FORMER STATE FARM EMPLOYEE
TESTIFIES THAT STATE FARM AGENTS AND EMPLOYEES REGULARLY FORGE CUSTOMER
At a time when insurance companies are seeking legislative
concessions in many states, it may be instructive to review how one former
insurance company lawyer exposed alleged corporate policies that, if true,
would constitute fraudulent criminal behavior and bad faith. Amy Girod
Zuniga, a former member of State Farmís litigation team, gave a deposition
in support of a lawsuit filed by Roderick and Krista Taylor in 1995. She
testified that State Farm agents and employees forged customer signatures to
exclude earthquake coverage from policies after the earthquake. She
testified that State Farm was aware of the pattern of forgeries because the
company paid claims whenever the forgery could be exposed and proven by
Insureds. In fact, American Home, which provides Errors and Omissions
coverage for State Farmís agents, refused to accept the tender in State Farm
agentsí forgery cases as American Home stated that State Farm had ample
notice of conduct of this type by its agents and that State Farm had taken
no meaningful steps to correct the problem. Therefore, American Homeís
position was that State Farm had ratified and authorized the agentsí conduct
so that State Farm was responsible for claims arising out of this type of
conduct. EDITOR'S NOTE: State Farm
attempted to have Zunigaís deposition sealed. They argued that there was
strategic information which should not be disseminated to the public. The
Second District Court of Appeals in California ruled that it could be made
public State Farm v. Superior Court (Taylor), no.B106120(Cal.Ct.App.
filed Apr. 22, 1997).
FILED BY A STATE FARM FORMER LITIGATION TEAM MEMBER
A former State Farm employee, Amy Girod Zuniga, who was a
former member of State Farmís litigation team, filed two affidavits in which
not only allegations of blatant bad faith were made but also outright
criminal conduct by high-ranking State Farm officials. Just several brief
highlights of her affidavits follow:
A. She indicated that certain court documents filed by
State Farm were false.
B. She was instructed by her supervisor never to use the
word "forgery" in connection with the forgery of signatures of State Farmís
Insureds by State Farm agents and agency employees. The word "forgery" was
referred to as the "F word" by personnel in her unit.
C. She stated that a John Bishop, one of State Farmís
senior executives at corporate headquarters, instructed that State Farmís
witnesses should never admit that forgeries occurred, and if compelled to do
so by Court Order, that they would develop a story in which they would try
to make this practice look like a "service." (The forgeries were to void
claims not to provide a service.)
D. That instead of complying with requests for discovery
by various plaintiffs, a carefully created "packet" from which many
documents were removed was prepared. One of the items removed was the
index. Their tactic was to give plaintiffs something containing no damaging
information but which was voluminous enough to distract their attorneys.
E. Prior to Ms. Zunigaís deposition, she was specifically
instructed by her supervisor, Vanessa Gudeij, that under no circumstances
was she to "give up" the name of David Tannenbaum to plaintiffís counsel.
Mr. Tannenbaum had told her that identical, screened packets of discovery
documents referred to above were to be produced in all earthquake cases in
response to discovery requests, regardless of the specifics of the
particular facts of the case.
F. She was given "talking points," a memorandum prepared
by her supervisor, which contained untrue statements in which she was to
memorize and give as her answers in the deposition.
G. She also stated in her affidavit that the written
script referred to above was typical of the practices and procedures she
observed at the company in connection with the preparation of company
witnesses for deposition. She, herself, as part of her duties, participated
in the preparation of many witnesses for deposition.
H. Professional witness consultants were hired to prepare
State Farm employees for giving testimonies at depositions and at trials.
Witnesses were taught to be very evasive and to try not to provide any
relevant information. One example of this training was that when asked,
"Where is your car parked right now?" if they responded by stating where
they had parked their car, they were told that their answer was wrong. They
were told that such an answer was incorrect because it had assumed that the
car had not been stolen or towed away, and thus the only correct answer was,
"I do not know." The witnesses were taught other tactics such as not
looking the questioner directly in the eye, since eye contact would tend to
facilitate meaningful communication and the giving of information.
Witnesses were taught not to answer a question with a "yes" or a "no" to
minimize the likelihood of giving a truly responsive answer. A yes or no
answer does not give "wiggle room" to change the answer at a later time.
Witnesses were taught to pretend not to understand the initial deposition
admonition, in order to throw off the Insuredís attorney. The entire point
of this training was to make it as difficult as possible for the Insuredís
attorney to learn any meaningful information about the company, its
practices, or the Insured's claim.
I. At trial, the companyís witnessís tactics are
different. They are trained to act completely different for the jury than
they do at deposition. Witnesses were trained to appear helpful and
polite, and to drop the evasive tactics used to keep information from being
disclosed at deposition. She gave examples of the company "purging" their
files and knowingly producing incomplete files when they were legally bound
to produce the complete file.
J. She also explained a company policy in which "low
damager" claims were not to be settled but rather fully litigated, and every
effort was to be made to make it financially unfeasible for the Insured to
obtain any benefits regardless of whether any liability was clear or not.
State Farmís attorneys were instructed to conduct formal discovery, obtain
records via subpoena instead of authorization forms, and to take depositions
of the claimant or Insured, even after the Insured had voluntarily given a
recorded statement. They were also forced to undergo so-called IMEís
performed by doctors the company was confident would give reports
unfavorable to the claimant/insured. This policy was to be "broadcast" to
all plaintiffsí attorneysí offices she dealt with. The stated goal and
purpose of that policy was to make it unprofitable and too expensive and
costly for plaintiffsí attorneys to handle those types of cases, even those
in which liability was clear. It was explained to her that the results of
the policy were intended to be a short-term increase in legal fees for the
company but a significant long-term decrease in benefits payments once the
plaintiffsí bar became aware that handling those cases would be too costly
and unprofitable. She not only observed but was, in fact, told at State
Farm that said policy was extremely effective.
K. She told of one incident in which State Farmís conduct
was so destructive, that it contributed to the deterioration of the
plaintiffís health which resulted in suicide attempts and psychiatric
hospitalizations during 1995.
State Farm is a company which probably more than any other company tries to
convince insurance departments, police authorities, legislatures, judges,
and juries that they are the ones who are victims of frauds. While that is
certainly true some of the time, their methods and tactics must be exposed
to the Insurance departments, police authorities, and to judges and juries,
likewise. See the next six news reports for other examples.
JURY ORDERS STATE FARM TO PAY $145
MILLION IN PUNITIVE DAMAGES
Curtis and Inez Campbell sued State Farm alleging they had
misrepresented Curtis Campbell after a fatal auto accident. During the
two-month trial, former State Farm employees testified that when Campbell
was sued after the accident, the insurer deliberately altered the accident
records. The trial Court judge later lowered the punitive award to $25
JURY AWARDS $3.6 MILLION IN
HOME FIRE AGAINST STATE FARM
A Merrillville, Indiana woman shared with her former
husband a $3.6 million verdict against State Farm Insurance Company which
refused to pay the couple after their home burned down in. The coupleís
original claim was for $145,000. They fully cooperated with the police and
even passed polygraph tests. While they were cleared as suspects in the
blaze and were never charged with any crime, State Farm still refused to pay
for the fire loss. After a seven-day trial, the Insureds were awarded
$145,212 for their home and personal belongings, and in addition, State Farm
was ordered to pay $500,000 for showing bad faith and $3,000,000 in punitive
STATE FARM SETTLES LAWSUIT
ALLEGING FRAUD FOR $200 MILLION
In August of 1998, State Farm agreed to pay 4,400,000 of
their customers $200 million to settle a lawsuit accusing the company of
fraudulent practices. It involved current and former owners of whole life
and universal policies, some dating back over 17 years. The lawsuit accused
the company of encouraging policyholders to switch to new policies in which
they lost value but were led to believe it was in their best interest to
switch. Lawyers say customers were also promised returns based on
assumptions that the company knew were unrealistic, such as double-digit
interest rates and were given artificially inflated dividend projections.
Editor's note: $200 million seems like a lot until we
realize it amounts to only $45.00 per customer.
STATE FARM FINED BY NEW YORK
DEPARTMENT OF INSURANCE
On September 30, 1998, it was reported that the State Farm
Group violated the Insurance Law and Department regulations when, in
connection with certain automobile insurance policies, they failed to pay or
deny claims within 30 days, failed to send out no-fault applications in a
timely manner, and failed to properly calculate the interest due on over-due
benefits. The companies also failed to use correct Red Book NADA Valuation
Manual figures in calculating the value of stolen or totaled vehicles. The
companies were fined a total of $136,490 and must review payments they made
between January 1, 1997 and June 6, 1998 and remit any interest in excess of
AGREES TO PAY $100 MILLION IN DAMAGES IN LAWSUIT SETTLEMENT
State Farm was sued by more than 100 California
policyholders for not disclosing the fact that their "new" policies had
deleted significant coverages. A Superior Court judge in May 1997 ruled
that that violated State Law. Discovery revealed an internal company memo
in which executives decided not to inform policyholders about restructure
plans because it would "appear inconsistent with our marketing philosophy."
STATE FARM ORDERED TO PAY
Texas Attorney General Dan Morales announced on October
23, 1996 that Texas consumers will receive nearly $22 million in restitution
from State Farm Insurance Company to settle allegations that the insurer did
not refund deductibles paid by its customers when required to do so by
Law. 75,600 Texas consumers were affected.
While most people try to do things the right way,
we ask if a sophisticated company like State Farm can really be sincerely
wrong this many times, or have they calculated that they will still make
more money in the long run by playing "hard ball" every step of the way?
Can the highest paid attorneys and executives in the industry really claim
ignorance? If, in fact, a corporate pattern of illegal activity occurs, the
FBI should be involved in an intensive criminal investigation.
POSITIVELY THAT THE VAST MAJORITY OF ARSON FIRES ARE NOT COMMITTED BY THE
In a research report titled "Arson Incidence Claim Study,"
the All-Industry Research Advisory Council, known as ARAC (which was formed
by the property-casualty insurance industry) found that of all arson fires,
approximately 14% of residence fires were perpetrated by the Insureds, and
12% of commercial fires were set by the Insureds. The study found that 50%
of all arson fires are best labeled as vandalism, 12% are set for revenge,
7% are to conceal other crimes (burglaries, murder, etc.), 3% are
perpetrated by pyromaniacs, and roughly 15% are designated as other causes.
There are other studies which also prove that of the vast
majority of arson fires, Insureds are rarely involved. In fact, Clifford
Karchmer, the editor for "Firehouse" magazine, published a few years ago
that "arson for profit is down from 14% to around 1%."
The FBI's National Center For Analysis of Violence In
Crime found that 55% of all arson fires are vandalism, of which 96% of those
are caused by juveniles. The report says that 25% of arsonists commit the
crime just for excitement. The FBI goes on to say that they find 14% of
all arson fires are set for revenge, and the rate of arson to cover up
another crime is twice that of arson for profit.
In a recent report, the federal government's Fire
Administration found that juveniles accounted for 55% of all arson arrests.
This obviously indicates that they are responsible for a much higher rate
than 55% as most are never even interviewed, while the Insureds are always
interviewed. We will see in a later article that numerous Insureds are
Statistics compiled by the Rocky Mountain News indicated
that nearly 67% of all arson fires are caused by juveniles under the age of
In a 1989 University of Rochester, New York study, they
found that 1 out of 7 school aged children have recently played with fire,
and almost 40% will have played with fire by the time they are 14 years
In the State of Connecticut alone, 127 children under the
age of 18 years old were arrested for arson in 1991. Many, many more were
referred for treatment.
The Colorado Department of Public Safety recently found
that the rate of juvenile fire setters per 100,000 population has increased
57.7% and that 1 out of every 15 persons arrested for arson is under the age
of 10, and 1 out of every 3 is under the age of 15. Their study found that
67% of all persons arrested for arson are under the age of 18. These
statistics prove beyond doubt that Insureds are guilty of "arson for profit"
in only a minute fraction of all cases. It goes on to say, "Still, these
statistics represent only part of the juvenile fire setting problem since
only a small proportion of children identified as having set a fire are
charged with arson, and fewer are arrested." Many others do not even become
Who are some other people who set fires?
One fire bug arrested in Kokomo, Indiana admitted to
setting fire to 38 buildings, some whoís owner had owned more than one.
Undoubtedly, many of those innocent Insureds were assumed arsonists by their
insurance companies and police authorities.
An Evansville, Indiana man confessed to setting 32 homes
on fire. Any of those homeowners who had marital problems, had a house for
sale, or were behind in payments were surely targeted as prime suspects.
In Valparaiso, Indiana, two of the four Burns Harbor
firefighters accused of breaking into a greenhouse and setting a fire to
cover up the burglary pled guilty.
In Los Angeles, not too long ago, two volunteer
firefighters were the prime suspect of a Malibu wild fire that killed three
people and destroyed 350 homes.
In Norfolk, Virginia, a state trooper faced up to 70 years
in prison after admitting he planted explosives at two malls, a court house,
and a coliseum to enhance his image and the reputation of his bomb sniffing
Everybody has heard about Captain John Orr of the
Glendale, California Fire Department. He was the chief arson investigator
and an acclaimed one at that. He even wrote a novel which drew upon his
expertise; his villain was a firefighter turned fire starter. He was
convicted in June of 1998 on four counts of arson and multiple murder by
arson. He faces the death penalty. He was convicted of setting three fires
while driving home from an arson investigators conference in Fresno, just
like the fictional character in his book.
Earlier in 1998 a fire dispatcher for the Indianapolis
Fire Department was convicted of arson and murder. Prosecutors portrayed
him as a "fire nut" who set the fire because he wanted to pretend to save
the baby and come out a hero.
Not too long ago, a police officer was arrested for arson
after he made his third dramatic fire rescue of the year.
Several years ago in a township near me, there was a
series of arsons almost every Friday night for a period of several months.
The Fire Chief and police organized a "fire watch" in which volunteers and
police officers would span the township during the hours most fires had been
set. The idea was that when an alarm came in, one of them would be near
enough to observe the make of cars and possibly license plate numbers of
nearby vehicles. Guess what? As soon as this task force was organized,
there was not one more arson. Guess why? The volunteer fireman knew he
would get caught.
In the summer of 1997, a volunteer fireman from Weiser,
Idaho admitted to setting ten fires, as he was in college and was paid $5
per hour when called to a fire.
In April of 1998, two Illinois volunteer firefighters were
charged with arson. The Chief said that several other volunteers were
being watched very carefully. The Chief said, "They like showing up to put
out fires. Hero mentality."
The West Virginia Supreme Court found that Sgt. Fred Zain,
a State Police lab expert, fabricated mountains of evidence and at least 134
convicted criminals, including a former state lawmaker, could have their
names cleared as a result.
While we declare as emphatically as we can that the vast,
vast majority of all law enforcement officers, firemen, and volunteer
firemen are honest and hard working heroes (and grossly underpaid heroes at
that), our point is that of all arson fires, Insureds are rarely involved,
and it's just paramountly wrong for any insurance company or investigator to
assume they are. The only fair first assumption to make is that the
Insureds are probably not involved.
ARSON BOOKLETS...PUBLISHED BY THE
INSURANCE INDUSTRY--ARE THEY FALSE PROPAGANDA IN AN ATTEMPT TO INTENTIONALLY
MISINFORM LAW ENFORCEMENT OFFICERS AND PROSECUTORS?
Several 20-page booklets have been published by the
Illinois Advisory Committee on Arson Prevention in cooperation with the
Illinois Chapter of the International Association of Arson Investigators.
These were later revised by State Farm and reprinted for mass
distribution to prosecutors, police officers, and firefighters. The
books contain large sections that are word for word, but incorporate
different covers so that prosecutors, police officers, and firefighters all
infer that it was written especially for them. They contain many false
statements and innuendoes which creates unwarranted prejudice and
discrimination against policyholders who are victims of arson or
undetermined fires. Given the proven statistics (which State Farm
themselves were involved in) in the above article, it seems to be nothing
short of a fraudulent statement for the booklets to state, "Burning for
profit is probably the most common arson motive." Their owns statistics
prove positively that that statement is an absolute lie! Of all proven arson
fires, in excess of 90% of policyholders are innocent. However, the
booklets conceal those statistics to the prosecutors, police officers, and
The booklets strongly encourage police officers to view
the policyholder as their number one suspect, but yet to interview the
policyholder not as a suspect but as a witness so that "this way you donít
have to advise him of his rights..." The booklets also entice prosecutors
by telling them that they will be known as "arson experts" after they have
tried two or three cases. While their own statistics clearly prove that
well over 50% of all arson fires are caused by juveniles, these outrageous
booklets infer that juveniles only cause a minute fraction of arson fires.
Among other unbelievable things, they inform police officers and
firefighters that if a house or building has curtains or blinds pulled down,
it is a good indication of arson. They instruct that anyone who is poor or
has marital problems must be given a lot of scrutiny. The booklets then
advise an investigation program which will surely defame and injure the
Insured. Incredibly, they also encourage prosecutors to lie to the jury by
tricking the jurors into believing that circumstantial evidence is much more
reliable than direct evidence. There are a number of other absurd and false
statements which many of our prosecutors, police officers, and firefighters
have been duped into believing.
Something is drastically wrong when the insurance industry bombards our
legal authorities with false information in an effort to try to manipulate
them to wrongly convict innocent people of arson. Psychological studies
prove how easy it is to believe almost anything when you fully assume that
the source of your information is honest and credible. This is how the
industry can con so many good law enforcement officers and juries. One
prosecutor recently, in violation of the Canon of Ethics, told an Insured if
he did not drop his insurance claim, that he would be arrested for arson.
What is the difference of a person stealing money from you with a gun or an
insurance company stealing money from you through rhetoric, confusion, and
blatant misrepresentations? There is a desperate need for insurance
commissioners, police officers, and prosecutors to carefully scrutinize
these types of representations being disseminated to them by insurance
companies who have repeatedly been found guilty of bad faith and have a much
greater profit motive to commit fraud than does any Insured. 740 persons
died in arson fires last year. Is the industry's deceptive campaign to
mislead our legal authorities responsible for any of those deaths? Time
spent investigating innocent Insureds instead of the neighborhood juveniles
may very likely have caused one or more of those deaths. With prosecutors
and police authorities being fed false information, not only regarding fire
behavior, but also policyholderís "behavior" the insurance industry
wrongfully wields a mighty club. We beg you prosecutors and police officers
to never assume credibility without a lot of sound, objective thinking.
Arsonists should indeed be sent to prison, but so should white-collar
criminals who try to frame an innocent victim.
JUDGE ACCUSES INSURANCE COMPANYíS
EXPERT OF SHAM TESTIMONY
In a Michigan Circuit Court trial (Marticoes v.
American Employers Insurance Company), the jury returned a verdict in
favor of the insurance company finding that the Insured had deliberately set
fire to his building. He filed a motion for judgment not withstanding the
juryís verdict against him, and the Honorable Thomas Roumell, the presiding
judge, granted said motion and issued a 55-page ruling. Here are a few
comments the judge wrote in his ruling:
A. "Every single item as the above recited crediting Mr.
Millerís (insurance companyís expert) findings or conclusions are mere
guesses, speculation, or conjecture when compared with the testimony of the
plaintiff and his witnesses as herein set out."
B. "Mr. Miller was not credible or believable in the
opinion of the Court. His performance was a show and a sham."
C. Among other things, the Judge blasted the companyís
expert for suggesting paint thinner cans were evidence of arson when they
were found in the same area where they were commonly stored, and that
unburned toilet paper was in fact a plant used in burning the building.
EDITORíS NOTE: Itís amazing how often insurance
companies are able to con a jury into believing that a certain thing caused
the fire, yet the "cause" wasnít even burned.
D. "He first amazed the Court when he described that he
asked Deputy Chief Larson to arrange for a crane with a clam-bucket in order
to conduct the investigation of the fire debris that remained rather than
use the bulldozer that was offered by the Deputy Chief Larson. In any
event, he was furnished with a crane with a clam-bucket. Mr. Miller then
began with pomp and great flourish to unravel before the Court and jury a
great number of pictures, extensive video tape, specially created exhibits
to theoretically support his testimony than could possibly have been
anticipated to have been necessary." The Judge went on to conclude that his
testimony was nothing but a "big production" designed to impress the jury.
The Judge then extensively compared his "testimony" with his "evidence."
He found that it was really nothing more than lights and mirrors.
E. "The truth and reality of it all, is, insofar as the
foregoing was concerned, that it was never shown or established that
Marketos had the slightest connection with the fireís commencement and this
will be amply demonstrated in another part of this document when the
evidence of how the fire began is reviewed."
F. "The defendant presented not a scintilla of evidence to
support its arson affirmative defense except the testimony of a private fire
investigation freelancer who was paid thousands of dollars to conduct an
investigation so that he could come into court and make a careless and
unsupported statement concerning the source of the fire and that accelerants
were used in starting the fire. This individual, so far as the Court is
concerned, was not credible or believable. Defendant also had the testimony
of retained auditors who made illusory reference involving comparisons of
financial problems and tribulations which in their general significance the
plaintiffs had never tried to hide, deny or cover-up in the first instance.
Plaintiffs at all times acknowledged that they had pressing financial
MYTHS AND OTHER FALSEHOODS ARE OFTEN
PRESENTED AS SCIENTIFIC EVIDENCE. MANY RULINGS OF ARSON ARE NOT ARSON AT
The following are only a few of the common myths and false
indicators that many fire investigators testify to be scientific evidence
that an arson has occurred, when in fact many have been scientifically
disproved. Some are also phenomena which are regularly over-emphasized or
misinterpreted to reach conclusions that are scientifically wrong. While
the cause of some fires can clearly be determined, others cannot be
determined. However, the causes of numerous fires are erroneously given for
a variety of reasons. Some are fraudulently misstated, but most wrong
findings are just due to unsound teaching, ignorance, and an incredible
campaign of false propaganda by the insurance industry. The following are a
few of those reasons:
1. Concrete spalling is often given as evidence of
arson when not too long ago, it was decided by most experts that it should
be debunked. Numerous laboratory tests which saturated concrete with
gasoline and other flammables (even torches were used on some) failed to
produce the spalling. There are many reasons why concrete will spall, and
arson is usually not one of them. Many consumers have lost everything to
their insurance company because of this one faulty indicator alone.
2. Greasy windows a couple of decades ago was at
least an indicator to look at. However, with so many petroleum products
now in the average home or business, greasy windows mean absolutely
nothing. Yet in some circles, it is still seen as an indicator of arson.
3. Color of smoke was often thought to be an
indication of whether or not an accelerant was used. There are usually too
many variables for this to be safely interpreted.
4. White ash used to be a common theory until it
was recently debunked. In fact, experiments have proven that the existence
of white ash means exactly the opposite of what some "fire investigators"
use to justify denials of claims.
5. Accelerants burn hotter was disproved by none
other than the National Fire Protection Association. In their guideís
section 921, 4-8.1 we read, "Wood and gasoline burn at essentially the same
flame temperature." It is true that an accelerant fire gets hotter faster
but not hotter overall. Still today, many consumers have their claims
denied, and some even are convicted of arson because some ignorant or
fraudulent "expert" convinced a jury that certain melted contents
items proved accelerants were used.
6. Tripped circuit breakers proves little. How
often have you heard from some so-called expert that the power must have
been on because it tripped? Not necessarily. Most all breakersí tripping
action is spring loaded, so it can trip if the breaker gets hot enough even
if it was off during the fire. If you donít believe us, try baking one in
your kitchen oven. Put it in its OFF position, crank up the heat to 400į,
and check it in about 20 minutes. While this is not a classic false arson
indicator, it does show that many so-called "experts" don't even know or
understand the basics. Yet they present long credentials to juries who
assume they do.
7. Collapsed furniture springs. NFPA 921,4-14
states, "The collapse of springs cannot be used to indicate exposure to a
specific heat source such as "flaming accelerant or smoldering combustion."
Another famous arson indicator is now debunked.
8. Fast fires do not in themselves indicate an
arson fire. There are many accidental fires that burn fast, too. Numerous
variables must be considered, and this is another example of a "little
knowledge" being dangerous. Captain Denny Smith ACFD recently wrote the
following, "It is important to remember that an
"accidental fire" can develop faster than an incendiary fire, and an
incendiary fire can develop more slowly than an accidental fire. Basically,
there is no relationship between speed of fire growth and any particular
ignition scenario. Fire development scenarios (speed of fire growth) are
contingent on many variables, such as HRR (heat release rates) of the
initial fuel, geometry of the space (narrow rooms, wide rooms, high ceilings
v. low ceilings), location of the fuel package within the space (in a
corner, against a wall, near the center of the room), the lining materials,
and the proximity of secondary fuels. These are some of the variables to be
considered in a fire growth scenario. See NFPA 921, sections 3-4 and 3-5
for additional information. Also see section 17-2.8 which is a warning
against using subjective observations and terms such as Ďexcessive,í
Ďunnatural,í or Ďabnormalí fire growth as indicators of incendiary fire
9. Burn patterns. I have seen numerous "fire
investigators" who read burn patterns less competently than someone would
read tea leaves, and there is nothing about tea leaves that I believe. Some
of these so-called "experts" will say that it is a definite sign of a liquid
accelerant if they find the bottom of a door charred. Yet numerous tests
have proven that that phenomena generally occurs when a door is closed and
hot gases (not accelerants) escape through the space at the top of the
closed door. Cool air generally enters the compartment at the bottom of the
door. The hot gases then escape under the door and cause charring under the
door and possibly even through the threshold. In a recent test, accelerants
were poured in a living room and set on fire. None was poured in the
kitchen, yet holes were found in the kitchen floor but none in the living
room (20 feet away). There are so many complex variables involved in
studying fire behavior which have caused many to call it "junk science."
The fact of the matter is that many of these so-called "experts" are no more
qualified to perform surgery on you than they are to look at a fire and
determine its cause. Yet with refined speeches and designer suits, and with
technical rhetoric that few judges and even fewer jurors can understand,
they come across to most juries as "smooth as silk." While some burn
patterns can be accurately interpreted, it is often forgotten that the more
fire damage to the building, the less they can tell. One investigator
pointed to a hole in the roof which had collapsed and said that hole was
evidence of a poured burn pattern. Itís examples like this that are causing
a growing number of people to call the field of fire investigation nothing
but a "junk science." Is the risk of error too high and too common not to
take drastic action?
10. Multiple origin fires. While multiple origin is
indeed a very good indicator of arson, itís down right sickening to see
insurance companiesí investigators and police authorities interpret drop
fires as multiple origins. I was in a house once when a deputy fire marshal
came in. He said he knew nothing about electricity or furnaces, but said he
was going to find out "what the hell caused the fire." Within five minutes
he thought he had it figured out. He saw what he said was a second fire in
front of the living room window. When I asked him if it was possible for
the heat from the utility room (clearly the point of origin) to have ignited
the drapes which then dropped to the floor and scorched it, he became mad
and left. His report ruled that the cause of the fire was arson, when
clearly it wasnít. The owner had recently moved (job transfer), so it was
"obvious" to this "investigator" that the owner just had to have done it.
11. Unpredictability: Honest experts who have
conducted many tests will readily agree that fire sometimes does very
mysterious things which just cannot be explained. Some experiments come out
totally inconsistent with what is generally normal. Many experiments produce
results which make no sense at all. The fact is, there are numerous
variables (moisture content in wood, type of wood, drafts [many of which are
unknown], vents, wind [and wind often shifts back and forth], humidity,
oxygen, size of rooms, ceiling heights, seldom knowing for sure everything
that burned (fuel), etc., etc....any one of which can make a fire behave
unpredictably. Worse yet, after a fire does its damage, many possible
variables are never even known to be considered. Lt. Steckmeister recently
wrote, "One of the many problems in fire investigation is that no single
indicator can be taken at face value without considering other factors."
EDITORíS NOTE: Because the
industry is wrong so many times and has failed to adequately police itself,
more and more people have been raising the argument that fire investigation
is nothing but a "junk science" or some kind of voodoo. It appears that
some courts may be agreeing. The U.S.Supreme Court Case of Daubert v.
Merrill Dow Pharmaceuticals, ruled that expert testimony in areas of
untested scientific theory (junk science) requires the proving the
scientific reliability of every aspect of the analysis used to reach a final
opinion. While the Daubert case was not about a fire investigation,
nevertheless, The U.S. Court of Appeals has applied it to one in
Michigan Millerís Mutual v. Benfield,
U.S.C.A.No.97-9138. Because so many innocent people are being jailed
and wrongfully losing their homes and businesses to insurance companies, it
is probably wise if Courts would declare it a "junk science" until a system
with scientific integrity can be put in place. We profusely apologize to
the many fire investigators who are honest and competent, but there are just
too many who are not which puts the public at too great of a risk. We need
to catch arsonists. That is a good thing to do, but we cannot allow the
"lynching" of numerous innocent people by fraudulent and ignorant witch
hunters. A couple of years ago, a mother was not only charged with arson,
but charged with the murder of her children who died in the fire. When
testimony of the deputy fire marshal during the criminal trial didn't "gel"
the prosecutor became very suspicious. Other fire experts were able to show
that the investigation was not conducted or processed in accordance with
professional standards. The criminal charges were dropped against the
mother and the deputy charged with perjury. He was later ordered to pay the
mother $500,000 in damages. If the deputy didn't trip himself up, the
likelihood of a different verdict would have been quite great. Our hat goes
off to this prosecutor who did not allow the adversarial process of our
judicial system nor the fact that he originally believed the deputy to be
credible to cloud his thinking.
ARE MOST FIRE INVESTIGATORS REALLY
It is a frightening fact that insurance companiesí experts
are presenting to juries every day alleged evidence as scientific fact which
has been scientifically proven to be wrong. Their multi-page credentials
are presented to a jury which becomes impressed and understands nothing the
"expert" says except his conclusion that "the Insured did it." To reinforce
his testimony, the insurance companyís attorney generally presents several
police or fire officials who will concur, but who really are not the least
qualified to make such an opinion. Most of these law enforcement officers
have the best of intentions but have unwittingly became servants of the
insurance companiesí manipulation and campaign of propaganda. Many of the
industryís so-called experts have become very wealthy by being awarded much
repeat business for their "uncanny ability to find arson."
Attorney Robert Richardson, from the State of Georgia,
best sums up the situation in an article he wrote entitled "ARSON
SEMINARS." Here are some excerpts from his article:
One of the most dangerous and absolutely anti-consumer
covens that I have ever witnessed is the Southeastern US Arson seminar held
annually in Athens and now Brunswick, Georgia. Iím sure that similar
meetings are held in various locations across the nation. The annual
Southeastern Arson Seminar is a place where individuals who are not
qualified to determine the cause and origin of a fire meet to teach
policemen and firemen how to catch arsonists. While catching arsonists is a
good thing, teaching people who have never taken a physics, chemistry, or a
fire science course how to determine from a review of the ashes of a fire
the determination of the cause of the fire can be a dangerous thing for the
public at large.
Even though many of the old wivesí tales that firemen and
other fire investigators use have been discredited, the false science is
still used to take the houses away from insured families. The National Fire
Prevention Association has published a standard by some concerned
professionals in the fire prevention industry to try and stop or at least
slow the spread of the false science that has enabled the insurance industry
to avoid paying thousands of legitimate claims. NFPA 921 has been savagely
attacked by the individuals who make a living by determining the cause and
origin of fires. Many of the unqualified cause and origin experts do not
enjoy having a guidebook that anyone can buy that debunks their science.
I once attended a two day arson seminar in New Orleans
where one of the speakers lamented that the group had been using faulty
indicators for years...here was a speaker actually admitting the cause and
origin profession had been doing it wrong for years.
When asked for comments from the attendees at the seminar,
I asked what about the poor Insureds who had lost their homes and lifeís
investments due to the cause and origin expertís mistake. The answer
I got was, "A good question! Any more questions?"
Guess who teaches the arson seminars? People who feed at
the trough of the insurance industry. Claims adjusters, cause and origin
people, chemists who process their samples, attorneys who are either on the
insurance companiesí payrolls or are independent contractors but dependent
on the insurance companiesí constant feeding. It is not uncommon to find
insurance professionals and insurance companiesí defense lawyers serving on
associations of arson investigators. I have never heard of a
consumer advocate attending those meetings to try and temper the insurance
Just so you get the picture, insurance companies sponsor,
finance, support, send speakers (both employees and individuals beholden to
them) to these seminars to teach firemen and policemen how to recognize what
the insurance industry would like to be fire science. It isnít science! It
is propaganda! When you have a fire, donít think the fireman or policeman
who investigates your fire is simply a dedicated public servant. He may be
in his or her own mind, but he or she may have been indoctrinated by the
insurance industry. Your tax dollars are financing this outrage.
If the state supported seminars really give a damn about
the public and not just pleasing the insurance industry, consumer oriented
speakers and scientists would be invited to give some balance. Obviously,
the insurance industry is not interested in balance, but rather
indoctrination. Rather than trying to convince firemen that every fire is
caused by an arsonist (and when it is, over 90% of the time itís not the
Insured), teach them that the insurance industry is interested in making
them soldiers against the public interest.
...These "experts" arenít licensed by the state of
Georgia! If an insurance company finds a "predictable" expert who will say
anything to please the insurance company and further if the insurance
company claims adjuster is not honest, there is no way to protect yourself
by going to the insurance commissioner or any other governmental
agency...Count on a huge and savage fight if your state legislature ever
tries to pass laws regulating these folks in an attempt to actually test
their proficiency and ability. The insurance companies donít want them
closely tested...Burn some old abandoned buildings and make the experts tell
the authority how the fire started and where. (There will be more than one
theory for sure.)
...Let me say in closing that many public safety officials
are as competent and honest as the day is long. Those individuals are aware
of the fact that heavy insurance company involvement in their professional
organizations does them no good. Those people are trying to separate from
the insurance industry personnel who have a vested interest in denying
claims. I admire those people who are sincerely interested in removing the
stain of insurance company involvement in shaping their conclusions.
...I have deposed and cross-examined many cause and origin
experts who were "assisted" by insurance claims adjusters when performing
their investigations to determine the cause of a fire. Why would a true
professional need the help of a claims adjuster charged with the
responsibility of paying or denying the claim? An insurance adjuster has no
business assisting or even accompanying an exert when a fire cause is being
A cause and origin expert does not need any information
about the Insuredís finances, domestic disputes, past criminal records,
business failures or any other non fire related facts. Either the fire was
intentionally set or it wasnít. That determination should be made on
examination of the fire scene alone!
Whenever any adjuster informs an investigator of any negative
information about the Insured, it is safe to assume that a signal is being
sent. As an example, while estimating a large commercial fire loss, the
insurance companyís private investigator visited the scene. After looking
around and learning that the fire occurred a week before, he said that it
was "way too late," as any investigation would be a "complete waste of my
time." However, 45 minutes later, after the adjuster bombarded him with
information about the Insuredsí marital problems and the bouncing of a few
checks, he marched in, and lo and behold, determined the cause was arson,
even though his reasons for said cause were entirely based on non-fact. The
Fire Chief who was the first on the scene, witnessed just the opposite of
what this private investigator used as the basis for "determining" arson.
He, of course, could have spent 10 minutes talking to the Fire Chief, the
first person on the scene, but why waste his time since he knew it was
obvious that anyone with marital problems and bounced checks who had a fire
would have to be an arsonist. This sort of thing happens all the time.
Itís even more frightening when you consider that often an Insured is unable
to find an attorney who is experienced or aware of the flaws contained so
often in the insurance companyís "expert reports." In addition, the
building or house is often demolished before the Insured even realizes they
may need an investigator of their own. The insurance companies laugh all
the way to the bank.
ARE INSURANCE COMPANIESí
INVESTIGATION PRACTICES, INCLUDING SIUíS, OUT OF CONTROL?
The answer to that question is an emphatic and unequivocal
YES. To put this question in proper context, though,
please review the five articles above concerning arsons.
The article on statistics and motives taught us that
juveniles cause the vast majority of arsons, followed by revenge, crime
cover-up, and then the Insureds. Studies vary as to what percentage of
arson fires are caused by Insureds, but the average indicates well less than
10%. One study was as low as 1%. Thus the question is, who should
insurance companies, their investigators, their attorneys, and police
authorities really be devoting the bulk of their time investigating?
Before we quote a spokesman for the insurance industry
itself concerning this, let me ask that if Insureds are innocent in over 90%
of arson fires, why do SIUís (Special Investigation Units) almost always
devote 100% of their time trying to prove an Insured guilty rather than
looking for the juvenile arsonist and others who are much more likely to
have committed arson than the Insureds? Why focus on a "long shot" if you
really want the truth? In fact, one member of an SIU suggested to his
associates that when they are referred a case by a company adjuster and it
does not result in them "hitting a home run," they should apologize. Other
SIUís classify a policyholderís loss as a "win." Some have contests among
each other to score the most "wins." With mentality like that, I rest my
case. Industry spokesman, Robert A. Meyerson, an insurance claims
consultant in California, authored an excellent article about the abuse of
SIUís in the January 1998 issue of "Claims" magazine. A few excerpts
from said article follow:
"All too often, once a fraud indicator is identified, the
thrust of the investigation seems to be to justify the suspicion rather than
conduct an investigation that takes into consideration facts that would
exonerate the Insured...Further, my observation, while reading testimony
from several cases, is that some of the people handling the fraud
investigation work from the premise that if there is a suspicion, the job is
to prove the assumption..."
While Mr. Meyerson was in no way intending to attack the
industry, nevertheless, he is pointing out that they are often guilty of bad
faith and fraud, because whenever a company ignores facts which would
exonerate the Insured and instead tries to prove a suspicion, not only is
the company breaching the fiduciary duty they owe the Insured, but they are
also in blatant violation of the Unfair Claims Act, not to mention engaging
in tortuous conduct. Any time a company ignores exonerating facts in order
to avoid paying a claim, that is a fraud, and fraudulent conduct is in fact
criminal. Mr. Meyerson goes on in his article and highlights three specific
claims which he believes were not handled correctly. In one, the SIU
investigator exploited an Insured who was an immigrant with some language
difficulties who somehow was even able to overrule the companyís V.P. of
Claims, who said the claim should be paid, but instead the SIU denied the
claim. The Insured was instructed to document his claim and went back to a
jeweler to obtain duplicate receipts. The receipts were obviously
duplicates, written from consecutive pages of a receipt book. The Insured,
again an immigrant with some language difficulties, characterized them as
"originals" (meaning the jeweler provided them) which was the SIUís basis
for accusing him of fraud. He hired a good attorney who obtained a $1
million dollar settlement. Had he lost his claim, the immigrantís defeat
would have resulted in a celebration (a "win") for the SIU. The other two
cases he describes are just as bad. He concludes his article by saying,
"Further, the suspicion of fraud is not proof of fraud.
SIU investigators should not think of themselves as bounty hunters.
Investigation of these three cases above could not, by any objective
standard, be considered an effort to evaluate. Rather, they were exercises
in proving the validity of a predetermined position."
As Mr. Jerry Provencher, the Director of Property Claims
for the Maryland Insurance Group, reminds us in his excellent article
("Claims Magazine", September 1994), that "The covenant of good faith
implied within every insurance policy requires the investigation to
objectively balance all evidence which could impact a decision on coverage.
He references that basic truth to 1Couch On Insuranceß1:5,LCP1982.
He states also in his article that "an expert who fails to recognize and
weigh evidence supportive to the policyholders position is a dangerous
liability." It seems clear at least to this editor that any insurance
company representative, any defense attorney representing an insurance
company, any investigator, or other personnel hired by an insurance company
who intentionally ignores or twists any facts or evidence in an effort to
deprive an Insured of a valid claim is guilty of criminal fraud (and often
the violation of civil rights) and should be charged accordingly. They are
literally more dangerous and do more damage than people with guns who rob
banks. Not only do they fraudulently cause people to lose their houses and
businesses, but sometimes families and liberties are lost along with oneís
reputation. I know of attorneys who have told adjusters to burn fire
reports (which listed the fire's cause as accidental) and who have tried to
get police officials to change their reports from accidental to arson.
Should not these attorneys be in prison rather than being "officers of the
Court"? It is not fair for our governors, our insurance commissioners, and
our legislatures to allow such an unchecked system, one which even recruits
and manipulates our law enforcement departments to become agents of
insurance companies, one which helps them to defraud tax paying
citizens...the people whom our governors, insurance commissioners, and
legislatures are sworn to protect. When I recently raised "cain" about a
state deputy fire marshalís finding of arson which clearly was based on
blatant incompetency, and pointed out that we had experts which disproved
it, I did not even receive an apology, but rather I received a subpoena. No
desire to change a wrong practice, just a desire to intimidate someone who
caught their incompetency.
The fact that many insurance companies and their
investigators and lawyers spend a disproportionate time trying to prove
their Insureds are criminals by intentionally exploiting finances and other
almost meaningless innuendoes, while ignoring exonerating facts, indicates
they are, in fact, out of control. If Mother Teresa had had a fire in this
country before her death, using the same sick logic many companies generally
employ, her claim would have been denied on the grounds she needed money.
Couple that with the fact that many S.I.U.s are required to submit company
reports indicating how much money each unit is saving the company, and we
have a situation that is intentionally set up for S.I.U.s to view Insureds
as adversaries instead of honest, paying customers, which the vast majority
of them are.
UNFAIR CLAIMS ACT
OFFERS MUCH PROTECTION WHEN ENFORCED (WHICH IS SHAMELESSLY
Among other things, the Uniform Unfair Claims Settlement
Act states the following:
1. The insurers are required to keep in their claim files
detailed notes and work papers pertaining to each claim.
2. The insurer must fully disclose to their Insureds all
pertinent benefits, coverages, and other provisions of an insurance policy
or insurance contract under which a claim is presented.
3. No agent shall conceal from a first party claimant
benefits, coverages, or other provisions of any insurance policy pertinent
to a claim.
4. No insurer shall deny a claim for failure to exhibit
the property without proof of demand and unfounded refusal by a claimant to
5. Every insurer, upon receiving notification of claim,
shall promptly provide necessary claim forms, instructions, and reasonable
assistance so first party claimants can comply with the policy conditions
and the insurerís reasonable requirements. Companies must comply with this
paragraph within 10 working days of notification of a claim.
6. Every insurer shall complete investigation of a claim
within 30 days after notification of claim, unless such investigation cannot
reasonably be completed within such time.
7. Within 15 working days of receipt by the insurer of
properly executed Proofs of Loss, the first party claimant shall be advised
of acceptance or denial of the claim by the insurer. No insurer shall deny
a claim on the grounds of a specific policy provision, condition, or
exclusion unless reference to such provision, condition, or exclusion is
included in the denial. The denial must be given to the claimant in
writing, and the claim file of the insurer shall contain a copy of the
denial. (An exception to this requirement is where the insurance company
has a reasonable basis supported by specific information available for
review by the insurance regulatory authority that the first party claimant
had fraudulently caused or contributed to the loss by arson.) If the
insurer needs more time to determine whether a first party claim will be
accepted or denied, it shall so notify the first party claimant within 15
working days after receipt of the Proofs of Loss, giving the reasons more
time is needed.
8. Insurers shall not continue negotiations for
settlement of a claim directly with a claimant who is neither an attorney
nor represented by an attorney until the claimantís rights may be affected
by a statute of limitations or a policy or contract time limit without
giving the claimant written notice that the time limit may be expiring and
may affect the claimantís rights.
Misc: Many states have enacted provisions which either
modifies or adds to the Uniform Unfair Claims Act. A few of them
specifically prohibit insurance companies from the following:
a) Misrepresenting pertinent facts or insurance policy
provisions relating to coverages at issue.
b) Failing to adopt and implement reasonable standards
for the prompt investigation of claims arising under insurance policies.
c) Refusing to pay claims without conducting a reasonable
investigation based upon all available information.
d) Not attempting in good faith to effectuate prompt,
fair, and equitable settlements of claims in which liability has become
e) Compelling Insureds to institute litigation to recover
amounts due under an insurance policy by offering substantially less that
the amounts ultimately recovered in actions brought by such Insureds.
f) Attempting to settle a claim for less than the amount
to which a reasonable man would have believe he was entitled by reference to
written or printed advertising material accompanying or made part of an
g) Attempting to settle claims on the basis of an
application which was altered without notice to, or knowledge or consent of
h) Making known to Insureds a policy of appealing from
arbitration awards in favor of Insureds for the purpose of compelling them
to accept settlements or compromises less than the amount awarded in
i) Failing to promptly settle claims, where liability has
become reasonably clear, under one portion of the insurance policy coverage
in order to influence settlements under other portions of the insurance
j) Failing to promptly provide a reasonable explanation
of the basis in the insurance policy in relation to the facts or applicable
law for denial of a claim or for the offer of a compromise settlement.
k) Delaying the investigation or payment of claims by
requiring an Insured to submit a preliminary claim report and then requiring
the subsequent submission of formal proof of loss forms, both of which
submissions contain substantially the same information.
l) Failing to promptly provide a reasonable explanation
of the basis in the insurance policy in relation to the facts or applicable
law for denial of a claim or for the offer of a compromise settlement.
m) An insurer may not request a first party claimant to
sign a release that extends beyond the subject matter that gave rise to the
Bulletinís Q &
A 479 states that the principle of indemnification obligates an insurer to
pay for the undamaged portion of items (kitchen cabinets, roof, etc., etc.)
where the replacement of the damaged portion will result in a mismatch.
The Court in Higgenbothan v. New Hampshire Indemnity Co., 498 So.
2d 1149 (1987) said that because a repair of an Insured's roof which had
been damaged by a windstorm could not be guaranteed leak proof, the company
owed to replace the entire roof and was ordered to pay all penalties and
attorney fees for taking their "arbitrary and capricious" position. Also
see Mastin v. Sandy
Beaver Ins. Co., 461 N.E. 2d 332 (1983),
Halloway v. Liberty Mutual Fire Ins.Co., 290 So.2d 791 (La. App. 1974),
and Hutcherson v. Tennessee Farmers Mutual Ins. Co. of Columbia, 1987
CCH Fire & Casualty Cas. 288 (Tenn. App.
1986) for supporting cases.
RANKED DEAD LAST
In a recent Melvin Fieldsí survey, Californians ranked
insurance companies dead last when asked to rate their degree of confidence
in various industries.
RANKED DEAD LAST
IF YOU WERE UNDERPAID,
YOU MAY HAVE THE RIGHT TO RE-OPEN THE CLAIM
The insurance policy is a contract that states if you
sustain a covered loss, your insurance company will pay to you the fair
value of your loss. If your payment was not fair, either the insurance
company intentionally defrauded you or there was a mutual mistake between
you and them as to the correct amount of your loss. The settlement is
generally not binding under either ground, even if you signed a "release" or
a check which said "full and final." In other words, if they cheated you,
not only did they breach the policy, but they violated the law. If they made
an honest mistake (which most under-payments are), they have yet to fulfill
the promises made to you under the terms of the contract of insurance they
sold you. This assumes that the Statute of Limitations has not expired.
(For a review of your situation, please click
May We Help You?)
INFORMATION REGARDING THE
There are pros and cons concerning the appraisal process.
It is often a good way to resolve a tough claim, but many insurance
companies abuse and manipulate the process by "stacking the deck" against
the Insured. There are many situations when both appraisers and umpire are
advocates for the insurance industry. If the appraisal process is being
implemented, the Insured should have their attorney write a letter
specifically instructing the company that the process better not be
manipulated or interfered with. As is often the case, the dispute which is
alleged by the insurance company is not an "honest" dispute, but is one that
is based on either fraud or incompetency. If an umpire is selected who is
pro-industry, often a low-ball estimate is merely rubber-stamped, and the
consumer loses big time. Some attorneys will even file a lawsuit at this
point alleging breach of contract and bad faith. We have had cases in
which after we obtained substantial appraisal awards, also received
settlements over and above the policy limits to settle the bad faith counts
contained in the lawsuit (bad faith damages cannot be decided in
appraisal). We would also encourage attorneys to ask for appraisal expenses
in situations where the award clearly indicated that the company's
settlement offer was substantially low. The Insurance Consumer Advocate
will soon have a lengthy and detailed report analyzing the appraisal process
from both a legal and a practical approach. Be sure to subscribe to our
free Internet newsletter for more information on this and many other
insurance related topics.
MANY SEWER "BACK-UPS"
ARE NOT REALLY SEWER BACK-UPS
Most insurance policies contain a provision which excludes
"sewer backup" losses from coverage. However, many times the water which
comes into the building from a drain sewer is one which reached its capacity
due to a hard downpour of rain. This type is often covered. We have a few
happy clients whose claims were denied but quickly paid based on the
interpretation of the Indiana Court of Appeals case of Thompson v.
Gneiss Building Corporation and Great American Insurance Company,
394N.E.2nd242(1979) which in essence stated that to have a "backup"
there must be a reversal of flow, and since an overfilled storm sewer comes
directly in without a reversal of flow, there is no backup, and thus that
type of loss is not excluded under the "sewer backup provision." While not
all states have adopted that opinion, the trend is to do so. Also see
Aetna v. Crawley, 207S.E.2nd666(1974).
THE DIFFERENCE BETWEEN VACANCY AND UNOCCUPIED MAY BE VITAL TO YOUR CLAIM
Some policies will exclude certain coverages if a property
is vacant for 30 or 60 days. It should be noted that a property containing
furnishings is legally considered unoccupied and not vacant.
The difference between vacancy and unoccupancy has been the deciding factor
in more than one of our clients being paid for their loss which originally
had been denied. Some companies have amended their policies to now exclude
certain coverages for properties which are also unoccupied, but it is
certainly worth checking out if one of your claims has been denied.
NOT ENOUGH INSURANCE
TO PAY FOR EVERYTHING YOU LOST?...OFTEN, THE FAULT OF UNDER-INSURANCE LIES
WITH THE AGENT WHO SOLD YOU THE POLICY.
While not always true, most Insureds rely upon the agentís
professionalism and expertise to recommend proper coverage amounts. Most
agents will even calculate a buildingís replacement cost before writing a
policy. If they are wrong, your lawyer should consider making a demand that
they file an E &
O claim (Errors and Omissions), and/or a demand that the company reform the
policy. If, in fact, it was everybodyís intentions for you to be insured
for 100%, then either a negligent act occurred or there was a mutual
mistake. The insurance industry is the only industry I am aware of which
has the audacity to suggest that they should be rewarded for their own
negligence, i.e. lower settlement payments and co-insurance penalties. We
have more than a few happy clients who collected more than policy limits in
situations like this, but we do acknowledge this is usually an uphill
$7.45 MILLION IN PUNITIVE DAMAGES AWARDED
In July 1997, a Los Angeles couple filed a $46,000 claim
with Farmers Home Group Insurance Company which the insurer denied saying
the amount of damages did not even exceed their deductible. The jury found
that the insurer deliberately ignored the full amount of the plaintiffsí
damages and awarded Leon and Mittie Robbins a total of $7.45 million in
punitive damages plus the original $46,000 repair cost claim and an addition
$100,000 for emotional distress.
PUNITIVE DAMAGES FOR
INVOKING THE ONE-YEAR FILING DEADLINE
A Superior Court jury in July 1997 found that 20th Century
Insurance Company had acted in bad faith by denying a homeownerís claim that
had been filed several months past the one-year filing deadline set in the
California Statutes. Though the judge in the case said that 20th Century
gave the plaintiffs plenty of notice about the deadline, the jury disagreed
and awarded James and Lorraine Meyer $6.75 million in punitive damages plus
$480,000 to cover repair costs, court costs, and emotional distress. Just
before publishing, we learned that the judge remitted the judgment to
$500,000. 20th Century has dropped their appeal, and the plaintiff's
attorney said they may seek a new trial. EDITOR'S NOTE:
The enforcement of the one-year policy deadline to file suit varies widely
from state to state. Some states mandate the one year deadline to begin from
the date of denial. Other states interpret it from the date that the damage
was discovered. It is generally not enforced where parties were in
negotiations shortly before or at the time of deadline. Some Courts, due to
the severity of the deadline, will look hard to find a waiver. It is the
editorís opinion that unless a company is prejudiced by a delay in filing a
lawsuit, that the various legislatures and insurance commissioners should
not allow its use. After all, something is drastically wrong if an insurance
company cannot settle a claim within a 12 month period. They are really
being rewarded for their delay tactics and for violating the Unfair Claims
Act. Some Courts will dismiss the breach of contract claim but not claims
for bad faith and other tortuous conduct if they are properly alleged.