Senate Bill 0354 Civil action for unfair claim settlement practices. Sen. Waterman. “Allows a person to file a civil action for damages related to an unfair claims settlement practice. Specifies the manner in which payment of certain damages must be made.”
Current law already specifies a laundry list of unfair claim settlement practices by insurance companies, including misrepresenting pertinent facts, failing to act promptly with respect to claims, refusing to pay claims without conducting a reasonable investigation, and forcing insureds to litigate by making low-ball offers. However, I believe this provision can currently only be enforced by the Department of Insurance. Under this legislation, an individual who suffers a pecuniary loss because of one or more of these practices would be able to bring a lawsuit directly against the insurer. The person can be awarded up to 2x the amount actually lost plus costs and attorney’s fees. Of the amount awarded above the actual loss, 75% would go to the plaintiff and the remaining 25% would go to the violent crime victims compensation fund.
I sympathize with the sentiment — having dealt with a couple of high risk motor vehicle insurance carriers that always low-ball you and always offer up the sketchiest liability defenses. However, if this passes, pretty much every lawsuit involving insurance will have an additional claim alleging an unfair claims settlement practice. It’d almost be malpractice for a plaintiff’s lawyer not to make the allegation any time the insurer offers anything less than the policy limits.
[tags]SB354-2007, insurance[/tags]
Any clause in an contract of adhesion that rams the parties through some private arbiter should ipso facto be regarded as an unfair claim settlement practice.
you can already recover contract bad faith and if you can prove malicious or willful intent (or gross negligence in some states) you can get punitive damages. This is attempting to make a violation of the UCPA per se bad faith, and to do away with the requirement to prove malicious or willful conduct in order to get punitive recovery. Most states either have vexatious statutory recovery *or* tort of bad faith recovery, but not both. Since when did Indiana get so unfriendly to insurers? What’s with the flurry of unfriendly bills this session?
Also, I am not sure what Branden is referring to by saying “private arbiter” – an appraisal clause? Generally both parties must agree to appriasal for it to be binding – only some states allow an insurer to unilaterally trigger it while barring insureds from suing (i.e., treating it as a condition precedent to suit). I think, but I won’t swear to it, that Indiana only treats appraisal as binding if both parties submit to it. And appraisal is only about damages, not coverage.
The more sophisticated an insurance contract gets, the less likely it’s going to be treated as a contract of adhesion, btw. Commercial insureds and insurers write manuscript policies all the time. They are considered negotiated documents and I’ve seen them contain all kinds of odd provisions. Courts will be deferential unless the provision is against public policy (for example, some states won’t let you insure yourself against punitive damages even if an insurance policy will cover them).
lawgeekgurl,
Maybe too many policyholders are getting creamed in the courts? I have read the Indiana Law Blog closely for over a year, and most insurance cases that make to the the Indiana CoA or Supreme Court seem — in my anecdotal recollection — to end up being resolved in favor of the insurer.
I do recall one or two catfights between insurance companies that were only resolved at the appellate level, but those turned on issues to which I had no exposure at all, so I was out of my depth to judge them even as a humble citizen.
Still, my theory up top probably attributes too much nobility to the General Assembly.
Or maybe it’s not even really a state issue. Maybe after Hurricane Katrina and the fiasco with State Farm and other insurers, it’s just not going to be a good legislative year for insurance companies, and politicans can score some points by kicking them when they’re “down”.
lawgeekgurl,
Oh, my thing about private arbitration was a careless remark that didn’t have anything to do with insurance policies.
As a meek middle-class citizen I strongly resent being handed huge, non-negotiable “agreements”, which steer me into binding private arbitration by some party I have no reason to believe doesn’t have a deep conflict of interest.
Hopefully you found my first reply to you more on point. Sorry for any confusion.
I suspect the story in today’s Star about Indiana leading the nation in storm claims last year (more than in Katrina-hit states – $1.5 billion in claimed damages) probably has something to do with the timing of these bills. Whenever you see a big storm with high claim volume, what inevitably follows is a ton of complaints which then spurs a lot of constituent-based legislation and/or new regulations in the following year. Personal lines insurance (homeowners, boat, auto) is the most heavily regulated area of insurance, and IMO results in both the most insurance department complaints and the highest amount of bad faith lawsuits anyway.
Insurer v. insurer lawsuits are always fun (unless you are an insurer, I suppose) because both parties are equally despised by the factfinder!
I think a lot of folks feel the way you do about arbitration/appraisal, which is why generally the ultimate factfinder is required to be “impartial”, “disinterested” or “unbiased” per most contracts. Now, what impartiality is I suppose varies depending on where you are. Usually you can’t have a direct pecuniary interest in the outcome, but aside from that, I don’t know what all gets used in weighing partiality.