December 26, 2013

Trusting is Optional, Verifying is Essential

Over the years we have handled numerous "insurance bad faith" claims against auto insurers. These cases often involve situations where, following a serious auto accident, the insurance company fails to disclose and pay all the insurance coverage that is owed to the injured insured. We have seen that auto insurers often treat insureds as if they are adverse parties. They leave it up to the injured person to figure out which insurance policies apply. They leave it up to the injured insured to figure out what benefits they are entitled to under a 30-page or longer fine print contract. This approach to claims handling is both improper and illegal. Insurance companies owe their insureds an obligation of good faith and fair dealing. Alaska insurance regulations specifically require insurance companies to "fully disclose" to insureds "all relevant benefits and other provisions of coverage under which a claim may be covered."

Determining what insurance policies and what coverages apply is often a complicated task, particularly in the event of a death or a serious injury. In a recent case, Allstate's handling of a claim where a woman's husband died in a head-on collision came to our attention many years after the fact. Our investigation determined that Allstate had denied underinsured motorist (UIM) coverage to the widow under a second household auto policy through a tortured and self-serving "interpretation" of the policy that the Allstate claims managers never disclosed to the widow. Indeed, Allstate never even told the widow (who was not represented by an attorney) about the possibility of coverage under this policy. After Allstate's conduct came to light and we filed suit, the court granted summary judgment in the widow's favor ruling that a "coverage determination based on arcane legal doctrine [followed by Allstate] is at odds with Alaska's reasonable-lay-interpretation doctrine, which expresses clear Alaskan public policy." The moral of the story is that unfortunately there is a need, in the event of a serious injury or death, to verify that you are actually receiving the "Good Hands" treatment your insurer promised and is required to provide as a matter of Alaska law.