*To preserve attorney-client confidentiality and comply with the confidentiality clause related to the settlement of this case, our client’s name, the insurance carrier’s name, and specific details pertaining to this case and the settlement thereof have been omitted.
Our firm recently settled a case for a client who came to us after her own auto insurance company denied her property damage claim, despite our client carrying the proper type of coverage and timely paying her premiums.
In 2017, our client was on vacation out of state when her vehicle lost traction and went off the road, causing significant damage to her vehicle. Our client made a claim with her insurance company under the collision coverage she had purchased. Our client’s insurance company investigated the claim, including taking our client’s recorded statement and inspecting her vehicle. The vehicle inspection resulted in our client’s vehicle being declared a total loss by her insurance carrier. However, our client’s insurance company refused to conclude its investigation and make payment on the claim. Nearly three months after making a claim with her insurance carrier, our client received a letter from her insurance carrier stating that it would not be making any payment to her and that it was cancelling her insurance policy because she had made misrepresentations in her application for insurance coverage.
At this point, our client, frustrated and confused, contacted our law firm for a consultation. After hiring our law firm, attorneys Brandon Beagley
and Carson Runge
began to try to make some sense of what had led to this bizarre denial by our client’s insurance carrier. After obtaining and reviewing the relevant documents, including the insurance application, the insurance policy, the recorded statement, and the insurance company’s claim file, it became clear that this was not an innocent misunderstanding; this was a strategic tactic employed by the insurance company to renege on its promises and deny (avoid paying) claims by using vague language in its application and taking advantage of unsuspecting and inexperienced consumers.
Here’s how it worked: Part of the application for insurance coverage that the insurance company required before it would issue an insurance policy consisted of a list of “yes or no” questions. The application stated that if the applicant answered “yes” to any of the questions, the applicant was not qualified for coverage. One of the “yes or no” questions asked if the covered vehicle was used for a “business purpose” and gave some specific examples, such as delivering pizzas/flowers/newspapers or driving for Uber/Lyft. However, following the specific examples, the insurance company used language so vague that simply taking a cell phone, notebook, laptop, briefcase, and/or tool belt to work in the morning could arguably meet the application’s definition of a “business purpose” that would exclude coverage. Of course, our client (much like the average consumer) thought to herself, “I don’t use my car for a ‘business purpose,’ I just use it to travel to and from work,” and she answered “no.” Subsequently, the insurance company issued her an insurance policy.
Now, I’m sure that the insurance company’s hope was that our client (like the rest of its insureds) paid her premiums and didn’t get involved in a car wreck (chances were that she would not), which would have avoided the “business purpose” issue with the application altogether. But, when our client was in fact involved in a car wreck, the vague “business purpose” language in the application gave the insurance company a footing upon which it could fabricate a basis to deny coverage to our client through the use predatory investigation techniques.
Shortly after our client’s car wreck, a representative of the insurance company called our client to obtain a recorded statement, during which the representative asked our client a myriad of questions, most of which dealt with her employment (an occupation in the beauty industry). Our client thought it was strange that, even though she had made clear that she was out-of-state on vacation when the wreck had occurred, the representative kept asking her detailed questions about her work, but she assumed that her insurance company was trying to help her by gathering the necessary information to arrange for an appraisal and resolve her property damage claim. During the questioning, when our client was asked if she used her vehicle for work, she responded that she used it to get to and from work, but not for work. The representative then suggested to our client a variety of ways that she could have used the vehicle in the past for work and not have realized it. The tone of the questions and the persistence of the representative made it clear to our client (and anyone listening to the recorded statement) that the representative wanted her to say that she somehow used the vehicle for work. When the representative suggested to our client that she may have used the vehicle to pick up work supplies in the past, our client stated that on occasion she had used the vehicle to pick up random supplies (latex gloves, dye, paper towels, etc.). Some weeks later, our client received the denial letter from the insurance company and a notification that the policy was being cancelled by the insurance company.
With the benefit of hindsight, it was easy to see that the primary purpose of obtaining the recorded statement from our client and incessantly questioning her about her work was not to assist her with her claim and honor the agreement it had with her (the policy), but instead to trick an unsuspecting insured into saying anything that the insurance company could use as a basis to deny our client’s claim through any means necessary and avoid paying out some of the money that the insurance company is so quick to accept from all of its insured.
Fortunately, our client did not take this kind of treatment lying down and she sought out our law firm to represent her. Brandon and Carson were proactive in using the litigation process to discover this insurance company’s egregious and deceptive conduct and achieved justice for our client. Yet, we can’t help but wonder how many people out there filled out a similar insurance application and will be, or have been, the victims of similar mistreatment by their insurance companies when they have the misfortune of being involved in a motor vehicle collision.
If you are wrongfully denied coverage by your insurance carrier, please contact the Sloan Firm