Insurance company exemptions allow insurance companies to avoid their contractual duty to provide coverage. There is a saying that the insurance company policies provide coverage in the first couple of pages and then the rest of the policy takes away that coverage. Although an accident may be a covered event under the insurance policy, the exemptions in the policy can allow the insurance company from being required to pay on a claim. A good example of this is the case of American Standard Insurance Company of Wisconsin v. Slifer, 395 Ill. App. 3d 1056, 919 N.E.2d 372, 335 Ill. Dec. 653 (4th Dist. 2009). In that wrongful death case, a hit and run driver killed a man in 2002. He did not report it to his insurance company despite the insurance policy requirement of prompt notification of an accident. Five years later, Slifer confessed to the police. He was sentenced to 14 years in prison. Since he did not comply with the policy requirement to notify the insurance company promptly, the insurance did not have to indemnify, or pay for, any judgment for wrongful death against Slifer. Unless Mr. Slifer became independently wealthy, which is unlikely given his prison sentence, the party that suffers would be the family of the person Mr. Slifer killed. While insurance companies should be allowed to protect their monetary reserves, the result of this decision will adversely impact the victim’s family. The one thing we can be sure of is that the insurance company would be allowed to keep all of the premiums Mr. Slifer paid without having to pay for his wrongdoing.
There is a saying that hard cases make bad law. This is clearly a hard case. No matter how it is decided, it is going to be unfair to one of the two parties, the insurance company or the victim's family. It would be unfair to the insurance company to have to defend and then indemnify someone when an accident goes unreported for five years. But denying compensation to the family also seems unfair. So we are left with a choice in cases like this: who should bear the brunt of this unfair situation? Both parties are blameless. One could argue that the insurance company got the premiums for the coverage and so they should not use this exemption to deny coverage. Conversely, one could argue that the victim's family is not without some measure of justice as Mr. Slifer is serving a prison sentence of 14 years. I can't say that the case was decided incorrectly but I think that the insurance company could bear the inherent unfairness of this situation better than the victim's families. What do you think should have happened? http://www.ellislawfirm.pro/
In my humble and almost moderately educated opinion, I feel it right to side with the family in this instance. While I see the point that the insurance company will be unfairly charged with this wrongful death judgment after years have passed, really what is the difference if they pay it now or 5 years ago? It is the responsibility of the insurance company to handle such things. If this were to apply to health insurance, we would all be in trouble. If I have been paying my premiums through work for years for my family's health insurance and they find a lump that they deem non-cancerous, I don't want to be left without coverage if the doctors change their mind next year and decide it was cancerous after all. It's a bit of a stretch, but applicable.
ReplyDeleteThat is a good argument in saying what difference does it make whether they pay on the policy now or five years ago. I suspect that the insurance company could argue that permitting claims five years after the event would make it very difficult to deny fraudulent claims. For example, if a car accident is staged, then it may be difficult to find witnesses after five years. If the claim were reported immediately, however, then witnesses that might contradict the insured's story could be located.
ReplyDeleteRegarding you hypothetical on insurance coverage, health insurance companies have denied, or tried to deny, claims for years by saying that a condition was a pre-existing condition. That is a much worse situation that the one in the case I cited. Giving money to decedent's family is about the only way we have to compensate someone in a wrongful death action. It provides some comfort but probably not alot. Conversely, denying coverage of medical care kills people. I personally wish we had gone to a socialized medicine after WWII like England did.
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ReplyDeleteI completely agree about socialized medicine. The United States of America is the best country in the world. However, we would be a much stronger nation if the civil war between the doctors, hospitals, pharmeceutical companies stopped punishing the young, old and infirm for their greediness.
ReplyDeleteDoctors in California were complaining about the skyrocketing cost of medical malpractice premiums. The insurance company blames plaintiff's trial lawyers for this, saying that they had to charge so much because of the huge verdicts the plaintiff lawyers were getting. The insurance companies lobbied for and got tort reform in California. That severely limited how much money an injured person could recover. The insurance companies, however, continued to raise their medical malpractice insurance premiums every year for the next 10 years. The only thing that stopped them was the legislators passed another law which limited how much insurance companies could raise those premiums.
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