A jury in colorado awarded the maximum $3 million under a property and casualty policy for the value of a building totally destroyed by fire. In addition, the building’s owner obtained a punitive damage award in the sum of $2.3 million due to the insurance company’s bad faith handling and denial of the claim.

The owner of the building was a mortgage company that had taken title by foreclosure. After the fire, the insurer alleged that the building was worth nothing because it was an abandoned apartment complex. The insurer also refused to pay claiming that it should have been notified that the building was vacant.

The jury rejected the insurance company’s arguments and found that it acted in bad faith.

The case was venued in the District of Colorado.

See James River Ins. Co. v. Rapid Funding, 07-cv-01146.

In the field of liability insurance, there is a special type of “bad faith” claim you can make against your insurer if there is a jury verdict against you in an amount higher than the amount of your insurance policy’s limits. If you are sued due to an auto accident or incident on your property, your insurance company has an obligation to settle the case against you within the limits of your insurance policy, when it has the chance, if there is a possibility that you could lose your case and get hit by a verdict bigger than the amount of your insurance policy. When the insurance company breaches its duty, in bad faith, and you get hit with such a large verdict, you can sue the insurance company for the amount in excess, over your coverage amount, plus punitive damages. That’s what happened in the Missouri case, described below.

A drunk driver was sued for severely injuring a couple when he crossed a divider and crashed his pickup truck into an innocent couple, injuring both of them severely. They were hospitalized for over a month. His insurer did not tell him that his insurance policy had a limit that was likely to be exceeded by this significant case, and it refused to settle on his behalf.

The drunk driver worked out a $5 million settlement with the injured couple and then allowed them to pursue his insurance company for its bad faith conduct in the handling of the liability claim against him, under his insurance policy. Allstate had an opportunity to resolve the case at an early stage, but by refusing to do so, it lost the opportunity and left its insured exposed for millions of dollars in liability to the insured couple.

After a trial on the bad faith case, the jury returned a verdict for $5.8 million in damages to compensate the injured couple for their injuries and financial harm and $10.5 million in punitive damages to punish Allstate for its conduct.

On appeal, the Court in Johnson v. Allstate, WD68169 Mo. App. West Dist. 2008, the court found that Allstate had exhibited a “reckless disregard” for its policyholder and upheld the verdict. The liability had been clear and Allstate failed to investigate and denied coverage in a manner that was a clear breach to its policyholder.

A federal judge in the State of Washington has ruled against a group of insurers in refusing to dismiss bad faith claims against them for their refusal to defend and indemnify a construction contractor faced with defect claims in a casino project.

In Aecon Buildings, Inc. v. Zurich of North America et al. No. CO7-832MJP (WD Wash, 2008), Aecon was faced with a number of construction defect claims from an Indian reservation upon which it was building the casino. It sued its subcontractors, seeking recovery from them, and the subcontractors tendered those legal claims to their insurers. Those insurers refused to defend and indemnify the subcontractors.

After a mediation in which Aecon settled the dispute with the owner for $3.75 million, it pursued the insurers for the subcontractors for reimbursement, alleging a bad faith investigation and an unreasonable coverage determination under the insurance policies in question. The claims were asserted under Washington’s Consumer Protection Act and under the common law duty of good faith and fair dealing under the insurance contracts.

The court found that even if it is ultimately found that coverage does not exist and there was never a duty to defend, Aecon can still proceed against the insurers for its bad faith and improper investigation and that due to their bad faith they are estopped from denying coverage.

The American Association for Justice recently published an extensive report listing the Top Ten Worst Insurance Companies In America; and considering all of the big names on this list, you should not be surprised to find your company on there.

Beginning with Allstate and ending with Liberty Mutual, with companies such as AIG, Conseco, WellPoint and Farmers in between, the list is a comprehensive and detailed report built on research and investigation of court documents, FBI records, state investigations and more. This is no late night TV show top ten list, but 29 pages packed with disturbing information.

As you read through the report, underlying the frustration and anger is a sinking feeling that this is a David and Goliath situation. As the insured, you’re likely to feel trapped, especially after reading about things such as the Powerpoint slide prepared for Allstate which features “an alligator and the caption ‘sit and wait’—emphasizing that delaying claims will increase the likelihood that the claimant gives up. According to former Allstate agent Shannon Kmatz, this would make claims ‘so expensive and so time-consuming that lawyers would start refusing to help clients.’”

If it was only one corrupt insurance company about which we were reading, it wouldn’t be so disheartening. But a list of ten (and you can be sure these ten aren’t the only ones employing the tactics of ‘deny, delay, defend’) indicates that it’s not an anomaly but a business model. These companies profit from lying, evading and taking advantage of their policyholders. It’s a situation that cannot continue.

Luckily the report isn’t all gloom and doom. The bad is tempered with the good, if you know how to see it, as with this quote about Unum, listed as the second worst Insurance Company, “Despite doctors’ orders to stop working, Unum told [the insured] he was not disabled and could still work—a decision the U.S. Ninth Circuit Court of Appeals would later describe as ‘defying medical science.’” It is shocking to read about the reprehensible acts of these insurance companies, but encouraging to read that judges and juries do side with the insured in many cases, ordering the insurance companies to pay what they have promised.

Cases can be won. Change can be made. And you can get your claims paid. Our firm specializes in taking on Goliath, and we’re dedicated to helping you get the security you deserve.

As a result of the recent spate of hurricanes, wildfires, floods and tropical storms, U.S. residents—and their insurance companies—have had their share of natural disasters and the clean-up and rebuilding that follows. Unfortunately, homeowners and commercial property insurance policies are not always clear regarding whether the damage caused by these natural disasters is covered, and insurance carriers are increasingly exploiting the language in these policies to attempt to avoid liability for these losses.

After Hurricane Katrina, many Louisiana residents found themselves without insurance coverage based upon their homeowner’s policy’s “flood” exclusion. Although both the trial court and intermediate appellate courts ruled in favor of the insured homeowners by finding the exclusion to be unambiguous and inapplicable to man-made events such as the failure of a level, the Louisiana Supreme Court reversed the decision and ruled in favor of the insurance carriers by finding the “flood” exclusion unambiguously applied to both natural and man-made floods in Sher v. Lafayette Insurance Company, __So.2d___, 2008 WL 928486 (La. 2008).

But Hurricane Katrina victims aren’t the only ones fighting with insurance companies to define and receive coverage for damages from natural disasters. CNN’s Money Magazine, in its article entitled Insurers Playing Rough, discusses a disturbing trend by insurance carriers to make lowball settlement offers to their insureds following natural disasters, thereby exploiting the insured’s financial vulnerability in order to avoid paying the total value of their legitimate claims. As detailed by Money Magazine, the carriers offer far less than the claims are worth because many of their insureds who have had their homes and businesses destroyed are desperate to rebuild their lives and will accept paltry settlements to survive.

Homeowners wonder what they can do if their insurance companies deny their claims or give lower payouts than what they feel is deserved. Although the Money Magazine article mentioned above gives some suggestions, your best opportunity to receive the financial coverage you deserve comes from having an experienced professional on your side. Our firm is experienced in negotiating with insurance carriers, has extensive knowledge concerning the intricacies of insurance law, and—unlike your insurance carrier—we always have your best interests in mind.

There is reason for optimism for insured individuals receiving treatment for a mental illness or substance abuse problem. The President just signed into law a bill that was 10 years in the making. It will “require that group health insurance coverage for mental illness and substance abuse be provided on the same terms as coverage for physical illnesses.” Although the bill will not require that mental illness and substance abuse coverage be added to group health plans, it will require that existing coverage for psychological illnesses be no more restrictive than coverage for physical illnesses.

The Bill passed in the House of Representatives by a large margin, and was approved by the Senate. On October 3, 2008, President George W. Bush signed it into law. The act is known as “The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act.” Congress joined the parity bill with the Emergency Economic Stabilization Act, the legislation created to address the economic crisis. The Senate passed the same version of the act earlier in the week.

Whether it’s the current state of the economy, or a maturity difference between the generations, many parents are finding that their children are living at home longer than earlier generations have—and often continue to need the benefits and protections that come with that, including health care coverage under their parents’ medical insurance plans. Now the state of Connecticut has just made it easier for parents to continue providing those benefits and protections to their adult children.

Effective January 1, 2008 in the state of Connecticut, parents will be able to keep unmarried dependents under the age of 26 covered under their own individual or group health plan. Although many health insurance plans already extend coverage for dependents over the age of 18 who are still attending college, the coverage terminates if the child graduates or stops attending school. This situation leaves such adult children and their parents with the difficult decision of choosing whether to pay for more expensive or less than comprehensive coverage, or to risk going without health insurance and paying for medical care as needed, which is always a risky prospect.

With so many children living at home longer, requiring more years to finish school, and facing challenges after graduation in an extremely competitive job market, parents found that the cost of their child’s health care was becoming more and more of a hardship. Although most kids between the ages of 19 and 26 are fairly healthy and don’t anticipate recurring medical expenses, the exorbitant cost of medical care in the event of an unforeseen accident left many parents reluctant to leave their post-college children uninsured. This new Connecticut law will ease the financial burden of obtaining health coverage for adult dependent children.

For more information about state-by-state health insurance coverage for young adults, click here.