Effect of possibility of insurance on jurors

Although the existence of insurance cannot be discussed or even alluded to at civil trials, pretty much every trial attorney assumes that a juror will bring up the fact that damages will be paid by an insurer, whether or not that is true. Here's an article from the wonderfully (or just weirdly) named Jury Research Blawg Konnectionn that discusses research into the issue.

U.S. District Court holds that fee dispute between law firm and former associate is not covered by malpractice insurance

Law firm Freedman, DeRosa & Rondeau (FDR) sued a former associate, Adam Clermont, for a portion of fees he collected from clients he continued to represent after leaving FDR. Clermont sought coverage from his legal malpractice insurer, Continental.

The policy covered claims "the Insured shall become legally obligated to pay as damages and claim expenses because of a claim . . . by reason of an act or omission in the performance of legal services by the insured."

"Claim" was defined in the policy as "a demand . . . arising out of: (1) an act or omission, . . . in the rendering or failure to render legal services."

"Legal services" was defined in the policy as "those services . . . performed by an Insured for others as a lawyer, arbitrator, mediator, as well as a notary public, or as a title agent."

"Damages" was defined in the policy as "judgments, awards and settlements." The definition excluded "legal fees, costs and expenses paid or incurred or charged by the Insured," and "injunctive or declaratory relief."

In Clermont v. Continental Cas. Co., 2011 WL 1235389 (D. Mass. 2011), the court held that a fee dispute did not come within the policy's definition of "legal services." It also held that the dispute fell within the exclusion to the definition of damages.

More on why it's good to comparison shop for insurance

This article also demonstrates how the rich are different from us.

Shopping for coverage can pay off

Although the couple that writes this blog, Sustainable Personal Finance, is Canadian, their point in this post on insurance agents is well-taken here as well: it never hurts to shop around.

As with all things in life, however, the cheapest coverage is not necessarily what you need. What is included in the coverage? What is excluded? What is the reputation of the insurer with respect to paying or fighting fair claims? What is the deductible? Does the property coverage provide replacement cost or present value? Do attorney's fees reduce the coverage limits? Is the insurer in danger of going out of business?

U.S. District Court finds no coverage for agency that provided therapy to girl who was abused in foster care

The tragic case of a girl in foster care who at age 11 was beaten nearly to death by her aunt and stepfather has been periodic front page news for years. The abuse put the child into a coma in 2005. Over the opposition of her stepfather, who purportedly sought to avoid a murder conviction, the Department of Social Services brought suit to allow her doctors to terminate life support, as she was in a vegetative state from which there appeared to be no hope of recovery. The Supreme Judicial Court ruled in favor of DSS. The child, however, began to breathe on her own and eventually recovered to the point that she could talk. The aunt committed suicide and the stepfather is in jail.

And now we move on to the insurance issues.

The child's current guardian sued a clinic that provided therapy to the child when some of the abuse took place. The defendant's insurer, Valley Forge Insurance Company, filed suit seeking a declaratory judgment that its policy does not cover the allegations.

The policy contained an exclusion for the "actual or threatened sexual or physical abuse or molestation by anyone to any person while in the care, custody or control of the insured."

At issue is the meaning of "in the care of." The insureds argued that the phrase means "physically in the care."

In Valley Forge Ins. Co. v. The Carson Center for Human Servs., Inc., 2011 WL 884802 (2011) the United States District Court for the District of Massachusetts disagreed. Finding little case law on point, the court turned to the dictionary definition of "care" to find that physical proximity is not required. Rather, the phrase means "under the supervision or charge of the insured."

The court held that the provision of bi-weekly therapy was sufficient to meet this definition.

The court also noted that in the underlying complaint the child's guardian alleged that she was in the care of the insured. "The word cannot carry one meaning for the purposes of liability and a different one for the purposes of coverage."

Republicans in Congress working on flood insurance

I write periodically about the imminent expiration/actual expiration/retroactive extension of the National Flood Insurance Program, or NFIP. NFIP is 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.

Even though there is now a whopping six months until NFIP expires again, this time round, according to this article in Insurance Journal, one side of the aisle is already working on the issue. The Republican draft of legislation will phase out subsidies (and therefore the entire program; the whole point of NFIP is to provide subsidies).

Coming soon: dog exclusions

According to this article in Claimsjournal.com, the American Association of Insurance Services (AAIS), which develops policy forms, has drafted endorsements for homeowners and umbrella policies which exclude coverage for damages caused by dogs owned by the policyholders.

Given the range of lawsuits that are brought against dog owners (I recall a case in which a dog barked from an enclosed lawn, startling the plaintiff and making her fall) and the high damages that can be awarded in dog bite cases, I recommend that dog owners avoid these endorsements even if it means paying higher premiums.