the homeowner.

Continue reading " Louisiana Supreme Court Settles Circuit Dispute Over Insurance Policy Renewal Issue " »

The Berniard Law Firm would like to wish all of our clients, their families and all of our friends a Happy, and safe, 4th of July!

Many coastal Louisiana homeowners were affected by Hurricane Katrina. Too many of those affected are still dealing with the stressful experience of rebuilding their homes, communities, and lives. When natural disaster strikes, the importance of good, quality homeowners insurance becomes starkly evident, and can provide much needed relief for homeowners. Unfortunately, insurance companies do not always make the recovery of benefits easy on the afflicted homeowner. The insurance claims process can be overwhelming, and may be complicated by the often necessary instigation of litigation. Homeowners carrying insurance need to be aware that in some instances the actions of their insurance provider in hindering their expedient recovery can compel a court to award additional compensation to the homeowner.

Louisiana revised statute §22:1892 * governs the recovery of additional damages against an insurance provider. Under §22:1892, an insurance provider who fails to make a payment on a claim within 30 days of settlement or written agreement to pay could be subject to sanctions if the court finds that failure to disburse payment is “arbitrary, capricious, or without probable cause.” If an insurer fails to make a timely payment as per the statute, the court may “subject the insurer to a penalty, in addition to the amount of the loss, of fifty percent damages on the amount found to be due from the insurer to the insured, or one thousand dollars, whichever is greater.” This penalty, if awarded, is either paid out to the insured, or to a designated employee of the insured.

The Fifth Circuit Court of Appeals case French v. Allstate Indemnity Co., addresses §22:1892. Allstate appealed the lower court’s ruling that it was liable under §22:1892 for failing to timely pay an undisputed portion of a wind damage claim made by the French’s. Allstate did not attempt to argue that they did not owe the French’s some amount under the statute, but rather they argued that the penalty amount awarded to the French’s was incorrectly calculated using an outdated version of § 22:1892. The lower court “calculated penalties on the Plaintiff’s entire wind-damage claim, without discounting any amounts Allstate had timely paid.” The court in French held that the lower court incorrectly calculated the statutory penalty to Allstate by failing to subtract a portion of the claim which Allstate timely paid from the penalty calculation. The court reduced the French’s award by $2,500.

It is important to note that had Allstate simply argued that they should not be penalized under the statute they would almost certainly have been unsuccessful. In Louisiana Bag Co. v. Audubon Indemnity Co., the Louisiana Supreme Court ruled that mere failure to pay within the statutory time limit constitutes behavior that is “arbitrary, capricious, and without probable cause,” and the statutory penalty applies. In other words, simply failing to make a timely payment as required by the statute, and nothing more, is sufficient reason for a court to subject an insurer to penalties.

The calculation of damages to be paid out by insurance companies is an often complicated process. Understanding and knowledge of any additional statutory awards that may be available to a homeowner in need can make all the difference. If you or a loved one has been affected by Hurricane Katrina you need an experienced law firm to help you navigate negotiations with your insurance company and to represent you in court should it be necessary.

*Prior to 2009, § 22:1892 was designated § 22:658, and is cited in French v. Allstate Indemnity Co. as § 22:658.

Continue reading " When an Insured Can Seek Statutory Damages from an Insurer " »

Nearly six years after Hurricane Katrina struck, Louisiana residents are still dealing with the traumatic and costly effects of the storm. The American Red Cross estimates that approximately 275,000 Louisiana homes were destroyed by the storm and thousands more were damaged. Even those homeowners with insurance can find the recovery of damages to be a difficult and definitely expensive process. This financial burden, regardless of the supposed

Many homeowners filing claims for damages were in for a nasty surprise: the “Named Storm Deductible.” Under Louisiana law, insurance companies can implement deductibles of as much as 5% of the value of the insured property for damage caused by “named storms,” including tropical storms and hurricanes such as Hurricane Gustav or Hurricane Katrina. Frequently these provisions have not appeared on the original policies, but were added during a policy renewal, meaning homeowners are unaware of its existence or don’t understand its implications.

Under a Named Storm Deductible of 5%, for example, damage caused to a home with an insured value of $100,000 would cost the homeowners a deductible of $5,000, rather than the standard $500 or $1,000 deductible ordinarily applied to such losses. Litigation arguing against and interpreting these deductibles can be complicated and frustrating.

Homeowners Mary Williams, Michael Manint, and Susan Manint ran into this problem firsthand when recovering from damage caused to their homes by Hurricane Katrina. While their policy from Republic Fire and Casualty Insurance Company includes a Named Storm Deductible of five percent (5%), it does not specifically designate what the 5% is to be taken from: the damage amount or the dwelling coverage limit. One year, when renewing their homeowners insurance, Republic sent them an Important Policyholder Notice explaining the application of the Named Storm Deductible. The Notice included an example of the Named Storm Deductible which showed that the deductible would be 5% of the dwelling coverage limit. This distinction, however, did not actually appear within the provisions of their policies.

After Hurricane Katrina struck Louisiana, Republic determined that Ms. Williams and the Manints would have to pay deductibles of $7,320 and $4,445, respectively, which were 5% of their dwelling coverage limits. Both homeowners, however, had expected to have to pay only 5% of the covered loss, which would have amounted to costs under $1,000.

Both homeowners filed suit against Republic, asserting that the company had miscalculated the Named Storm Deductible. They argued this on the theory that the Important Policyholder Notice, which showed that the 5% was to be taken from the dwelling coverage limit, could not be considered when interpreting the Named Storm Deductible. The district court however, disagreed and ruled in favor of Republic, confirming that the deductible had been calculated correctly.

On appeal, the court affirmed the district court’s ruling. Under Louisiana law, because the Important Policyholder Notice was physically attached to the renewal policies, it was made a part of them as well. This meant that the Notice’s interpretation showing that the 5% was to be taken from the dwelling coverage limit was part of the policy and thus enforceable against the homeowners.

If you find yourself in a similar predicament, consulting with a legal expert may be your best chance in receiving the justice you deserve.

Continue reading " Insurance Policies and How They Affect Recovery After a Hurricane or Disaster " »