• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Contact Us
  • Sponsor An Email
  • Post A Job
  • Merger & Acquisition Services

Agency Checklists

Massachusetts Insurance News & Job Opportunities

You are here: Home / Insurance Insights | Massachusetts / InsurOp-Eds / InSurOp-Ed: In Claim Disputes, Disregard Case Law At Your Own Risk

InSurOp-Ed: In Claim Disputes, Disregard Case Law At Your Own Risk

May 10, 2022 by Bill Wilson

Legal Decision


The International Risk Management Institute has several free newsletters. Recently, I received my copy of the IRMI Construction Risk Manager newsletter which featured a court case, Security Nat’l Ins. Co. v. Construction Assoc. of Spokane, No. 2:20-cv-00167, 2022 U.S. Dist. LEXIS 53533 (E.D. Wash. Mar. 24, 2022), that involved whether a general contractor was an additional insured under a subcontractor’s CGL policy.

But the issue I’d like to address in this article is, according to newsletter editor Ann Hickman, CPCU, CRIS, ARM, the court’s holding the insurer “in bad faith for denying a claim without making a reasonable attempt to review the legal precedent cited by the insured’s counsel.” According to Ann, the court held that “insurance companies must take reasonable steps to ensure adjusters are equipped to make appropriate coverage and defense determinations. ‘Such steps could include teaching adjusters to run case searches or, more likely, supplying adjusters with subscriptions to relevant legal newsletters, a resource most attorneys rely on to keep apprised of legal developments,’ the court opinion states.”

I make precisely this point in my book “When Words Collide: Resolving Insurance Coverage and Claims Disputes.” In the book, I devote over 70 pages to 17 legal and contractual principles that can be used to resolve such disputes. One of these principles is what I refer to as “Unconscionable Advantage.”

In my discussion of this principle, I cite the following court case:

“In situations where a layman might give the controlling language of the policy a more restrictive interpretation than the insurer knows the courts have given it and, as a result, the uninformed insured might be inclined to be quiescent about the disregard or non-payment of his claim and not to press it in timely fashion, the company cannot ignore its obligation. It cannot hide behind the insured’s ignorance of the law; it cannot conceal its liability. In these circumstances it has the duty to speak and disclose, and to act in accordance with its contractual undertaking.” — Bowler v. Fidelity & Cas. Co., 53 N.J. 313, 327-328, 250 A.2d 580, 588 (1969)

More specific to the Security National decision referenced in the IRMI newsletter, the Bowler decision expresses how important and valuable governing case law can be to a claim. If the insurer is made aware of case law under identical or significantly similar circumstances where coverage has been found, it is with great risk that it continues to deny the claim. In fact, consider the following case cited in my book [emphasis added]:

“An insurer bears a duty to defend its insured whenever it ascertains facts which give rise to the potential of liability under the policy irrespective of the source of the information.” — Smith v. Travelers Indem. Co., 32 Cal. App. 3d 1010, 1017, 108 Cal. Rptr. 643 (Ct. App. 5th Dist. 1973)

The adjuster and insurer failed to acknowledge the case law cited by the claimant’s attorney. Governing case law is often critical to resolving claim disputes and, as the Security National case illustrates, this does not mean just the case law one party believes supports its opinion.

Finally, as my book in its entirety demonstrates, not only is case law of value, but ANY reputable source of credible, substantive and material authority may be relevant.

Agency Checklists MA Insurance News Mass Insurance News Bill Wilson Insurance Commentary

Bill Wilson, CPCU, ARM, AIM, AAM

Founder at InsuranceCommentary.com

One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America.

Copyright 2016-2021 by InsuranceCommentary.com. Reprinted with permission.

  • Website
Print Friendly, PDF & Email

Filed Under: InsurOp-Eds, Latest News Tagged With: Agency Checklists, Bill Wilson, Mass. Insurance News, New England Insurance News

Primary Sidebar

Sponsored

Sponsored

MA Division of Insurance Announcements

Latest Agency Sales

Kaplansky Insurance Acquires Seekonk’s Crosstown Insurance

Aronson Insurance Acquires LJM Insurance Agency

More Agency Sales

Career News

A Slideshow Of Mr. Bellotti’s 100th Birthday Celebration

Two Vermonters Voted as Top Captive Insurance Professionals in the World

Phil Shepard Hired as Surety Territory Manager of FCCI Insurance

Renaissance Appoints Clyde Ebanks Senior Vice President/Carrier Partnerships

Agency Checklists, MA Insurance News, Mass. Insurance News

ShoreOne strengthens leadership team with experienced Massachusetts Territory Manager

Herbert H. Landy Insurance Agency Hires Stephanie McNamara, AAI, AIS

Pauline E. Ashworth Joins Preferred Mutual as Executive Vice President, Chief Human Resources Officer and Diversity and Inclusion Officer

Vermont Mutual Insurance Group Adds Two New Board Members

MassDrive’s Jean-Marie Lovett Named One of Travelers’s 2023 Personal Insurance Agents of the Year Award

Concord Group's Chris Hynes To Receive Rise Professional 35 Under 35 Award

Concord Group’s Chris Hynes To Receive Rise Professional 35 Under 35 Award

View More Career News

In Memoriam

In Memoriam: Robert J. Dowling – A Lifelong Commitment to Insurance and Community

In Memoriam: Hugh Campbell Findlay, 1928-2023

In Memoriam: John C. Cross, 1954-2023

CAR News

Regional Gaps in Auto Insurance Prices “Not Equitable or Fair,” Lawmaker Says

2nd Look 2023: The MA Commercial Auto Insurance Marketplace

2nd CAR Update 2023: The MA Private Passenger Auto Insurance Marketplace

View More CAR News

Massachusetts Law Updates

The JMA v. Zurich Appeals Court Ruling: A Warning Against Insurers’ Delayed Payment of Insureds’ Legal Fees”

Appeals Case Revisits Underlying Lawsuit Involving Zurich Insurance Duty to Defend Dispute.

Appeals Court Decision Reopens Door To Lawsuit Against New Bedford-Based Insurance Agency

A New Bedford-based agency may end up having to face a lawsuit it thought it might have avoided.

Understanding The Duty to Defend: Partington Builders v. Nautilus Ins.

Understanding The Duty to Defend: Partington Builders v. Nautilus Ins.

Federal Court Reaffirms Massachusetts Rule Regarding an Insurer’s Duty to Defend

Appeals Court Reins in Superior Court’s Expansion of Risk Management

Court Limits Indemnity Agreements Interpretation and Reverses $237K Legal Fee Award

More Mass. Law Updates

DOI News

MA Homeowners’ Insurance Premiums Topped $2.8B in 2021

Massachusetts Remains The 14th Largest Insurance Marketplace As Ranked By Total Premium Volume

Facts & Figures For New England Insurance Departments & Insurance Producers | 2023

Massachusetts Insurance Commissioner Honored for Exceptional Leadership

View More DOI News

Insurance Fraud

Staged Accidents Bring 2.5-Year Sentence In $300,000 Luxury Car Insurance Scam

Investment Adviser & Affiliated Insurance Agency Trigger SEC Disgorgement Lawsuit Over Undisclosed Commissions

Temporary Employment Agency Owner Indicted for Tax and Insurance Fraud

Six-Day Jury Trial: Property Owner Not Guilty Of Insurance Arson

More Insurance Fraud News

Footer

Agency Checklists

Contact us

Advertise on Agency Checklists

We offer a variety of ways to get help promote your company or product.

Announcements
Email Sponsorships
Partnerships
Custom Collaborations

*Affiliate Disclosure

Please note that any of Agency Checklists’ articles might contain one or more affiliate links. This means that any subsequent purchase resulting from these links may result in a commission for us, but at no additional cost to you. For example, as an Amazon Associate, Agency Checklists earns a commission from all qualifying purchases. By working with affiliates we can continue to keep Agency Checklists subscription free. Thank you for your support.

SEARCH OUR SITE

Explore Our Archives

Copyright © 2023 · Agency Checklists · All rights reserved.

 

Loading Comments...