Hulk Hogan proves my point

I posted here three reasons why almost every Massachusetts auto owner should purchase more than compulsory auto insurance.

Need more convincing? As reported here, Hulk Hogan is suing his insurance agent for not seeing to it that he had an umbrella policy over his $250,000 motor vehicle coverage. His $250,000 limit was insufficient to cover damages when his son seriously injured a friend in an auto accident, requiring him to pay out of his personal assets.

Massachusetts Appellate Division holds that insurer did not violate 93A when it relied on IME opinion to deny PIP benefits

I reported here on the Salem District Court case of Genest v. Commerce Ins. Co., 2010 WL 1740605 (Mass. App. Div.), in which an insurer was held not to have violated Mass. Gen. Laws ch. 93A when it failed to pay PIP benefits.

The Massachusetts Appellate Division has affirmed that ruling. 2010 WL 1740605 (Mass. App. Div.).

Genest, the insured, was injured in an automobile accident. She sought PIP benefits from Commerce. Commerce paid medical expenses but cut off additional payments on the advice of an independent medical examiner, who opined that injuries caused by the accident had resolved.

The Appellate Division held that Commerce's reliance on the IME was reasonable, and that its subsequent decision to pay the medical bills was merely a business decision. Because Commerce's liability to pay the medical expenses was not reasonably clear, it was not liable for breach of 93A.

Superior Court holds that post-arbitration interest of twelve percent applies in context of uninsured and underinsured coverage

In my last post I started discussing the Superior Court case of Meaney v. OneBeacon Ins. Co., 2010 WL 1253600 (Mass. Super.), which concerns post-arbitration interest in the context of uninsured and underinsured motorist coverage.

Judge Neel held that post-award interest in an arbitration case is twelve percent. His reasoning was that two SJC decisions affirmed awards at that rate without addressing whether the rate was appropriate.

Superior Court holds that three year statute of limitations applies to post-arbitration interest on uninsured and underinsured motorist coverage

In Meaney v. OneBeacon Ins. Co., 2010 WL 1253600 (Mass. Super.), brought to my attention by Mike Tracy of Rudolph Friedmann LLP, the plaintiffs sought post-arbitration interest from the defendant insurance companies in the context of uninsured and underinsured motorist coverage. In an earlier decision the Superior Court had ruled that they were entitled to such interest under common law.

In the current decision Judge Neel ruled that, like all 93A claims, the claim for violation of Mass. Gen. Laws ch. 93A was governed by a four year statute of limitations.

The court held that the gist of the common law counts were tort claims, not contract claims, so that the three year statute of limitations for torts applied to them.

Downsides to not purchasing optional coverage on a motor vehicle policy

Under Massachusetts law people who own cars are required to have automobile insurance. The required or "compulsory" coverage includes $20,000 of coverage for "bodily injury to others."

I recommend that almost everyone purchase optional bodily injury coverage in addition to the compulsory coverage. There are several reasons for this:

1. As I discussed here with respect to general liability insurance, anyone can have an off day. If you space out or are distracted by your kids or simply miss a stop sign, you could seriously injury someone. Higher insurance limits will provide more money to the injured person, which could make all the difference to them. While everyone needs to evaluate their own financial circumstances in determining how much insurance they can afford, I firmly believe that ethics require those of us who drive to have higher than compulsory limits if we can afford them.

2. If you have appropriate insurance for your financial station in life the attorney for the injured person is likely not going to be interested in going after your personal assets. They will settle with the insurance company. But if you have inadequate insurance for your financial situation, the attorney is much more likely to encourage their client to insist that a settlement include contribution from your personal assets.

3. Compulsory insurance does not cover you if you are driving outside of Massachusetts. Optional bodily injury insurance, in any amount, will cover you in every state and Canada.

Massachusetts Appeals Court holds that your work exclusion does not apply to trespass damages unrelated to a contractual relationship

In a recent post I discussed Porter v. Clarendon Nat'l Ins. Co., 76 Mass. App. Ct. 655 (2010), in which insurers argued that there was no coverage for a claim that its insured had built a retaining wall and two parking lots on an abutter's property, resulting in continuing trespass.

The insurers argued that the claim was excluded by the "your work" exclusion, because it was the insured who erected the retaining wall and paved the parking spaces. The Massachusetts Appeals Court disagreed.

The exclusion excludes work for "[w]ork or operations performed by you or on your behalf." The court noted that the exclusion "operates to exclude repair or replacement costs for faulty workmanship by the insured that it has been contracted or otherwise hired to perform." The reason for the exclusion is that the general liability policies in which it is found provide coverage "for tort liability for physical damages to others and not for contractual liability of the insured for economic loss because the product or completed work is not that for which the damaged person bargained."

The court held:

The complaint here was not brought by someone involved in a contract or project with the insured, seeking repair or replacement costs for faulty work on the damaged property. Rather, an abutter to the insured, with no contractual or other business relationship with the insured, sought trespass damages. Consequently, the exclusion does not apply.

Massachusetts Appeals Court holds that exclusion for property you own rent or occupy does not apply to third-party claim

In Porter v. Clarendon Nat'l Ins. Co., 76 Mass. App. Ct. 655 (2010), the underlying plaintiff, Porter, and defendant, Clarendon (the insured), owned abutting property. Porter alleged that Ryan had built a retaining wall and two parking spaces on Porter's property, resulting in continuing trespass. Ryan defended on the ground of adverse possession.

Ryan's insurers asserted that coverage was excluded by an exclusion for property damage to "property you [the insured] own, rent, or occupy." The insurers argued that because Ryan "occupied" the disputed property, there was no coverage.

The Massachusetts Appeals Court disagreed, stating:

That exclusion prevents the insured from using the general liability policy as property insurance. . . . "What the exclusion means is that the [general liability] policy was intended to cover only liability of the insured to third parties and not [damage to] the property of the insured." Here, the damage caused by the trespass was to at third party's property, not property of the insured.

Congress working on bill to extend National Flood Insurance Program by five years

I have written several times (click the link and then scroll down to see earlier posts) about the National Flood Insurance Program, or NFIP, a program of the Federal Emergency Management Agency ("FEMA") that issues standard flood insurance policies, mostly through private insurers. NFIP is created by statute, and was originally set to expire in October, 2008. Congress has issued several short-term extensions to it. Recently Congress has had to reauthorize the program retroactively, and the program now expired again, leaving some homeowners unable to buy flood insurance.

Insurance & Financial Advisor reports here that Congress is working on a bill that reauthorizes NFIP until September 15, 2015. The article reports that the current version of the bill adds wind coverage, but such efforts have failed in the past.

According to the article, the current version of the bill increases coverage limits but phases out out premium subsidies for second homes and vacation homes.

SJC holds that Massachusetts Insurers Insolvency Fund is subject to 93A liability

In Wheatley v. Mass. Insurers Insolvency Fund, 456 Mass. 594 (2010), the Supreme Judicial Court of Massachusetts held that the Massachusetts Insurers Insolvency Fund is subject to suits for breach of Mass. Gen. Laws ch. 93A when it breaches Mass. Gen. Laws ch. 176D, § 3(9). (See here for an explanation of the statutory scheme.)

The Insolvency Fund is an entity created by statute to provide insurance coverage when the insurer on the risk is no longer in business.

The court held that it was subject to 93A liability to the same extent as insurance companies because of statutory language of 93A and 176D.