What should I include in a Notice of Claim letter to the Insurance Company?

Had an accident? A fire? Someone’s sued you? You need notify your insurance company. The repercussions of when you do this is a topic for a different post, but do it as soon as you can. What do you tell the insurer? There are differing opinions on this. In this post, I’ll let you know what I put into a notice of claim letter to insurance companies.

The short answer—it depends. It depends on the policy(ies) at issue, the type of claim, the type of policy, the coverage problems at issue, etc. If you’re really concerned, talk to an attorney.

That being said, here are some guidelines to include in your notice letter.

First, if you know the policy(ies) numbers that are implicated, you should include those. I suggest you also state “and any other applicable policies.”  You may not know initially which policies are actually triggered and at issue at the start.

Second, it is helpful to identify the person or entity covered under the policy. This, (along with the policy number(s)) assists the insurer figure out the policies that are at issue.

Third, you should include description of the claim. If you’ve been sued, I wouldn’t characterize the lawsuit. Doing so could impact the coverage analysis. Just inform the insurer that you’ve been sued and attach a copy of the complaint. If there’s been an accident, I’d follow the same guidance. Just say you’ve been in or had an accident. You can identify when, where, and the contact information of others involved. You can attach a police report if available. I wouldn’t address who you think was at fault.
 

I think it is a good idea in your notice to request a “Certified” copy of any applicable policies. In Indiana, insurers have an obligation to do provide you a copy. If they do not, they could lose their coverage defenses.

If you already have a lawyer, a contractor, etc. involved, let the insurer know who you’re using. Request the insurer to advise you if they suggest someone else. I’d also state that you’ll forward the insurer their bills. This helps minimize a potential subsequent argument that you didn’t use the right person/organization.

I would send this letter certified mail so that you have proof you sent it and when the insurer received it.

Finally, I would also send notice to your insurance agent/broker. Ask them to pass the notice letter along to any potential insurer. I’d also ask them for copies of the policies as well.

Good luck. As always, this is not legal advice.

Insurance Coverage for Brown Recluse Spider Infestations

Everyone shutters when they hear Brown Recluse Spiders. They’re hideous. As the comedian Ricky Gervais so eloquently notes: "They're always ready!"

 

 

Can you imagine if you found one in your house?

 

What would you do if your home was infested with them—hundreds of them? Most would say, CALL THE EXTERMINATOR ASAP. Pretty good advice, but I’d recommend calling your insurance company first. Insurance coverage likely exists—despite what your insurance company and/or your agent says.  Depending on your policy, your insurance company should pay to exterminate the spiders and provide you a place to live in the meantime.

These mass infestations are rare, but they do occur. They occur frequently enough that I’ve had multiple matters dealing with this issue. This can be a traumatic time for a family, especially if there are children and individuals with compromised immune systems living in the home.

I wouldn’t be a bit surprised if your insurance company denies your claim. Don’t worry—there’s hope.  The insurer will likely at least raise two issues. First, it will say there’s no coverage because there is no “direct physical loss.” Second, it will deny the claim based on the “insect” exclusion. Neither of these defenses works.

Taking the latter first, spiders are not insects. This is something we learn in grade school. While some folks may have forgotten it, it is common knowledge that spiders are not insects. Everything from children’s books and dictionaries to scientific research papers note the distinction. Spiders have eight legs and two body parts. Insects have six legs and three body parts.

Insurers also argue that an infestation is not a “direct physical loss.”  They claim that because there is no physical damage to structure there is no “direct physical loss.” Courts around the country have held, in a variety of situations, that there does not need to be physical damage to structure to have “direct physical loss.” I have been successful convincing a court and insurer this is the case on two separate occasions, both of which involved brown recluse spiders.

Of course, depending on the facts of your cases, there may be other issues. At a minimum, be prepared to address these two arguments from the insurance industry. Go and fight the good fight.

As always, this is not legal advice and I am not your attorney.

Late Notice and Your Insurance Agent and/or Broker

THIS IS NOT LEGAL ADVICE—TALK TO AN ATTORNEY FOR THAT

If you’re in an insurance claim dispute with your insurance company because it denied your claim alleging you failed to provide it “timely” notice (known as a “late notice defense”), don’t give up. Did you tell your insurance agent or your insurance broker about the claim at all? If so, you may have coverage. 

The “late notice” defense is a big issue these days in Indiana. Insurance companies often cite “late notice” as a justification for issuing a claim denial letter. Ever since the Indiana Supreme Court issued Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267 (Ind. 2009), insurers have been attempting to expand the Supreme Court’s limited holding.  Want proof?  Check out Travelers Ins. Cos. v. Maplehurst Farms, Inc., 953 N.E.2d 1153 (Ind. Ct. App. 2011), trans. pending. But “pretender” costs (costs incurred before notice is provided) and an insurer’s ability to outright deny your insurance claim (subjects of Dreaded, Maplehurst, and others) will be a topic of another post. I’m sure you’ll wait with bated breath for that one.

Back to the topic at hand—insurers denying claims because of “late notice,” despite the fact you told your insurance agent and/or insurance broker about the claim. I had an insurance claims representative argue with me today that she had properly denied the claim. She didn’t seem to care that the policyholder had submitted the claim to the same insurance broker it used to buy the policy. The insurance claims representative was stuck on the fact that we didn’t have any proof that the insurance broker sent the claim on to the insurance company.  Under these circumstances in Indiana, actual notice to the insurer does not matter (whether the broker should have submitted the claim to the insurer is a different issue).

In Indiana, an insurance company that denies a claim with these facts shouldn’t prevail.  Notice to your insurance agent and/or your insurance broker constitutes notice to the insurer. Ind. Code § 27-1-13-7(a) states: 

No such policy shall be issued or delivered in this state by any foreign or domestic corporation, insurance underwriters, association or other insurer authorized to do business in this state, unless there shall be contained within such policy a provision that notice given by or on behalf of the insured to any authorized agent of the insurer within this state, with particulars sufficient to identify the insured, shall be deemed to be notice to the insurer.  

Thus, if your policy doesn’t say that notice to the “authorized agent” constitutes notice to the insurer, then this statute legally adds it to the policy.

Now, this raises the question: what constitutes an “authorized agent?” The Indiana Supreme Court has addressed that. It has held that when an insurance agent and/or insurance broker “makes an application for insurance and the policy is issued[,] the broker become[s] an agent for the insurance company . . . .” Benante v. United Pac. Life Ins. Co., 659 N.E.2d 545, 547 (Ind. 1995). The Supreme Court went even further stating: “Our opinion in Aetna Ins. Co. clearly stands for the proposition that the application for and issuance of an insurance policy establishes the broker as the agent of the insurer; it does not hold that a broker for several insurance companies can never be the agent of one in the absence of the issuance of a policy.” Id. (internal citation omitted).

Thus, if you notified the same agent/broker of the claim that you used to purchase the policy, the insurance company should be deemed to have notice of the claim.  The late notice defense fails. If you bought the policy from someone else, there’s still hope, but things won’t be as clear. Good luck.

The Structure of an Insurance Policy--How to Read It (Part 8 of 8)

PART 8—HOW TO READ THE POLICY

Assuming you’ve read Parts 1–7 and are still interested in reading your policy, this post is, in my opinion (and you know what they say about those), the best way to go through your policy to see if you’re covered. Reading your policy is not an easy task—policies are a labyrinth of words and phrases. As Indiana’s Supreme Court stated: “Synthesizing the policies’ insuring agreements with their respective definitions of capitalized words and phrases is a daunting task, replete with often confusing, redundant, and sometimes circular concepts.” Cinergy Corp. v. Associated Electric & Gas Insurance Services, Ltd., 865 N.E.2d 571, 576 (Ind. 2007). So don’t feel bad, the Indiana Supreme Court even thinks it’s hard to do.

Before I proceed, please forgive me if I repeat a few points from my earlier posts. I know some people skip to last the chapter book to find out how it ends. Granted, a how-to-read-an-insurance-policy post isn’t Clancy or Grisham (it’s not even Twilight), but there are some things you should know, so I thought they were worth repeating.

You should start with the Dec Page. Check the forms listed on it to make sure you have the full policy. If you don’t have a copy of the policy or are missing a form, call your insurance company, agent, or broker to get it. Ask for a “certified” copy (this means they’re guaranteeing you the policy is all there). I like to then go to the Endorsements. Go through these to see what parts of the policy have been modified.  Each endorsement should tell you what part of the policy it is changing. I generally mark (use a pencil—trust me, you’ll make a mistake or two) the modified section in the policy. This way, I know that when I get to that modified section I shouldn’t waste my time trying to figure it out—I should just read the endorsement. 

Once you’ve done this for all the endorsements, you should find the policy’s Insuring Clause. Take a look at this language to see if the policy language appears to cover your problem. If so, great! If not, consider talking to an attorney. I’m not trying to make a shameless plug here—you don’t have to call me—but if it’s important get a lawyer involved. Don’t forget to flip back to the Definitions Section any time you come across defined terms (look for quoted, italicized, bolded, and/or all caps words).  Remember: the definitions are rarely the common meaning of the word.  

If you have coverage, you then need to check to see if an Exclusion applies. If there aren’t any exclusions that take away coverage, things are looking good for you. Finally, you need to check the Conditions to make sure you are doing what you need to do (like paying that last premium installment or letting your insurer or the agent/broker know there is an issue).

When you’re reading a policy, often times there can be multiple ways to interpret the meanings of words or phrases. In Indiana (and in many other states), the interpretation should favor coverage.  If there is more than one reasonable way to interpret the policy, it will be interpreted in favor of providing you coverage. This rule is a great asset to policyholders. In Indiana you don’t have to show that your interpretation is the most likely; you only need to show that your interpretation is a reasonable one. The Indiana Supreme Court has explained the justification for this rule: “This strict construal against the insurer is driven by the fact that the insurer drafts the policy and foists its terms upon the customer.  ‘The insurance companies write the policies; we buy their forms or we do not buy insurance.’” Am. States Ins. Co. v. Kiger, 662 N.E.2d 945, 947 (Ind. 1996), quoting Am. Econ. Ins. Co. Liggett, 426 N.E.2d 136, 142 (Ind. Ct. App. 1981).

Good luck—it’s not an easy task.

The Structure of an Insurance Policy--The Endorsements (Part 7 of 8)

PART 7—POLICY STRUCTURE

The Endorsements

Finally, the last pieces of a policy are the Endorsements. These are the other pieces of paper your insurer sends you on a regular basis (along with your bill and the Dec Pages). Issuing endorsements is how insurance companies modify your policies. (Most of the time they do change your policy, but sometimes these endorsements are not enforceable, but that’s a whole post itself—stay tuned.) Yes, this is a bit annoying. It would be easier if they’d just send you a new policy and tell you to throw the old one away. Unfortunately, it doesn’t work that way.  Endorsements can change any part of the policy, so you should pay attention to them. They can increase or decrease the limits, modify the insuring clause to expand or reduce coverage, insert or delete an exclusion—you get the picture. Don’t hesitate to call your agent/broker to ask how the change effects you.

The Structure of an Insurance Policy--The Conditions (Part 6 of 8)

PART 6—POLICY STRUCTURE

The Conditions

So far in these policy-structure posts, I’ve referenced Twilight and quoted Lee Corso—I’m impressed you’re still reading. The next section is the Conditions Section of the policies, which details the policyholder’s obligations. Failing to satisfy these conditions is another way a policyholder can lose coverage under the policy.  This section requires things such as providing the insurance company notice of a claim.  This notice requirement is probably the most important part of the Conditions section. This section also requires that you pay the insurance premiums. Yes, it seems obvious, but it’s in there.  

Depending on the type of policy, the Conditions may require you not to incur any costs associated your claim without getting the insurance company’s permission (think don’t settle a case without checking with your insurer). It may require you to provide a “proof of loss” (a detailed list of all your damaged property).  It may require you to sit for an examination under oath, which is a recorded question and answer session where you have answer truthfully.

The Structure of an Insurance Policy--The Definitions (Part 5 of 8)

PART 5—POLICY STRUCTURE

The Definitions

Have you noticed in the previous posts that I keep putting quotes around certain words (e.g., “loss,” “property damage,” and “bodily injury”)? They weren’t air quotes—I loath air quotes. It was intentional. Your policy will have quoted words (sometimes they’re italicized, bolded or in all caps instead), and these words have very special meanings. They are defined terms. Often the actual definitions are not what you would expect. You need to read them. The Definitions Section is part of the reason why “reading” (OK, those were air quotes; I suppose “loath” was a bit strong) an insurance policy is so difficult. Every time you come across a defined term, you have to go to the definition of that term and essentially substitute the definition for the term. It’s confusing enough just explaining what you have to do.