California Personal Injury and Insurance Blog

Occurrence v. Claims Made

People often seem confused by the terms occurrence policy and claims made policy. What is covered when?

Lets start with an example of what is not covered, ever. On a Google group, I read this post. (You may have to scroll down to the bottom to see it.) The author suggets pulling a "fast one" on the insurance company to get coverage in a situation. You cannot "pull a fast one". The insurance company will catch you. In California, you could be facing a felony with a substantial fine and jail time. Dont do it!

Now, back to our topic. An occurrence policy pays for claims that occur or happen during the time the policy is in effect. A claims made policy pays for claim that are made during a policy period.

Example A: Policy is in effect from 1/1/05 to 1/1/06. You injure someone on 6/1/05. The claim is made on 2/1/06. This occurred during the policy period, and an occurrence policy would cover you. However, a claims made policy would not cover you since the claim was made after the policy expired.

Example B: Policy is in effect from 1/1/05 to 1/1/06. You injured someone on 10/31/04. Claim is made on 2/1/05. The injury occurred before the policy period, so an occurrence policy would not cover you. However, a claims made policy would since the claim was made during the policy period.

I am sure this is clear as mud. Most policies are occurrence policies. If you have an errors and omissions (commonly called malpractice) policy, you may have a claims made policy. Contractors also have claims made policies quite often. Read your policy, ask your agent what type you have, and make sure you know. The difference between a covered claim and an uncovered claim could result in your bankruptcy.

Disability Insurer Sued for Denying claims

UnumProvident is the nation's largest disability insurer.  If you are a teacher, they probably provide your disability insurance. And, they have been sued - AGAIN.

UnumProvident recently settled charges with 48 states about its delay in settling claims. 48 states? I wish I knew which two were missing. For fun, I googled UnumProvident delay claims and 699 hits came up. This is probably just the tip of the iceberg.

Insurers, be it life, health, disability, auto, homeowners, business, whatever, need to learn that they cannot delay in paying claims. As stated in a prior post, they make money by delaying claim payments. But, people pay into a system and expect to be paid timely when they make a covered claim. Do the right thing and pay the person. Maybe if the insurance industry started doing that they would gain the most important thing an industry can have - the respect of the public.

Insurers Mistakes with Clients

My friend and fellow CPCU, George Wallace, one of the good guys in insurance defense work, just returned from a trip to the CPCU Annual Meeting. The annual meeting is always a fun place to go, meet new people, see old friends, and learn some insights from others in the insurance business.

George attended a program on the Top 10 Mistakes that Insurers Continue to Make. It seems like the more things change, the more they stay the same, especially in the insurance industry. Here is the top 10 list, as written about by George:

10.  Failure to write in clear language.

9.    Failure to investigate a claim promptly.

8.    Failure to read the policy when making coverage determinations.

7.    Failure to understand the relevant law of the relevant jurisdiction.

6.    Failure to monitor litigation activities of outside counsel.

5.    Unnecessarily 'nitpicking' a claim before settling (especially in 1st party [e.g., property loss] claims).

4.    Taking inconsistent positions in coverage litigation (e.g., insisting that identical policy language means x in Case A and y in Case B).

3,    Claims handlers treating policyholders as "the enemy."

2.    Attempted overuse of the extreme remedy of rescission of the policy.  (It's one thing to deny a single claim, quite another to accuse the insured of deception or dishonesty so as to cancel the entire policy.)

1.    Taking positions that result in the purchase of more insurance yielding less coverage.

Lets see if I can take these in reverse order:

10 - When I was at CIGNA they tried this. Unfortunately, they wrote a policy in English. It was easy for people to read, but, if you haven't checked lately, they atre no longer selling property or liability insurance.

9 - This is the bane of my existence. Adjusters have not handled claims promptly since long before I was handling claims. There does not seem to be any urgency for adjusters. However, when you are the one who suffered the loss, everything is urgent. If more adjusters had claims, more adjusters would handle claims promptly.

8 - Not reading the policy? No, that cant happen? Yes, it happens all the time. I recently had an adjuster assure me that something was in a policy. Of course, she could not tell me where it was in the policy, and I am still looking for it. (Its not there!)

7 - Some adjusters like to think they are attorneys. Unfortunately, unlike attorneys, a lot of adjusters have not been to law school. Adjusters are updated on the law when a firm brings them lunch and talks to them for 30 minutes. Its too bad that more insurance companies do not care about providing continuing education.

6 - CIGNA monitored litigation activities carefully. Did I mention they are no longer in this business? But, this is one thing that they did right. I haven't seen an insurance company try to monitor it this way since!

5 - Nitpicking? I just had an adjuster argue with me over whether the client should have been in her rental car for 30 days or 22 days, because the adjuster used a formula to calculate 22 days. I used real life and came up with 30. They want to argue over 8 days at $20 per day?

4 - Inconsistent positions are common. I had an attorney argue that there was coverage, but it was limited. Then, when I filed suit, they argued that there was no coverage at all. Huh?

3 - A lot of adjusters think that anyone who files a claim is a fraud. I am not sure where this attitude came from. I know someone who had a water damage claim and then, 7 years later, had another water damage claim in a different house. The adjuster thought this required a fraud investigation.

2 - In almost 9 years, I was involved in one recission. That seems about right.  Today, it seems like there is one recission per month, based on the calls I get.

1 - Insurance companies do take positions that result in the purchase of more insurance for less coverage. Ask anyone who bought CIGNA's technology policy about 6 years ago!

Thanks to George for his article. I encourage everyone to go read his blog - even if he is a defense attorney!

Auto Insurance Fraud and Hurricane Katrina

The Navy Compass has a story from last week about scam artists who have a new scam going. They are taking cars that were damaged from Hurricans Katrina and Rita and repairing the cars, sometimes cosmetically, before selling them in other states. By retitling the vehicle, they can take a salvaged car and get a good title. The people who buy the cars have no idea that the car was damaged.

How can you avoid getting caught in this scam? First, buy a Carfax report before you buy the car. Dont trust the sellers report. Spend the extra dollars and get your own. Second, check with NICB to see if the car was damaged. You can do this by VIN number.

These two steps wont prevent you from becoming a victim, but they will go a long way to making sure you dont end up with someone else's problem. 

Prescription Drug Help

This post is going to be a bit off topic, if such a thing exists.

I have clients who usually do not have health insurance. These clients have a difficult time getting doctors to treat them. Even if they are treated, they sometimes do not get prescriptions filled because of the lack of insurance.

Today, my friend in Texas, Bob Kraft, an excellent attorney, posted a link to NeedMyMeds. This is a clearinghouse for information on how to get prescriptions at no cost or low cost. Everyone without insurance should go look at this site.

A vote for contingency fees

The contingency fee is always under attack. Certain groups do not want to see attorneys take cases on a contingency fee. The reasons vary from claims that the attorney gets too much money from the outcome to claims that it increases frivolous lawsuits.

Today, my friends at the Tampa Bay Personal Injury Law blog had an article and excerpts from a report that concludes that the contingency fee should not be capped. Heres why, in a nutshell:

Lets say person A thinks they have a case. They approach a lawyer who takes contingency fees. That lawyer will evaluate the case. The lawyer will only take the case if they lawyer thinks that case has enough merit and potential to make it worth his or her time financially. Lawyers who work on contingency fees do not take cases that are frivolous, usually, or cases that have no value, usually, because then they are not making any money. However, a lawyer who takes a case hourly does not have to be as certain about the value or merit of the case because he will get paid anyway.

Thus, in reality, the contingency fee is a good thing for everyone as it acts as a control on cases that are filed.

Ways to Save on Homeowners Insurance

About.com FINALLY came up with a good post about insurance. I know they are well meaning people over there, and some of their other information is great, but they should not be one of your first stops for insurance information.

Anyway, they do have an article on how to save on your homeowners insurance. Its interesting that people always shop their car insurance for price, but never their homeowners insurance. I think a lot of that has to do with many people having their homeowners insurance paid through their mortgage company.

Here are some of the ideas from About.com:

1. Multiple policy discount
2. Increased deductible
3. Home security discount
4. Dead bolt discount (I have never seen a carrier offer this, but it may be out there)
5. Smoke Alarms
6. Sprinkler systems (which should be mandatory in more places)
7. Non-smoking home (Again, one which I have never seen)
8. Organizational Affiliation
9. EFT Payments
10. Credit ratings

The most important one to me is the second one. You should have a minimum $500 deductible, but a $1,000 deductible is even better. Not only does this lower your premium, but it makes you less likely to report small claims - claims that can result in a surcharge or cancellation of your policy.

Tort reform?

Prof. Martin Grace, a guy who seems to be an all around good guy, had a post today about a web chat from Sickoflawsuits.com.

While I respect Prof. Grace, and I have commented on his posts before, this is another example of mis-information, although not from the good professor. Sickoflawsuits.com is an example of a tort reform group who wants to limit the publics right to sue. These groups are usually funded by large corporations, insurance companies and drug companies. But, they never tell you that. They hide by "Citizens Group of.........." fill in the blank.

I am not going to take a position on this, but I do believe that both sides should be a lot more honest about who is sponsoring them and who is footing the bill.

Saving on your auto insurance and the type of car you drive

Everyone has a method to save on auto insurance.  I have heard all types of methods, including some that make no sense. I have heard people say that you should have every car insured with a different company (makes no sense), that you should only drive older cars (makes some sense), or that you should limit your miles (makes some sense).

About.com has an article about which vehicles you should avoid to save money on your insurance premium.  The list of vehicles to avoid include:

1. vehicles with horsepower,
2. sports cars,
3. high performance vehicles,
4. luxury vehicles,
5. large SUVs,
6. small cars,
7. cars with a high rate of theft.

Whats left to drive then? The article recommends vans and station wagons, which are great, but then your gas prices go up!

My advice: buy what you want and dont worry so much about it. If you can afford a sports car or a luxury vehicle, you can probably afford the insurance on it. If you want to drive a small car, drive it. Dont let the insurance price affect your car buying decision.

Insurance Proof of Loss

If you have an insurance claim, you sometimes hear the insurance company ask you for a "Proof of Loss." But does anyone know what it is?

The insurance company may have a form for you to complete. Its usually a one or two page form that is entitled "Sworn Statement in Proof of Loss". It has blanks to complete and then a space for you to sign it, swearing to its contents, sometimes in front of a notary. The insurance company may tell you that you MUST sign their form, but they are wrong.

California Insurance Code section 552 lets you give the insurance company the same information without it being on their "proof of loss form." California courts have upheld this and have said that as long as you substantially comply, you have done what you are supposed to do. The purpose of the proof of loss is to give the insurance company enough information to verify that a loss has occurred. Therefore, giving them the information, in whatever form, is all that is required.

Generally, the insurance company needs to be given this information to satisfy the purpose of verifying a loss:

1. Your name
2. Your policy number
3. The type of loss that occurred (theft, fire, etc...)
4. The location of the loss (usually your address)
5. The date of loss
6. The property that was damaged (your house, your personal property, your fence, etc...)
7. The amount of insurance that you have (its on your declarations page, something we will discuss soon)
8. The amount of your damage
9. Possibly, the amount of the actual cash value of your claim (again, to be discussed soon)
10. Your signature

If you give your insurance company that information, you should be safe. I would send it via certified mail, return receipt requested so you can prove when they receive it. But, once you do that, you have met your obligations.