Articles Posted in Insurance Law

handshake.jpgBodily Injury (BI) insurance sold in Florida covers the insured for damages caused by his or her negligence up to the policy limits. The minimum coverage limit is $10,000, but can be in the millions. Inexplicably, BI insurance is not mandatory in Florida. Only PIP and Property Damage Liability are mandatory.

While the difference between $10,000 and, say, $1,000,000 in BI coverage is significant, the insurance company has a duty to defend the insured equally regardless of the limit. This is another benefit of maintaining bodily injury insurance.
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application.jpgThis link contains an overview of permit and license standards in Florida for drivers between the ages of 15 and 17.

Florida Statute §322.09(1)(a) requires an authorized adult (e.g., parent or guardian) to sign and verify the minor’s application. In turn, §322.09(2) makes the adult jointly and severally liable for any damages caused by the negligence or willful misconduct of the minor under the age of 18 years when driving a motor vehicle, any motor vehicle, upon the roadway.
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crushed vehicle.jpgMany people, including some personal injury lawyers, believe that UM insurance always provides coverage when the insured is not at fault and there is no other insurance to cover the losses. This is wrong.

When the driver of an uninsured or underinsured (UIM) vehicle causes an accident, UM/UIM should kick in to compensate for losses such as wage loss, medical expenses, and pain and suffering. This is prescribed by Section 627.727(1) Florida Statutes, which provides, in pertinent part, as follows:

No motor vehicle liability insurance policy which provides bodily injury liability coverage shall be delivered or issued for delivery in this state with respect to any specifically insured or identified motor vehicle registered or principally garaged in this state unless uninsured motor vehicle coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom. (Italics provided)

Crashes without the wrongdoing of another driver do occur. Our office was recently retained by a woman who struck a tree after swerving her car to avoid hitting a dog that had suddenly entered the roadway. She sustained severe whiplash and a blow to the head which caused her to lose consciousness. She was rushed to the hospital by ambulance and admitted for testing and overnight observation. Her car was totaled. The accident was not her fault.
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truck2.jpgInsurance companies operating in Florida are under a legal duty to adjust claims in good faith to prevent their insureds from being subject to excess judgments (a court judgment in excess of a policy’s liability limit). A carrier that fails to act in good faith may be forced to satisfy an excess judgment as punishment for breaching the duty.

Most individuals do not maintain adequate policy limits to cover the full consequences of a serious accident. For example, the minimum and least expensive limit for motor vehicle bodily injury (BI) insurance is $10,000 per person/$20,000 per accident. For those individuals who even carry BI coverage at all — it is not mandatory in Florida — this is the limit level most frequently chosen. BI insurance is expected to cover past and future medical expenses, past and future lost income, property damage, and non-economic damages such as pain and suffering. Nor do most individuals have enough private money to cover damages above policy limits. In cases involving serious injuries, $10,000 does not go far.

Liability insurance companies have an affirmative duty to gather damages information. They cannot sit idle when information is at their disposal. Evidence such as vehicle property damage and the police crash report, often indicators of the seriousness of a crash and fault, are usually readily available. This information, alone, can be enough for the carrier to make the decision to tender policy limits. For example, in a case involving a $10,000 policy, evidence of a high speed crash resulting in significant property damage should be enough for the carrier to tender.
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car-insurance-policy.jpgFlorida law requires every owner or registrant of an operable personal use motor vehicle to maintain Personal Injury Protection and Property Damage – Liability insurance. See Florida Statute 627.733 Required security. While other types of coverage are available under the standard Florida motor vehicle insurance policy, these are the only two that are mandatory. While premiums are charged for the additional coverage, the value can be worthwhile. For example, the minimum mandatory coverage (PIP & PD – Liability) does not keep an at-fault insured from losing driving privileges when injuries are involved. Bodily Injury (BI) insurance does.

Here is a summary of the various types of coverage available under the standard Florida motor vehicle insurance policy:

Personal Injury Protection (PIP).
This coverage is outlined in Florida Statute 627.736. For in-state accidents, PIP covers the named insured, relatives residing in the same household, persons operating the insured motor vehicle, passengers in such motor vehicle, and other persons struck by such motor vehicle while not occupying a self-propelled vehicle. For out-of-state accidents occurring within the U.S. and Canada, PIP covers the named insured and resident relatives if occupying a listed vehicle. Remember this: Out-of-state, out-of-vehicle, out-of-luck.

PIP pays:

  • 80 percent of reasonable or allowable accident-related medical expenses
  • 60 percent of lost wages
  • $5,000 death benefits

The typical PIP policy limit is $10,000 per person with a deductible of up to $2,000.

Property Damage Liability (F.S. 324.022). Covers damage to a third party’s property, including motor vehicles, walls, telephone poles, buildings, etc. The coverage travels with the insured, meaning it applies (with exceptions) when the insured is operating a non-listed vehicle. It may also cover a permissive user of a listed vehicle. The minimum policy limit is $10,000.

Bodily Injury Liability (BI) (324.021). Not mandatory in Florida. However, for those convicted of DUI, it is mandatory for a period of three years after  license reinstatement. For convictions before October 1, 2007, the minimum coverage limits are $10,000 per person/$20,000 per accident. On or after October 1, 2007: $100,000/$300,000.

BI covers for injuries and loss of life caused by the insured while operating certain listed vehicles. It may also afford coverage to the insured while operating a non-listed vehicle, like a friend’s car. An added bonus of maintaining BI is that the insurance carrier will furnish a legal defense on its tab. The minimum BI coverage limits are $10,000/$20,000. The maximum can be whatever the insured desires and can afford. Umbrella insurance is a way of increasing limits while saving on cost.
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puzzle2.jpgUnderstanding Florida motor vehicle insurance law can be puzzling. The various coverage options include Personal Injury Protection (PIP), Bodily Injury (BI), Comprehensive/Collision, Property Damage Liability, and Uninsured/Underinsured Motorist (UM/UIM). Presently, only PIP and Property Damage Liability are mandatory in Florida. Neither of these coverages compensates the victim of an accident for non-economic damages like pain and suffering arising from a bad injury. Only two of the coverages do: BI and UM.

UM is typically thought of as coverage purchased for the benefit of the named insured or insureds and resident relatives (see definition at Florida Statute 627.732(6)). It takes the place of BI where BI is not available (UM) or not adequate (UIM) because the loss exceeds available coverage limits. UM/UIM are not thought of as providing coverage to those other than named insureds and resident relatives. This thinking is incorrect.
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applicationWhenever an insured makes a claim, one of the first things every insurance company does is try to figure out ways to deny the claim. Common methods are to assert that the loss is not covered under the policy or that the insured has failed to cooperate with the carrier. Another popular practice is to rescind the insurance contract based on charges of misrepresentation, omission, concealment of fact or incorrect statement in an application for insurance. This method is authorized by Section 627.409(1) of the Florida Statutes, and can even be based on non-intentional misstatements.

While the law does not favor the forfeiture of rights under an insurance policy, see Johnson v. Life Insurance Company of Georgia, 52 So.2d 813, 815 (Fla. 1951), beating back 627.409 charges can be difficult. To prevail under 627.409, the carrier need only show any of the following:

(a) The misrepresentation, omission, concealment, or statement is fraudulent or is material either to the acceptance of the risk or to the hazard assumed by the insurer.

(b) If the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith would not have issued the policy or contract, would not have issued it at the same premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss.

These are not especially difficult standards for carriers to meet. Moreover, while carriers sometimes prey on the vulnerable by rescinding based on flimsy or non-existent evidence, not expecting the insured to fight back, more frequently their evidence contains some modicum of substance. Notwithstanding these hurdles, insureds do have a fighting chance under Florida law.

Waiver. “[W]hen an insurer has knowledge of the existence of facts justifying a forfeiture of the policy, any unequivocal act which recognizes the continued existence of the policy or which is wholly inconsistent with a forfeiture, will constitute a waiver thereof.” Johnson at 815. The elements of waiver are: (1) the existence at the time of the waiver of a right, privilege, advantage, or benefit which may be waived; (2) the actual or constructive knowledge of the right; and (3) the intention to relinquish the right. Capital Bank v. Needle, 596 So.2d 1134 (Fla. 4th DCA 1992); Taylor v. Kenco Chemical & Mfg. Corp., 465 So.2d 581 (Fla. 1st DCA 1985).

Johnson involved a life insurance policy. Following the insured’s death, the carrier sought to rescind the policy based on misrepresentation. It was clear that the insurance application contained material misrepresentations concerning the insured’s health and medical treatment before issuance of the policy. It was also uncontroverted that the insurance agent became aware of the misrepresentations only two months after the date of the issuance of the policy, yet the carrier continued to accept and collect premiums with constructive notice of these facts. (The carrier did not challenge that the knowledge acquired by the agent was imputable to it, the principal, even though the agent might not have communicated the information to the company. On this issue, the Johnson court wrote: “[U]nder the circumstances here present the knowledge of the agent is imputable to his principal whether disclosed by him to it or not, and the company will be bound by such knowledge. See National Life & Accident Ins. Co., Inc., v. Travis et al., Tex. Civ.App., 128 S.W.2d 867; Poole v. Travelers Ins. Co. et al., 130 Fla. 806, 179 So. 138.”)

Failing to take acts necessary to effectuate rescission. In Leonardo v. State Farm Fire & Casualty Company, 675 So.2d 176 (Fla. 4th DCA 1996), a case involving a theft policy, the court of appeal reversed summary judgment for the carrier in a rescission case because, in part, the carrier did not remit, or even make a tender of, any premiums paid by the insured for the allegedly void policy. (The appeal court also reversed on waiver grounds, because State Farm continued to bill the insured and accept payment of premiums for a considerable period of time after denying his claim, and after notifying him of its intent to void the policy.)
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application.jpgSadly, the first thought that crosses the mind of many insurance adjusters when a claim is made is how it can be denied. At the top of the list of the ways to deny claims is rescinding the insurance contract.

Black’s Law Dictionary defines rescission as an act “where a contract is canceled, annulled, or abrogated.” An insurance policy can be rescinded before or after a claim is made. Insurance companies prefer to wait until after a claim is made. The longer they wait, the more money they receive in premium payments. If no claim is made, the carrier keeps all the premiums and pays out nothing. If a claim is made, the carrier rescinds and refunds only those insurance premiums paid to keep the policy in effect after the rescission. Heads we win, tails you lose.

Thanks to favorable legislation and case law, it is surprisingly easy for insurance companies doing business in Florida to rescind policies. Among the more popular excuses is misrepresentation. Florida Statute 627.409 (2010) allows rescission on this basis if the carrier can show the following:

a) The misrepresentation, omission, concealment, or statement is fraudulent or is material either to the acceptance of the risk or to the hazard assumed by the insurer.

(b) If the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith would not have issued the policy or contract, would not have issued it at the same premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss.

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law books.jpgOne of the primary objectives of every Plaintiff’s personal injury lawyer is to fairly and honestly maximize his or her client’s recovery. For Defendants and their insurance companies, the opposite outcome is their primary goal.

For a Plaintiff’s lawyer to be successful, he must know the personal injury insurance laws.

In the area of personal injury law involving motor vehicle accidents, uninsured/underinsured motorist insurance frequently comes into play. See F.S. 627.727. While there are many different aspects to UM/UIM coverage, this blog will focus on whether the UM/UIM carrier is entitled to a credit for the money its insured receives for personal injury damages from a self-insured.

scales.jpgFor-profit insurance companies enjoy privileges in Florida not afforded individuals and other commercial activities. It is little wonder they profit so handsomely. In turn, their wealth allows them to exercise ever greater control over politicians, the courts, and the psyche of the people. It’s an ugly picture.

In the context of liability claims, an insurance company’s primary responsibility is to protect its insured from an excess judgment. An excess judgment is a judgment entered by the court in an amount greater than the insured’s policy coverage limits. The carrier can achieve this outcome in most cases simply by being conscientious and reasonable. Falling below this standard is generally considered negligence.

As a lawyer, I can be held accountable for negligence causing harm to a client. The same holds true for doctors, bankers, manufacturers, drivers and every other entity … except for insurance companies.

In DeLaune v. Liberty Mutual Ins. Co., 314 So.2d 601 (Fla. 4th DCA 1975), Liberty failed to settle a car crash claim for its insured’s policy limit of $10,000. A verdict was rendered against the insured for $360,000. The court disallowed the Plaintiff’s attempt to recover the difference in a separate lawsuit based on allegations of harm resulting from negligence. The court said that an insurance company cannot, unlike every other entity in Florida, be held liable for harming an insured based solely on negligence. (The insured assigned the Plaintiff his right to sue Liberty in exchange for the Plaintiff agreeing not to enforce the judgment against him. This is standard operating procedure in situations where insurance carriers expose their insureds to excess judgments.) See also Thomas v. Lumbermens Mutual, 424 So. 2d 36, 38 (Fla. 3rd DCA 1982).

Not good.

Silent (Dominant) Partner
When its insured is sued, the insurance company calls the shots on every aspect of defending the case. The carrier chooses the lawyers, hires the experts (or not), requires the insured’s cooperation, and decides on settlement (or not). Florida juries are not allowed to know any of this. See Sec. 627.4136, Fla. Stat.; Beta Eta House Corp. v. Gregory, 237 So. 2d 163, 165 (Fla. 1970) (The Florida Supreme Court said this information is not relevant to issues of fault and damages.)

Not good.
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