Insurance company anger

Is this comment pertinent to this conversation about my bitching about insurance companies?

State Farm did exactly the same thing to me.....after specifically running TELEVISION ads saying that they wouldnot hold Hurricane Fran and Hurricane Floyd damage against their customers they cancelled us for exactly that reason. Fran leveled my house, we actually ended up moving, it was totaled and we opted to sell after it was rebuilt, and we sustained lesser damage but damage nonetheless from Floyd, they dropped us. At the same time, I was hit and run for the second time in three years at work and this was on my COMMERCIAL policy, and they dropped us from all our auto insurance including the SEPARATE policy on squinneys' van.

The insurance companies, always criminals, have become emboldened and expoentially worse about this kind of action since the party they support and contribute to the most has taken over.

The guys you support.

That aside I not only sympathize but empathize with your feelings.

Most assuredly it is. It is directly pertinent to the "bitching" part of your post.

By the way, for McGentrix and Bi-Polar Bear and any other aggrieved State Farm policyholders, there is a simple free-market solution to your problems. Since State Farm is a mutual company, policyholders are also shareholders in the company. Consequently, you have a direct say in the operations of the company. Your duty, then, is to convince your fellow policyholders/shareholders to alter the company's practices. It's the perfect solution and one that is directly at hand: no state regulations, no lawsuits, no statutes, just the free interplay of market forces. Now go for it!

screw 'em , I'm with someone else now.....

Re: Prohibited and Deceptive Insurance Practices


I don't agree. Due to a 19 year history of automatic policy renewal, the policy holder had a reasonable expectation that the policy would be renewed the 20th year. The insurer unilaterally decided not to renew because the insured, in the past, merely required the insurer to do what it was contractually obligated to do--pay claims for covered losses incurred due to acts of God. There is a covenant of good faith and fair dealing that exists between contracting parties. Claims against an insurer for bad faith and unfair dealing are tort claims. An insurer's misconduct may give rise to both a breach of contract action and a separate and independent tort action. A good plaintiff's attorney ought to be able to frame an appropriate complaint that won't get thrown out of court.



Again, I disagree. We do not have a "free market system" in this country. Our government regulates almost every facet of business. Insurance companies are heavily regulated because insurance is most often mandatory and insurance policies are adhesion contracts (offered on a take-it-or-leave-it basis).



Again, I disagree. You must be confusing noneconomic damages (such as mental anguish) with damages for intentional infliction of emotional distress (which is a tort in and of itself) which requires "outrageous behavior."

Re: Prohibited and Deceptive Insurance Practices

Not only is that bad law, that's bad logic. Automatic renewals do not create a vested right in either of the parties to the contract. The policyholder can no more expect to be renewed for the 20th year than the company can expect the policyholder to accept the proffered renewal.


And why isn't the insurer entitled to act in this fashion? In a contractual relationship, both parties are free to continue or break off the relationship. After all, the company cannot force the policyholder to renew, so why should the policyholder be able to force the company to renew?


Only as long as the contractual relationship exists.


Good luck.


I'm not sure who you're disagreeing with. I never said that insurance wasn't heavily regulated or that companies didn't issue adhesion contracts. What's your point?


No, I'm not the one who is confused here.

Non-economic damages are normally not available in breach of contract cases. In general, you cannot assert tort claims in a breach of contract case unless there is some behavior on the part of one of the contracting parties that constitutes a separate wrong. As such, non-economic damages for "mental anguish" cannot form part of the relief if "mental anguish" could not form part of the claim. Consequently, a party can only recover damages for "mental anguish" in a contract case if the defendant also committed an independent tort, such as intentional infliction of emotional distress -- which requires proof of behavior that "shocks the conscience."

Re: Prohibited and Deceptive Insurance Practices





An insurer's misconduct may give rise to both a breach of contract action and a separate and independent tort action. Damages for a breach of contract claim are measured and determined differently than damages for a tort claim. Both economic and noneconomic damages are available in tort claims.

Noneconomic damages include inconvenience, mental anguish, pain and suffering, loss of consortium or companionship, etc.

Intentional infliction of emotional distress is an independent tort. The plaintiff must prove outrageous conduct that shocks the conscience.

I clearly identified mental anguish as a component of noneconomic damages for a tort claim--not for a breach of contract claim. You claimed damages for mental anguish were not available unless the plaintiff can prove outrageousness that shocks the conscience. In my opinion, you were clearly confusing a component of noneconomic damages of a tort claim with the specific independent tort of intentional infliction of emotional distress. These are two different animals (a component of noneconomic damages vs. the independent tort). I am not confused at all.

To be perfectly clear, a plaintiff may claim noneconomic damages for mental anguish and, in doing so, the plaintiff does NOT have to prove outrageous conduct that shocks the conscience.

Welcome, Debra. You seem a useful and interesting addition.

Re: Prohibited and Deceptive Insurance Practices

Well, this is a bit like watching someone play "hide the pea." You keep claiming that someone can assert both contract and tort claims, Debra_Law, but you never specify exactly what tort claims one may assert in conjunction with a breach of contract.

You've noted that one could allege a breach of the independent covenant of good faith and fair dealing. That's true, but then one simply cannot recover for "mental anguish" under that theory (if you have a citation to a case that says otherwise, I'd be very interested in seeing it). Likewise, one cannot allege simple negligence in a breach of contract case unless there had been some kind of behavior totally unrelated to the breach (e.g. the defendant not only breached the contract but also ran over the plaintiff while driving out of the parking lot). There is, after all, no such thing as a "negligent breach of contract."

How, then, can one allege an independent tort that permits a plaintiff in a breach of contract case to recover damages for "mental anguish?" If it's not the breach of the covenant of good faith and fair dealing, what is it? Could it be ... hmmm ... maybe intentional infliction of emotional distress?

Really, you're being too clever by half when you assert that a plaintiff can recover for "mental anguish" as damages for some unspecified tort, without noting that the only tort that permits that kind of relief -- in connection with a breach of contract -- would be intentional infliction of emotional distress* (or, in those jurisdictions which recognize it, I'll add negligent infliction of emotional distress as well).

But I'll be generous, D_L: if you can identify one basis for the recovery of damages for "mental anguish," where the tortious behavior also constituted a breach of contract, and which is not based on either intentional or negligent infliction of emotional distress, I will retract everything I've said so far.


To be perfectly clear, a plaintiff may claim non-economic damages for "mental anguish" in connection with a breach of contract only if he proves that the defendant engaged in outrageous conduct that shocks the conscience.


*I will presume, for the sake of this analysis, that State Farm did not inflict actual physical injury to McGentrix when it refused to renew his homeowners policy.

I agree, roger. Anyone who disagrees vehemently with me is a useful addition to this site.

Good point. I'm also careful of my wording when disagreeing with Thomas.

OOooh, boy, a cat fight...

Who's popping the corn?

Re: Prohibited and Deceptive Insurance Practices





First and foremost, when a plaintiff commences an action against a defendant, the plaintiff may join as many claims as the plaintiff may have against the defendant in a single action. A plaintiff may have a breach of contract claim against the defendant. A plaintiff may have have a tort claim against the defendant. A plaintiff may also have a statutory claim against a defendant based upon a consumer protection act. Regardless of how many claims a plaintiff may bring against a defendant, each claim must stand or fall on its own merits.

Nevertheless, you ask the following: "How, then, can one allege an independent tort that permits a plaintiff in a breach of contract case to recover damages for 'mental anguish?'"

Your question is based upon a faulty premise that one claim (e.g., an independent tort claim) is somehow conjoined and dependent upon another claim (e.g., breach of contract claim). If we cannot agree that each claim that a plaintiff makes against a defendant must stand or fall on its own merits, then our discussion is an exercise in futility. A plaintiff does not allege an independent tort "in a breach of contract" case. The plaintiff alleges two separate claims that either stand or fall on their own merits.

An insurance policy is a contract.

If the insurance company (insurer) breaches the contract, the insured may bring a claim against the insurer for breach of contract.

As damages for breach of contract, the insured may claim all economic damages that flow from the breach. Generally, damages for breach of contract are limited to the pecuniary loss sustained and the insured is required to mitigate damages. Noneconomic damages, e.g., mental anguish, are not available in a breach of contract claim. (Likewise, punitive [exemplary] damages are not available in a breach of contract claim).

Implied in every contract of insurance between the parties is the covenant of good faith and fair dealing.

Insurance policies (contracts) are not negotiated by the parties in an arm's length deal. Insurance policies are adhesion contracts and any ambiguity therein must be strictly construed against the insurance company (the insurer) in favor of the policyholder (the insured). If one interpretation of the policy language will impose liability on the insurer and the other will not, the interpretation favorable to the insured will be adopted.

In the often cited case, Gruenberg v. Aetna Insurance Company, 9 Cal.3d 566, 573 574, 108 Cal.Rptr. 480, 485, 510 P.2d 1032, 1037 (1973), the Supreme Court of California enunciated an insurer's duty to act in good faith in dealing with its insured concerning a claim under an insurance policy:

"... in the case before us we consider the duty of an insurer to act in good faith and fairly in handling the claim of an insured, namely a duty not to withhold unreasonably payments due under a policy... That responsibility is not the requirement mandated by the terms of the policy itself--to defend, settle, or pay. It is the obligation, deemed to be imposed by the law, under which the insurer must act fairly and in good faith in discharging its contractual responsibilities. Where in so doing, it fails to deal fairly and in good faith with its insured by refusing, without proper cause, to compensate its insured for a loss covered by the policy, such conduct may give rise to a cause of action in tort for breach of an implied covenant of good faith and fair dealing."

Accordingly, if the insurer breaches the covenant of good faith and fair dealing implied in every contract of insurance as a matter of law, the insured may bring a claim against the insurer for "bad faith." This is not a breach of contract claim. This is a separate, independent tort claim that either stands or falls on its own merits.

In my very first post on this discussion, I identified the tort of "bad faith." I suggested that the original poster who started this thread to read about insurance and "bad faith."

In a tort claim for bad faith, the insured may claim damages for all detriment proximately resulting therefrom including economic loss as well as noneconomic loss such as mental anguish or emotional distress resulting from the conduct and, in a proper case, punitive damages (under proper allegations of malice, wantonness, or oppression).

******

Based upon the above clearly-established law (in most jurisdictions), we can make a cursory evaluation of a nonrenewal situation.

I do not have a copy of a typical homeowner's insurance contract. Therefore, I do not know if there is any language therein concerning renewal. Most often, the homeowner's insurance is renewed annually when the insurer submits the billing to the homeowner's mortgage company and the premium is paid from the homeowner's escrow account. We can assume, for 19 years in a row, the insurer sent the annual premium statement to the original poster's mortgage company and the premium was paid from the escrow account.

Interpretation of insurance policies is slightly different than that of general contracts. The proper focus in interpreting an insurance contract is the reasonable expectation of the policyholder (the insured).

See, e.g., HIGHLANDS INSURANCE GROUP v. BUSKIRK
http://www.paed.uscourts.gov/documents/opinions/00D0834P.pdf

For 19 years, the insured's homeowner's policy was automatically renewed each year when the insurer sent the premium statement to the insured's mortgage company and the premium was paid from the insured's escrow account. Absent any wrongful conduct on the part of the insured and based upon 19 years of history in doing business with the insurer, the insured had a reasonable expectation that the homeowner's policy would be automatically renewed the 20th year in the same manner that the policy was automatically renewed for the last 19 years.

The insured never engaged in any misconduct. The insured, however, three times in the past six years, experienced property damage that was a coverable loss under the insurance policy. The insured filed legitimate claims on the policy and was compensated for the property damage in accordance with the coverage. The insurance company never informed the insured, if he filed legitimate claims--something he had a right to do, that the insurance company will label him as "high risk" and refuse to renew the insurance contract in the future. At no time was the insured advised by the insurance company that he would be penalized in any manner for something he had a right to do (e.g., make a legitimate claim for a covered loss). At no time was the insured advised by the insurance company that he would be labeled "high risk" for losses that were incurred due to no fault of insured.

On the 20th year, the insured received a nonrenewal notice stating the reason the insurer was refusing to renew the policy because the insured made three legitimate claims during the last six years. Accordingly, the insurer is telling the insured that as a condition precedent to renewing the insurance contract each year, the insured must forego the benefits of the insurance contract. If the insurance company will sell its insurance policy to only those people who will absorb their covered property losses and agree not to file claims, the insurance policy is virtually worthless for the purpose in which it was intended.

When the insurance policy is not renewed, the insured suffers another serious detriment. Mortgage companies will not lend money to borrowers to purchase their homes except on the express condition that the home is insured and remains insured during the term of the loan. The loss of insurance places the insured in an untenable and urgent situation.

When the insurance policy is not renewed, the homeowner must scramble to find and purchase another insurance policy before the mortgage company declares the mortgage loan in default. Because the homeowner made legitimate claims in the past, the homeowner is now labeled as "high risk" and no other insurance company wants to insure the mortgaged home unless the insured pays more money and possibly agrees to higher deductible. The homeowner must now pay a much higher premium to get coverage that usually is not equal to the coverage he had in the past. This is a stressful, emotional situation. The insured suffers mental anguish! If the insurance company had informed him that making a legitimate claim would place him in this dilemma, the insured might not have made the claim--even though he had a right to do so.

Any way you look at the insurance company's conduct, it was unconscionable and in bad faith.

Therefore, I stand by my assessment that a homeowner in this type of situation more likely than not has a tort claim against the insurance company for bad faith and the homeowner may seek noneconomic damages for mental anguish. [If the insurer's conduct of dumping insureds who have done nothing more than file a legitimate claim is deemed egregious enough, punitive damages may also be available.] If the homeowner retains a reasonably competent plaintiff's attorney, a complaint can be drafted that will stand up in court.

I found a suggested format for a renewal clause in a homeowner's insurance policy:

If the insurance contains an automatic renewal clause, its provision should be substantially the
following to be acceptable to FmHA or ts successor agency under Public Law 103–354:

"This policy will be automatically extended
for successive terms at expiration of the
original term and of each extension thereof,
upon payment of renewal premiums. It is a
condition of this policy that if the policy ex-
pires or is canceled for nonpayment of pre-
mium, or for any other reason, the mort-
gagee will be given 10 days notice."

http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/janqtr/pdf/7cfr1806.2.pdf

If the original poster will respond, can you tell us if your State Farm policy has any type of renewal clause and if so, what does it provide?

bookmark

Interesting that the non-renewal notice period is much shorter in the U.S. than in Canada.

Will do.

Colorado case
There are slight variations in remedies available depending on what state you live in. Here's a clip from a case describing the remedies available in the State of Colorado when an insurer engages in misconduct:

2003 Colo. LEXIS 117,*;64 P.3d 230

Petitioner: GIOACCHINO (JACK) GIAMPAPA, v. Respondent: AMERICAN FAMILY MUTUAL INSURANCE COMPANY.

No. 00SC468

SUPREME COURT OF COLORADO

64 P.3d 230;2003 Colo. LEXIS 117

February 24, 2003, Decided


I. INTRODUCTION

This case clarifies the availability of non-economic damages when an insurer has willfully and wantonly breached its insurance contract.

When an insurer has wrongfully refused to pay benefits to an insured, the insured may, under certain circumstances, seek remedies under contract law, tort law, and the Colorado Auto Accident Reparations Act ("No Fault Act" or "Act"). §§ 10-4-701 et seq., 3 C.R.S. (2002). In this case, Gioacchino (Jack) Giampapa filed all three types of actions against the American Family Mutual Insurance Company and a jury awarded Giampapa damages under all claims. Under the contract claim specifically, the jury awarded Giampapa $ 900,000 in economic and non-economic "special damages" for American Family's willful-and-wanton breach of contract. This award did not duplicate any of Giampapa's tort or statutory damages. On appeal today is the issue of whether Giampapa may recover complete non-economic damages under his common law contract claim.

We hold that a complete range of non-economic damages is available when an insurer has willfully and wantonly breached its contract [*4] with an insured, so long as the damages are foreseeable at the time of contracting and the damages are a natural and probable result of the breach. We begin our discussion with a summary of the underlying facts of this case and an explanation of its complex procedural history. Next, we address the threshold issue of whether a common law contract claim can coexist with a statutory claim under the No Fault Act, and conclude that the No Fault Act does not preempt a contract claim. We then address contract claims specifically, explaining (1) the background of Colorado's existing "willful-and-wanton" rule; (2) why we retain the rule today; and (3) why the scope of the rule allows an insured to recover complete non-economic damages not limited to "mental anguish." Finally, we apply Colorado's willful-and-wanton rule to Giampapa and find that (1) the "law of the case doctrine" is inapplicable here; (2) his case satisfies the elements of the willful-and-wanton rule; and (3) the full $ 900,000 award stands because American Family has waived its section 13-21-102.5(3)(a), 5 C.R.S. (2001), statutory cap argument. Accordingly, we reverse the judgment of the court [*5] of appeals and reinstate Giampapa's original special damages award in its entirety.

II. FACTS AND PROCEDURAL HISTORY

In 1992, a vehicle traveling at 35-45 miles per hour rear-ended Giampapa while he was stopped at a stop sign. After the initial impact, a second vehicle crashed into the first vehicle, causing another collision. Giampapa suffered numerous serious injuries, including spinal fractures, head and neck injuries, torn knee cartilage, and severe numbness in his arms and legs.

At the time of the accident, the defendant American Family Mutual Insurance Company ("American Family") was Giampapa's automobile insurance carrier. Giampapa was covered under a "deluxe" insurance plan, for which he paid a higher premium and which provided additional benefits beyond the basic personal injury protection ("PIP") coverage required by the No Fault Act. Namely, American Family agreed to pay for medical care provider bills and for reasonable and necessary durable medical equipment.

Following the accident, Giampapa began a physical therapy regimen that included hydrotherapy, treadmill walking, and strengthening exercises. Giampapa's physicians believe that he probably will need [*6] to continue this physical therapy for the rest of his life. On his physicians' advice, Giampapa attended these physical therapy sessions three to five times a week and had to drive approximately sixty miles, round trip, to attend each of these sessions.

Soon, the strain of this frequent and time-consuming drive began to substantially aggravate his condition and to negate the positive effects of the therapy. In light of these circumstances, Giampapa's physicians concluded that he would be better off with a treadmill and weight machine for home use. Such home equipment would allow Giampapa to continue physical therapy without having to make the strenuous drive, thus his therapy would be more effective. His physicians also prescribed a special therapeutic chair that would allow him to sit without great pain, and a hot tub that had been effective in both improving his condition and alleviating his constant pain.

American Family was advised of the medical opinion that this home medical equipment was necessary to help Giampapa recover from his injuries, but American Family repeatedly refused to pay for such items. Furthermore, in addition to refusing to pay for the medical equipment, [*7] American Family failed to pay some of Giampapa's medical care provider bills and paid other bills months late. As a result, Giampapa received numerous collection notices from his medical providers about his failure to pay for their services.

All of these events had a devastating impact on Giampapa's life. Because of American Family's failure to pay the above benefits, Giampapa was required to continue his sixty-mile drives to his physical therapy sessions, three to five times a week. He consumed large amounts of pain medications to offset the diminished effectiveness of his physical therapy, and he endured substantial side effects from these medications. His personal relationships with his family degenerated as he became increasingly irritable and withdrawn, and his condition eventually forced him to shut down his business.

Giampapa ultimately filed suit against American Family for failing to make timely medical provider payments and for failing to pay for reasonable and necessary medical equipment. Giampapa argued that American Family's actions constituted a common law breach of contract, a statutory violation of the No Fault Act, and a tortious bad faith breach of contract. A jury [*8] trial found for Giampapa on all claims.

Under the contract action, the jury found that American Family had willfully and wantonly breached its contract with Giampapa by failing to pay for $ 10,574.59 worth of reasonable and necessary durable medical equipment, causing him to suffer an additional $ 900,000 in special damages. Furthermore, the jury found that American Family had willfully and wantonly failed to pay $ 9,336.74 in medical care provider bills in a timely fashion.

Because the jury found that American Family's conduct was willful and wanton, the trial court, pursuant to section 10-4-708(1.8) of the No Fault Act, 3 C.R.S. (2001), trebled "the amount of unpaid benefits recovered in the proceeding." Specifically, the trial court awarded Giampapa three times the amount of the actual value of the medical equipment and three times the amount of the actual value of unpaid medical care provider bills.

Finally, under the tort action, the jury found that American Family had breached the insurance contract in tortious bad faith, entitling Giampapa to $ 100,000 in economic damages and $ 200,000 in non-economic damages. Neither amount duplicated the special damages under the contract [*9] claim. The jury also determined that American Family's breach was willful and wanton beyond a reasonable doubt, thus warranting punitive damages in the amount of $ 300,000.

****

If you want to read the entire case, it is available at the LexisOne website. Anyone can subscribe to the free case law service. You can find the case using the citation search: 64 P.3d 230

This may be quite different in the U.S. than in Canada, but isn't non-payment of benefits a bit different can of worms from non-renewal of a policy with notice?

You certainly wouldn't be able to apply any of those ^^^ cases to a non-renew issue here.

Re: Prohibited and Deceptive Insurance Practices


I stated the above in a previous post above. This is the clearly established law in my jurisdiction and I believe in most jurisdictions. I had no idea that the State of Colorado had recently ruled that noneconomic damages were available in a breach of contract action if the breach was willful and wanton and if the noneconomic damages were foreseeable at the time contracting.

Humbly, I associate the phrase "willful and wanton" with "bad faith"; I associate the legal concept of "foreseeability" with tort claims--not with contract claims; and I believe the rule in Colorado that allows noneconomic damages for some breach of contract actions seems to overlap the tort claim and allow for double recovery. Live and learn, but the generosity of Colorado remedies surprised me.