Deck 50: Insurance

Question 1

Exclusion from Insurance Policy Richard Usher's home was protected by a home owners' policy issued by National American Insurance Company of California. The policy included personal liability insurance. A provision in the policy read, "Personal liability and coverage do not apply to bodily injury or property damage arising out of the ownership, maintenance, use, loading, or unloading of a motor vehicle owned or operated by, or rented or loaned to any insured." Usher parked a Chevrolet van he owned in his driveway. He left the van's side door open while he loaded the van in preparation for a camping trip. While Usher was inside his house, several children, including 2-year-old Graham Coburn, began playing near the van. One of the children climbed into the driver's seat and moved the shift lever from park to reverse. The van rolled backward, crushing Coburn and killing him. Coburn's parents sued Usher for negligence. Is the accident covered by Usher's home owners' policy? National American Insurance Company of California v. Coburn, 209 Cal. App.3d 914, 257 Cal. Rptr. 591, 1989 Cal. App. Lexis 356 (Court of Appeal of California)

Answer 1

Case summary:
Person U protected his house by homeowners' policy issued by A Insurance Company of State C. The policy incorporated personal liability insurance. The provision in the policy does not cover any property damages or bodily injury.
Person U parked his van in his own driveway but did not close the van side door. Many children were playing near the van. One of the children sat in the driver seat and moved the van. Thus, it killed a 2-year-old Child C. The parents of Child C sued Person U for his negligence.
Determine whether the accident covered by the homeowners' policy of Person U:
According to Person X, the homeowners' policy of Person U does not cover this accident. This is because, the policy of homeowners' has the provision that personal coverage and liability does not apply to the property damages or bodily injury. Thus, Person U's van accident is not covered by this policy.
Conclusion:
In this case, the accident is not covered under the homeowners' insurance policy of Person U. It is a provision, which is provided in the policy by A Insurance Company.

Question 2

Automobile Insurance Jowenna Surber owned a Mercedes-Benz automobile that she insured through an insurance broker, Mid-Century Insurance Company (Mid-Century). Mid-Century secured a policy for Surber with the Farmers Insurance Company (Farmers). Surber gave permission to her friend, Bruce Martin, to use the car. Martin held a valid California driver's license. Surber did not receive any compensation for allowing Martin to use the car. While driving the car, Martin was involved in a collision with another vehicle, driven by Loretta Haynes, who suffered severe injuries. Martin admitted that his negligence was the cause of the accident. Surber's policy stipulates that the policy covers "you or any family member or any person using your insured car." Is Farmers liable to Haynes? Mid-Century Insurance Company v. Haynes, 218 Cal. App.3d 737, 267 Cal. Rptr. 248, 1990 Cal. App. Lexis 219 (Court of Appeal of California)

Answer 2

Case summary:
Person S who owns a car and she insured the car from broker C Insurance Company. The insurance policy of Person S insured with F Insurance Company. Person S gave permission to Person M to use her car.
The car met with an accident when Person M was driving and it injured Person H. Person M accepted that due to his negligence, accident has happened. Person S's insurance policy specify that this policy covers Person S, any family member, or any person who is using the insured car.
Determine whether F Insurance Company is liable to Person H:
According to Person X, F Insurance Company is liable to Person H. This is because Person S insured her car with F Insurance Company and thus, the company is liable. In the insurance policy, it is given that the insured company will cover the loss of any person who is driving the car.
Person H was injured due to accident from the Person S's insured car. Thus, F Insurance Company is ethically liable to Person H.
Conclusion:
It this case, Person M was using Person S's insured car, which was insured with F Insurance Company. The insured car met with an accident and Person H was injured. Thus, due to insurance policy F Insurance Company is liable to Person H.

Question 3

Automobile Insurance Antonio Munoz and Jacinto Segura won some money from two unidentified men in a craps game in a Los Angeles park. When Munoz and Segura left the park in Segura's car, the two men followed them in another car. They chased Segura's car for several miles and then pulled beside it on a freeway. The men in the other car fired several gunshots at Segura's car, killing Munoz. At the time he was killed, Munoz had an automobile insurance policy issued by Nationwide Mutual Insurance Company (Nationwide). A provision in the policy covered damages from "an accident arising out of the use of an uninsured vehicle." Munoz's widow and child filed a claim with Nationwide to recover for Munoz's death. Nationwide rejected the claim. Who wins? Nationwide Mutual Insurance Company v. Munoz, 199 Cal. App.3d 1076, 245 Cal. Rptr. 324, 1988 Cal. App. Lexis 259 (Court of Appeal of California)

Answer 3

Case summary:
Person M and Person S won money in game from two unknown person in City L Park. In City L, two men in another car followed Person S's car from the time Person M and Person S left the park. They chased Person M and Person S and then started to fire gunshots towards Person M. due to this Person M died.
However, Person M has an insurance policy issued by N Insurance Company. The policy covers damages from an accident arising out of the uninsured vehicle usage. Thus, widow of Person M and his child filed the case against N Insurance Company to claim for Person M's death.
Determine who wins:
According to Person X, N Insurance Company wins the case against Person M's widow and his child. As the insurance policy of N Insurance Company, it covers accident arise out of uninsured vehicle use but not the shooting. Person M died due to the gun shoot thus, N Insurance Company will reject the claim. N Insurance Company wins the case.
Conclusion:
In this case, the defendant is N Insurance Company and plaintiff is Person M's widow and his child. The court favored N Insurance Company. This is because Person M died due to gunshot but the policy covers accident arising out of unlicensed vehicle.

Question 4

Malpractice Insurance Donald Barker, a wealthy Oregon resident, went to the law firm Winokur, Schoenberg, Maier, Hamerman Knudson to have his estate planned. An attorney at the firm repeatedly told Barker that he could convey half of his $20 million estate to his wife tax free under Oregon's marital deduction. Barker had his will drawn based on the law firm's advice. It was not until after Barker died three years later that Barker's family learned that Oregon does not recognize the marital deduction. As a result, the will's beneficiaries were subject to significant estate taxes. The beneficiaries sued the law firm for negligence, and the case was settled for $2 million. At the time Barker was being advised by the law firm, it had a professional malpractice insurance policy with the Travelers Insurance Company (Travelers) that covered "all sums which the insured shall become legally obligated to pay as damages because of any act or omission of the insured arising out of the performance of professional services for others in the insured's capacity as a lawyer." The policy expired one year prior to Barker's death. Is Travelers liable for the $2 million settlement? Travelers Insurance Company v. National Union Fire Insurance Company of Pittsburgh, 207 Cal. App.3d 1390, 255 Cal. Rptr. 727, 1989 Cal. App. Lexis 130 (Court of Appeal of California)

Question 5

Duty to Defend When Michael A. Jaffe, a child psychiatrist practicing in California, was accused of Medi-Cal fraud and theft, he requested that his malpractice insurer, Cranford Insurance Company (Cranford), provide his criminal defense. Cranford refused to defend Jaffe, citing the terms of Jaffe's malpractice insurance policy. The policy describes the insured risk as "psychiatrist's professional liability in respect of insured's practice of psychiatry." Another clause of the policy states that Cranford "agrees to pay such damages as may be awarded in respect of professional services rendered by Jaffe, or which should have been rendered by him, resulting from any claims or suits based solely upon malpractice, error, or mistake." After Cranford refused to defend him, Jaffe hired his own criminal defense lawyer. The case went to trial, and Jaffe was found innocent of all charges. After his acquittal, Jaffe demanded that Cranford reimburse him for the expenses incurred during trial. When Cranford refused this request, Jaffe sued. Who wins? Jaffe v. Cranford Insurance Company , 168 Cal. App.3d 930, 214 Cal. Rptr. 567, 1985 Cal. App. Lexis 2153 (Court of Appeal of California)

Question 6

Ethics Case Gaiy and Ila Fedderson owned and operated Whiskey Flow, a restaurant and bowling alley located in Howard, South Dakota. After operating the business for some time, the Feddersons purchased a $1 million insurance policy from Columbia Insurance Group (Columbia) that covered damages to the business caused by fire. The policy included a "Concealment or Fraud Condition" that voided the insurance policy if "any insured" intentionally concealed or misrepresented a material fact or committed fraud or false swearing in connection with the insurance contract. One month after taking out the insurance, the Whiskey Flow was destroyed by fire. Gary and Ila submitted a $1 million claim to Columbia. In their proof of loss statement, Gary and Ila swore that an "unknown party started the fire." After investigation, Gary was convicted of the crimes of conspiracy to commit arson and insurance fraud. Ila was not involved in the arson and did not have knowledge of Gary's involvement in the arson. Ila sued Columbia to recover 50 percent of the insurance proceeds as an "innocent insured." Can Ila collect half of the insurance proceeds? Did Gary act ethically in this case? Did Ila act unethically in trying to recover half of the insurance proceeds? Fedderson v. Columbia Insurance group, 824 N.W.2d 793, 2012 S.D. Lexis 164 (2012).

Question 7

FEDERAL COURT CASE Suicide Clause
Riggs v. Metropolitan Life Insurance Company
940 F.Supp.2d 172, 2013 U.S. Dist. Lexis 55539 (2013)
United States District Court for the District of New Jersey
"The Court finds that MetLife's interpretation of 'suicide' is not unreasonable."
-Rodriquez, Senior District Judge
Facts
Terry Riggs worked for NuStar Gp, LLC (NuStar). As part of his employment benefits, he was covered by a life insurance policy issued by Metropolitan Life Insurance Company (MetLife) in the amount of $261,000 which took effect on April 1, 2008. Argia Riggs, Terry's wife, was named the beneficiary of the life insurance policy. The policy contained a two-year suicide clause. On November 17, 2009, Mr. Riggs was prescribed Abilify, an antipsychotic. Because Abilify made Mr Riggs feel lethargic, on March 9, 2009, Mr. Riggs was prescribed Zyprexa for three days, but he told Ms. Riggs that he heard "uncontrollable thoughts and voices" and "it made him feel like killing himself." On March 15, 2009, Mr. Riggs called his physician, who prescribed Cymbalta, an antidepressant. That evening Mr. Riggs told a family friend that he had negative thoughts and "heard voices telling him to kill himself." At approximately 5:30 a.m. on the morning of March 17, 2010, Mr. Riggs shot himself in the head and died. The certificate of death issued by the state of New Jersey stated that the manner of death was suicide.
When Ms. Riggs applied to MetLife for life insurance benefits, the company denied her claim because Mr. Riggs had died 16 days prior to the expiration of the two-year suicide exclusion. Ms. Riggs sued MetLife, alleging that the command hallucinations caused by the prescription medicine had caused Mr. Riggs to shoot himself and that he had not committed suicide because he could not have formed the intent to do so. Plaintiff Ms. Riggs and defendant MetLife filed separate motions for summary judgment.
Issue
Does the two-year suicide clause prevent Ms. Riggs from recovering life insurance benefits?
Language of the Court
MetLife contends that it is reasonable to rely on government documents, such as a death certificate, and it is not required to independently investigate Mr. Riggs' death or why he committed suicide. MetLife does not offer a definitive definition of suicide, but emphasizes the requisite physical act of self-destruction and that based on the facts of this case, it is reasonable to conclude that an individual's death, resulting from a self-inflicted gunshot wound to the head, is a suicide. Here, the standard is reasonableness. The Court finds that MetLife's interpretation of "suicide" is not unreasonable. As a result, the Court must defer to MetLife's interpretation.
Decision
The U.S. district court granted MetLife's motion for summary judgment and denied Ms. Riggs's motion for summary judgment.
Did MetLife act appropriately in denying the life insurance claim? What would be the consequences if Ms. Riggs's theory had been accepted by the court?

Question 8

STATE COURT CASE Insurance Fraud
People v. Abraham
22 N.Y.3d 140, 978 N.Y.S.2d 723, 2013 N.Y. Lexis 3214 (2013) Court of Appeals of the State of New York
"Defendant reported the fire to his insurance company, but did not say that he had burned down the building."
-Lippman, Chief Judge
Facts
On April 16, 2009, defendant Akiva Abraham's company 1st Call, LLC, acquired a property in Colonie, New York, on which stood an abandoned nightclub known as Saratoga Winners, for $1. On the same day, an entity called Parcel Road, LLC, was given a mortgage of $475,000 on the property, indicating that Parcel Road had loaned 1st Call that amount of money. And on the same day as the purchase, Abraham took out fire insurance on the property for $475,000, the amount of the mortgage. On April 30, 2009, two weeks after the purchase, Saratoga Winners burned to the ground. Abraham reported the loss to his insurance company, and a property loss notice was filed. He told the company that he did not know the cause of the fire.
Investigators found accelerants both inside and outside the building, the same as contained in Tiki torch fuel, and cinders of Duraflame logs. Investigators discovered that on April 27, 2009, three days before the fire, defendant had purchased four gallons of Tiki torch fuel and two 9-pack boxes of Duraflame logs at Home Depot. Police arrested defendant, and a search of his premises revealed four empty gallon bottles of Tiki torch fuel and two empty Duraflame boxes. Further investigation discovered that Parcel Road did not transfer any mortgage money to 1st Call, had $25 in its checking account, and was owned by the defendant's father. New York brought criminal charges for insurance fraud against defendant Abraham. The trial court jury convicted defendant of insurance fraud, and the appellate division affirmed the judgment. The defendant appealed.
Issue
Is the defendant guilty of the crime of insurance fraud?
Language of the Court
Defendant reported the fire to his insurance company, but did not say that he had burned down the building, causing a property loss notice concealing material information to be filed in support of his claim. Viewed together, this evidence is sufficient for a rational jury to conclude beyond a reasonable doubt that defendant lied about the cause of the fire to his insurance company in an effort to collect wrongfully on the policy, thereby committing insurance fraud.
Decision
The court of appeals affirmed the defendant's conviction for insurance fraud. Therefore, the insurance company did not owe the insurance proceeds to the defendant.
Did the defendant act ethically in this case? Do you think that many building fires are caused intentionally to collect insurance proceeds?