“Every time an insurance decision is rendered,
a Coverage Geek gets its wings.”
However, unlike George Bailey, you will never catch us saying we wish this Blog “had never been born.” Nah, we’re unrepentant- Scrooge with an OCD-like interest in Cali insurance law. Hence, let the Ghosts of Coverage Present day appear!
BETTER NOT MISCALL SAUL: Graciano v. Mercury General Corporation et al. (2014) 231 Cal. App. 4th 414 (*status changed to published on November 12, 2014)
Graciano was struck by a car driven by Saul who was insured by California Automobile Insurance Company (CAIC). Graciano’s attorney contacted CAIC alleging Graciano was injured by one of CAIC’s insureds but misidentified the driver as “Jose” and referred to Jose’s insurance policy. After three weeks, CAIC completed its investigation, identified the correct insured and policyholder and tried to settle the claim by way of a “full policy limits offer.”
Graciano rejected the settlement offer and filed a bad faith action against CAIC based on an alleged wrongful refusal to settle. Graciano contended that CAIC should have more quickly discovered the correct facts (such as, by more promptly requesting a police report) and made a settlement offer more quickly. The jury bought it and judgment was entered in favor of Graciano.
The Fourth Appellate District, Division One, reversed in favor of the insurer. The Court noted: “An insured’s claim for ‘wrongful refusal to settle’ cannot be based on his or her insurer’s failure to initiate settlement overtures with the injured third party” (citing Reid v. Mercury Ins. Co. (2013) 220 Cal.App.4th 262, 277.) The Court stated the obvious: “Because Graciano never demanded payment of Saul’s policy limits in exchange for a release of Saul’s liability, Saul would not have been protected even had CAIC accepted the terms of Graciano’s demand.” The Coverage Geek says: “No brainer. Correct call.”
HOW FIREMAN’S FUND STOLE CHRISTMAS: Stephens & Stephens XII, LLC v. Fireman’s Fund Ins. Co., 2014 Cal.App. LEXIS 1073 (Cal.App. 1st Dist. Nov. 24, 2014)(*certified for partial publication)
“And the Grinch, with his insurer-feet ice cold in the snow, stood puzzling and puzzling, how could it be so? … And he puzzled and puzzled ’till his puzzler was sore. Then the Grinch thought of something he hadn’t before. What if COVERAGE, he thought, doesn’t come from a store. What if COVERAGE, perhaps, with premiums regularly paid, means a little bit more?”
Stephens XII purchased a liability policy from Fireman’s Fund for a commercial property in January 2007 and added property damage coverage on June 28. On July 1, Stephens XII discovered that burglars had caused more than $2 million in property damage. Within days, Stephens notified Fireman’s Fund. Fireman’s Fund concluded that the damage was too extensive to have occurred in the brief period of the policy’s coverage. In 2012, five years after the incident, Fireman’s Fund denied coverage on grounds that Stephens XII had concealed and misrepresented material information.
Under the policy at issue, Stephens XII could claim either actual cost value or replacement cost, but it was entitled to receive replacement cost only if it actually repaired the damage. Although Stephens XII did not repair the property, it asserted that it was excused from complying with the repair requirement because it was prevented from repairing the damage by Fireman’s Fund’s failure to accept coverage. The Court of Appeals agreed: “When an insurer’s decision to decline coverage materially hinders an insured from repairing damaged property, procedural obstacles to obtaining the replacement cost value should be excused.”
LEGISLATIVE UPDATE: Happy Holidays! Online ride-sharing companies Must Pony Up More Dough for Insurance . Fa La La La La!
Under recently passed Assembly Bill No. 2293, signed into law by California Governor Brown, online ride-sharing companies (Uber, Lyft, Sidecar etc.) will be subject to new insurance restrictions starting July 15, 2015. Among the more onerous requirements: “Transportation network company insurance shall be primary and in the amount of at least fifty thousand dollars ($50,000) for death and personal injury per person, one hundred thousand dollars ($100,000) for death and personal injury per incident, and thirty thousand dollars ($30,000) for property damage.” And get this, the driver’s personal insurer is off the hook: “The participating driver’s or the vehicle owner’s personal automobile insurance policy shall not have the duty to defend or indemnify for the driver’s activities in connection with the transportation network company, unless the policy expressly provides otherwise.” The complete text of the bill can be found at: http://www.leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB2293
TRADING COVERAGE PLACES
“Trading Places” was a 1983 comedy starring Dan Aykroyd and Eddie Murphy. The premise- what happens when two men from different worlds (Aykroyd, as high class commodities broker “Louis Winthorpe” and Murphy as street hustler “Billy Ray Valentine”) are “switched” as part of a social experiment by two unscrupulous curmudgeons (the “Duke Brothers”). Murphy becomes the broker and Winthorpe is thrown into the cold Philadelphia streets.
We mention this firstly because this is a top ten all time Holiday movie; but more aptly, because of The Coverage Geek’s own “Trading Places” experience- from the comfy confines a coverage firm representing carriers to a “starting from the ground up” enterprise representing mid-level consumer/business policyholders. If you haven’t seen the movie in the end, the Duke Brothers are in ruins and Winthorpe and Valentine are sipping drinks on a yacht docked in an island paradise. The last lines “Looking good, Billy Ray. Feeling good, Louis.”
We wish you all, except for the Duke Brothers, Happy Holidays and that you are all looking and feeling good. The Premiere of Season Two of The Coverage Geek is February 9, 2015 (or thereabouts.) Don’t miss it.