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<title>September 10 | Insurance Advocate</title>
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<title>Cover Sept 10</title>
<link>https://www.insurance-advocate.com/2022/09/10/cover-sept-10/</link>
<dc:creator><![CDATA[Insurance Advocate]]></dc:creator>
<pubDate>Sat, 10 Sep 2022 17:07:52 +0000</pubDate>
<category><![CDATA[September 10]]></category>
<category><![CDATA[Covers]]></category>
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<title>55% of Organizations Have Cyber Coverage</title>
<link>https://www.insurance-advocate.com/2022/09/10/55-of-organizations-have-cyber-coverage/</link>
<dc:creator><![CDATA[Insurance Advocate]]></dc:creator>
<pubDate>Sat, 10 Sep 2022 15:02:28 +0000</pubDate>
<category><![CDATA[September 10]]></category>
<category><![CDATA[Cover Story]]></category>
<guid isPermaLink="false">https://www.insurance-advocate.com/?p=13397</guid>
<description><![CDATA[<p>A new report has hit the cyber cover situation head on revealing that: just 55% of organizations currently have cyber insurance, and of those, most policies have limits far lower than the cost of the average attack.</p>
The post <a href="https://www.insurance-advocate.com/2022/09/10/55-of-organizations-have-cyber-coverage/">55% of Organizations Have Cyber Coverage</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description>
<content:encoded><![CDATA[<p class="p1">A new report, <b>the BlackBerry Limited Cyber Insurance Coverage study, </b>has hit the cyber cover situation head on revealing that: just 55% of organizations currently have cyber insurance, and of those, most policies have limits far lower than the cost of the average attack.</p>
<p class="p3"><b>Key findings of the report issued by Blackberry include: </b></p>
<p class="p1">· Only 55% of respondents currently have cyber insurance, while over half (56%) of the insured are only covered up to $600,000 – not even enough to cover the median ransomware demand of 2021.</p>
<p class="p1">· Businesses are concerned about how they would cover the costs of a cyberattack. Many say they would like government assistance in paying for ransomware attacks (44%), a figure which rises to an even 50 percent amongst businesses with under 1500 employees.</p>
<p class="p1">· The importance of cyber insurance in business deals is growing with 60% of respondents claiming they would be hesitant to enter a new agreement with any organization lacking cyber insurance</p>
<p class="p1">· Two-thirds of respondents said they would reconsider a partner or buyer relationship due to poor cybersecurity practices or a breach.</p>
<p class="p1">· The biggest challenges organizations face with cyber insurance are lack of transparency from insurance companies about what will be covered (49%) and costly premiums (57%), which will only get worse with 85% seeing some sort of increase in their cyber insurance premiums over the last 12 months.</p>
<p class="p1"> The BlackBerry Limited (NYSE: BB) (TSX: BB) Cyber Insurance Coverage study, shows businesses are increasingly concerned about how they will meet ransomware demands. Only 19 percent of those surveyed have ransomware coverage limits above $600,000, while over half (59 percent) hoped the government would cover damages when future attacks are linked to other nation-states. Small-to-medium sized businesses (SMBs) – who have become a favorite criminal target – are especially feeling the heat. Of businesses with under 1,500 employees, only 14 percent have a coverage limit in excess of $600,000. A recent Forrester report estimated that a typical data breach would cost the average organization $2.4 million to investigate and recover. Perhaps unsurprisingly, 50 percent of SMB respondents hoped the government would increase financial aid in all ransomware incidents.</p>
<p class="p1">“Not only are there more ransomware threats than ever, but the criminals are more ruthless. They will iterate threats and wait patiently in order to extract maximum damage,” said Shishir Singh, Executive Vice President and CTO, Cybersecurity at BlackBerry. “For uninsured and underinsured organizations, this potentially puts them in extreme jeopardy. The cyber underground is increasingly sharing learnings and partnering to make threats as efficient as possible. It’s vital businesses strengthen their security posture against these threats by supplementing insurance with a prevention-first software approach that lowers their overall risk.”</p>
<p class="p1">Many businesses reported cybersecurity coverages that are poorly tailored to their current situation. Over one-third (37 percent) of respondents aren’t currently covered for any ransomware payment demands, while 43 percent aren’t covered for auxiliary costs such as court fees or employee downtime.</p>
<p class="p1">At the same time, cyberinsurance has become harder to get, due to increased software requirements placed by insurance brokers. Over one-third (34 percent) of respondents have been denied coverage due to not meeting specific Endpoint Detection and Response (EDR) software requirements. These increased requirements however may be having a real impact on reducing ransom payouts.</p>
<p class="p1">“Though it might sound counterintuitive, continuing to adhere to software requirements is one of the best ways to fight the ransomware industry,” said Vincent Weafer, CTO at Corvus. “In our portfolio alone, we’ve seen a 50 percent reduction in the ratio of ransom demands that end up being paid. Better software adoption is a critical element in better positioning organizations to stand up to attackers.”</p>
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<title>La Plus ça change</title>
<link>https://www.insurance-advocate.com/2022/09/10/la-plus-ca-change/</link>
<dc:creator><![CDATA[Steve Acunto]]></dc:creator>
<pubDate>Sat, 10 Sep 2022 10:07:05 +0000</pubDate>
<category><![CDATA[September 10]]></category>
<category><![CDATA[Foreword]]></category>
<guid isPermaLink="false">https://www.insurance-advocate.com/?p=13409</guid>
<description><![CDATA[<p>Independent agents again shown to place the majority of all property-casualty insurance written in the U.S. Independent agents place 62% of all property-casualty insurance written in the U.S., according to the Big “I” 2022 Market Share Report. The annual Market Share Report compiles and analyzes property and casualty premium data and provides insights for agencies […]</p>
The post <a href="https://www.insurance-advocate.com/2022/09/10/la-plus-ca-change/">La Plus ça change</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description>
<content:encoded><![CDATA[<h3 class="p1"><span class="s1">Independent agents again shown to place the majority of all property-casualty insurance written in the U.S.</span></h3>
<p class="p1">Independent agents place 62% of all property-casualty insurance written in the U.S., according to the Big “I” 2022 Market Share Report. The annual Market Share Report compiles and analyzes property and casualty premium data and provides insights for agencies and carriers on current market shares by distribution types. Based on 2021 data, this year’s report underlines agents’ continued dominance in commercial lines, with nearly 88% of all commercial lines written premium is placed by the independent agency channel.</p>
<p class="p3">While independent agencies are the clear leaders on the commercial side, the independent agencies in the U.S. place 37% of all personal lines premium. Overall, independent agents place approximately 62% of all p-c premium written in the U.S. Of the $765 billion in total premium written in the U.S., personal lines accounts for approximately 50% to the total premiums, just over 38% comes from commercial lines, and the remaining 12% is “unclassified” coverage that cannot be easily categorized as either personal or commercial lines. Independent agents place approximately 85% of this “unclassified” business. “The demise of the independent agency channel has been predicted by various sources for many years, but the Market Share Report affirms the reality that independent agents have and continue to place the majority of all p-c business,” says Chris Boggs, Big “I” vice president of agent development, education and research. “In particular, independent agents continue to prove their dominance in commercial lines.”</p>
<p class="p3">Within the top 10 lines written by independent agents, workers’ compensation was the only line that did not see at least some growth in the percentage written by the independent agency channel over the five years ending in 2021. All other lines saw the percentage written by independent agents remain steady or grow.</p>
<p class="p3">We present the full report in this issue – agents will be proud of it, but, hopefully, not complacent. <b>SA</b></p>
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<title>Imua Now Offering Members All Access To Remote Education</title>
<link>https://www.insurance-advocate.com/2022/09/10/imua-now-offering-members-all-access-to-remote-education/</link>
<dc:creator><![CDATA[Insurance Advocate]]></dc:creator>
<pubDate>Sat, 10 Sep 2022 07:06:29 +0000</pubDate>
<category><![CDATA[September 10]]></category>
<category><![CDATA[In The Associations]]></category>
<guid isPermaLink="false">https://www.insurance-advocate.com/?p=13407</guid>
<description><![CDATA[<p>Inland Marine Underwriters Association (IMUA) announced that the association is elevating its professional development commitment to members and will provide “all access” to remote education events at no additional cost. In making the announcement, Kevin O’Brien, IMUA President & CEO, said, “As announced at our recent 91st Annual Meeting in Savannah, the IMUA Board of Directors […]</p>
The post <a href="https://www.insurance-advocate.com/2022/09/10/imua-now-offering-members-all-access-to-remote-education/">Imua Now Offering Members All Access To Remote Education</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description>
<content:encoded><![CDATA[<p class="p1">Inland Marine Underwriters Association (IMUA) announced that the association is elevating its professional development commitment to members and will provide “all access” to remote education events at no additional cost.</p>
<p class="p1"> In making the announcement, Kevin O’Brien, IMUA President & CEO, said, “As announced at our recent 91st Annual Meeting in Savannah, the IMUA Board of Directors approved this exclusive member benefit. The industry professionals of our member companies will now have free access to all IMUA remote education events. This includes unlimited member access to IMUA webinars, seminars, courses, papers and upcoming virtual educational events. It is another shining example of the benefits of membership.”</p>
<p class="p1"> Members can access this IMUA service by logging into the IMUA website and clicking on the On-Demand link. Members can also click on the “All Access Learning” logo. Registration is required and there will still be a fee for “in-person, onsite events.”</p>
<p class="p1"> The IMUA President noted that IMUA has been serving the commercial inland marine insurance industry</p>
<p class="p1">since 1930, focused on providing education and professional development opportunities to employees of our 47-member insurance companies, 151 broker affiliates and 38 associate members.</p>
<p class="p1"> IMUA is the national association for the commercial inland marine insurance industry. IMUA serves as the voice of its member companies representing over 90 percent of all commercial inland marine insurers. The association provides its members with comprehensive training and educational programs, including research papers and bulletins, industry analysis and seminars. IMUA was founded in 1930.</p>
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<title>NAIC Passes Pet Insurance Model Act</title>
<link>https://www.insurance-advocate.com/2022/09/10/naic-passes-pet-insurance-model-act/</link>
<dc:creator><![CDATA[Insurance Advocate]]></dc:creator>
<pubDate>Sat, 10 Sep 2022 06:05:48 +0000</pubDate>
<category><![CDATA[September 10]]></category>
<category><![CDATA[In The Associations]]></category>
<guid isPermaLink="false">https://www.insurance-advocate.com/?p=13405</guid>
<description><![CDATA[<p>The National Association of Insurance Commissioners (NAIC) members passed a Pet Insurance Model Act to establish appropriate regulatory standards for the pet insurance industry, which has annual premiums of approximately $2.8 billion in total in-force premiums in 2021 (up over 30.5% from $2.175 billion in 2020) and over 4.41 million insured pets across North America, […]</p>
The post <a href="https://www.insurance-advocate.com/2022/09/10/naic-passes-pet-insurance-model-act/">NAIC Passes Pet Insurance Model Act</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description>
<content:encoded><![CDATA[<p class="p3">The National Association of Insurance Commissioners (NAIC) members passed a Pet Insurance Model Act to establish appropriate regulatory standards for the pet insurance industry, which has annual premiums of approximately $2.8 billion in total in-force premiums in 2021 (up over 30.5% from $2.175 billion in 2020) and over 4.41 million insured pets across North America, up 27.7% from over 3.45 million pets insured in 2020, according to the North American Pet Health Insurance Association.</p>
<p class="p3">“This model law establishes clear rules for the sale of pet insurance and provides important disclosures to pet owners interested in purchasing this product,” said Beth Dwyer, Superintendent of Insurance for the Rhode Island Department of Business Regulation. “Now, it is up to the states to see if they would like to adopt or modify the model law for this regulatory framework to be in effect.”</p>
<p class="p3">Key elements of the model include:</p>
<p class="p5"><b>Consumer Protections</b></p>
<p class="p3">The model codifies several consumer protections related to policy renewals, required disclosures of waiting periods, policy limits, conditions, benefit schedules, and more. Robust disclosures allow consumers to affirmatively choose the policy that is best for them in a world with dozens of available options.</p>
<p class="p5"><b>Preexisting Conditions</b></p>
<p class="p3">The model limits how insurers can deny pet insurance claims related to preexisting conditions of covered pets. And the onus is put on the insurer to prove those preexisting condition limitation applies.</p>
<p class="p5"><b>Wellness Programs</b></p>
<p class="p3">The model explicitly requires insurers and their producers to clearly differentiate pet wellness programs from insurance policies to help eliminate consumer confusion between insurance policies and non-insurance wellness programs.</p>
<p class="p5"><b>Training Requirements</b></p>
<p class="p3">The model codifies training for insurance producers to ensure that producers are appropriately prepared to present information to consumers.</p>
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<title>Hagerty Acquires Broad Arrow Group </title>
<link>https://www.insurance-advocate.com/2022/09/10/hagerty-acquires-broad-arrow-group/</link>
<dc:creator><![CDATA[Insurance Advocate]]></dc:creator>
<pubDate>Sat, 10 Sep 2022 05:05:03 +0000</pubDate>
<category><![CDATA[September 10]]></category>
<category><![CDATA[company news]]></category>
<guid isPermaLink="false">https://www.insurance-advocate.com/?p=13403</guid>
<description><![CDATA[<p>Hagerty (HGTY), an automotive lifestyle brand and a leading specialty insurance provider focused on the global automotive enthusiast market, has announced that it has entered into a definitive agreement to acquire all outstanding shares of Broad Arrow Group, which specializes in the transactional segments of the collector car market. Earlier this year, Hagerty acquired approximately […]</p>
The post <a href="https://www.insurance-advocate.com/2022/09/10/hagerty-acquires-broad-arrow-group/">Hagerty Acquires Broad Arrow Group </a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description>
<content:encoded><![CDATA[<p class="p1">Hagerty (HGTY), an automotive lifestyle brand and a leading specialty insurance provider focused on the global automotive enthusiast market, has announced that it has entered into a definitive agreement to acquire all outstanding shares of Broad Arrow Group, which specializes in the transactional segments of the collector car market.</p>
<p class="p1"> Earlier this year, Hagerty acquired approximately 40 percent equity ownership in Broad Arrow Group (Broad Arrow) as a centerpiece of its automotive Marketplace strategy, designed to provide consumers new trust-based platforms for buying, selling and financing collectible cars.</p>
<p class="p1">Hagerty is now acquiring the remaining 60 percent of Broad Arrow for $64.8 million in an all-stock transaction, with an expected closing date of August 16, 2022.</p>
<p class="p1"> “In addition to being trusted experts in their field, the Broad Arrow Group team shares our ethos of excellence when it comes to customer experience, so we are a natural fit,” said McKeel Hagerty, CEO of Hagerty. “We expect our additional investment in Broad Arrow to enhance our growth and profitability over time, as we intend to rapidly scale this part of our overall business.”</p>
<p class="p1"><span class="s2"> The live and online collector car auction industry, Hagerty noted, is a substantial financial opportunity for the company. In the last 12 months ending June 30, 2022, Hagerty saw its members buy and sell more than 300,000 collectible cars for nearly $12 billion in value. The Broad Arrow acquisition will provide immediate growth opportunities in a compelling adjacency to the Hagerty ecosystem of products and services serving the vast collectible car market and enthusiasts around the world.</span></p>
<p class="p1"> “After working together for a few months, we saw the compelling value proposition for the two organizations to fully integrate,” said Kenneth Ahn, CEO of Broad Arrow Group. “We look forward to serving the collectible car community in the years to come as a part of Hagerty’s comprehensive ecosystem of products and services.”</p>
<p class="p1"> Hagerty Marketplace features an easy-to-use proprietary automotive classified platform that connects buyers and sellers. Marketplace also provides access to Hagerty’s portfolio of automotive-focused offerings, including Hagerty Media and Hagerty Valuation Tools. In April 2022, Hagerty also acquired Speed Digital, an industry leading provider of cloud-based technology solutions for dealers, auction houses, collectors and enthusiasts.</p>
<p class="p1"> Broad Arrow will host its first live auction in Monterey, California, August 18th in conjunction with Hagerty’s Motorlux event (formerly McCall’s Motorworks Revival) located at the Monterey Jet Center. The auction will feature 90 exceptional motorcars within the grounds of this spectacular event, kicking off Monterey Car Week in grand style.</p>
<p class="p1"> Broad Arrow founders and industry veterans Kenneth Ahn, Alain Squindo, Ian Kelleher, Donnie Gould, Barney Ruprecht, Alexander Weaver, David Swig, Karsten Le Blanc, Ramsey Potts, Madeline Baker and Mike Mortorano, along with their colleagues, will become a part of the Hagerty team as part of the deal, and Kenneth Ahn will continue to lead the team as President of Hagerty Marketplace.</p>
<p class="p1"> Based in Traverse City, Michigan, Hagerty’s purpose is to save driving and car culture for future generations and its mission is to build a global business to fund that purpose. Hagerty is an automotive enthusiast brand offering integrated membership products and programs as well as a specialty insurance provider focused on the global automotive enthusiast market. Hagerty is home to Hagerty Drivers Club, DriveShare, Hagerty Valuation Tools, Hagerty Media, Hagerty Drivers Club magazine, MotorsportReg, Hagerty Garage + Social, The Amelia, the Concours d’Elegance of America, the Greenwich Concours d’Elegance, the California Mille, Motorlux, the Hagerty Drivers Foundation and more. For more information on Hagerty, please visit www.hagerty.com, or connect with us on Facebook, Instagram and Twitter.</p>
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<title>Insuring Your Online Business</title>
<link>https://www.insurance-advocate.com/2022/09/10/insuring-your-online-business/</link>
<dc:creator><![CDATA[Guest Author]]></dc:creator>
<pubDate>Sat, 10 Sep 2022 04:04:23 +0000</pubDate>
<category><![CDATA[September 10]]></category>
<category><![CDATA[MSO Inc.]]></category>
<guid isPermaLink="false">https://www.insurance-advocate.com/?p=13401</guid>
<description><![CDATA[<p>By Sue C. Quimby, CPCU, AU, CIC, CPIW, DAE – Vice President/Media Editor Lockdowns of the pandemic resulted in a significant and rapid increase in business being done online. Ibisworld.com estimates that 30% of business is now done over the internet. Selling online has risks and insurance considerations just as a brick and mortar store […]</p>
The post <a href="https://www.insurance-advocate.com/2022/09/10/insuring-your-online-business/">Insuring Your Online Business</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description>
<content:encoded><![CDATA[<p class="p1"><em><strong>By Sue C. Quimby, CPCU, AU, CIC, CPIW, DAE –<span class="Apple-converted-space"> </span>Vice President/Media Editor</strong></em></p>
<p class="p1">Lockdowns of the pandemic resulted in a significant and rapid increase in business being done online. Ibisworld.com estimates that 30% of business is now done over the internet.<span class="Apple-converted-space"> </span>Selling online has<span class="Apple-converted-space"> </span>risks and insurance considerations just as a brick and mortar store does. It is a common misconception that a homeowner’s or renter’s policy will offer protection for money making ventures done out of the home or automobile. This is often not the case. Helping clients understand the proper way to insure their online business is another value-added service of the professional insurance agent.</p>
<p class="p1">According to trade.gov, ecommerce sales rose 19% in 2020. For food and personal care items, the increase was even greater – about 26%.<span class="Apple-converted-space"> </span>Online learning also soared.<span class="Apple-converted-space"> </span>Weforum.org reports that online education course registrations doubled in 2020, increased another 32% in 2021, and reached a peak of 189 million.</p>
<p class="p1">What are the exposures and risks? Most personal lines policies, including automobile, have exclusions for business practices. Coverage for business use of your personal property, vehicles, home computer, and other office equipment is either excluded or very limited.<span class="Apple-converted-space"> </span>If the mailman trips on a loose step while delivering a package to your home, or you cause an accident while traveling for your business, your personal policies may not provide coverage.<span class="Apple-converted-space"> </span>Products or food that cause harm to customers also pose exposure.<span class="Apple-converted-space"> </span>A stolen laptop may contain private customer banking and personal information.<span class="Apple-converted-space"> </span>Posting a picture of someone without permission or infringement of a copyright or trademark also pose potential problems.</p>
<p class="p1">The type of insurance required will vary depending on the type and scope of the business.<span class="Apple-converted-space"> </span>Part time sales of crafts and jewelry may only require an endorsement to the homeowners policy.<span class="Apple-converted-space"> </span>Businesses with customer traffic, or storage of inventory are better off with a businessowners or commercial package policy.<span class="Apple-converted-space"> </span>A business auto policy should be purchased for use of the vehicle in the business, including delivery to or pick up from customers, or driving to a different location to provide services such as dog walking or pet sitting.</p>
<p class="p1">Businessowners policies offer protection for loss or damage to property, liability for claims of bodily injury or property damage, and business income coverage should the operation be shut down by a covered loss such as a fire. In the event of a computer system hack, data breach and cyber coverages can provide funds for the required notification to customers and credit monitoring services – in addition to protecting your reputation.<span class="Apple-converted-space"> </span>Product liability coverage comes into play when a product you sell injures someone or damages their property.<span class="Apple-converted-space"> </span>This policy also includes defense coverage for court cases as well as funds to pay possible settlements or judgments.</p>
<p class="p1">The self-help and counseling industries are rapidly increasing in popularity.<span class="Apple-converted-space"> </span>Anyone who offers advice or professional services needs professional liability insurance.<span class="Apple-converted-space"> </span>These policies typically cover claims of negligence, mistakes in advice given, copyright infringement and personal injury, such as libel or slander.</p>
<p class="p1">In addition to having the proper insurance, it is important to make sure the business is protected legally.<span class="Apple-converted-space"> </span>Part time or low income does not mean the business has no exposure to loss or lawsuits.<span class="Apple-converted-space"> </span>A sole proprietorship may be attractive from a cost and simplicity perspective, but there are drawbacks. As a sole proprietor, all personal assets can be at risk.<span class="Apple-converted-space"> </span>Important things to consider are record keeping and tax implications. Customer and employee information must be protected.<span class="Apple-converted-space"> </span>If the business has a location in a state, typically applicable sales tax must be collected in that state. Insurance is not designed to protect anyone from operating outside of the law.</p>
<p class="p1">Technology has opened to the door to many business opportunities that were unheard of just a few years ago. However, running a business is much more than setting up a webpage or recording a how to video.<span class="Apple-converted-space"> </span>Helping clients navigate the risks and exposures of managing an online business is another sign of the true insurance professional.</p>
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<title>No Bad Faith</title>
<link>https://www.insurance-advocate.com/2022/09/10/no-bad-faith/</link>
<dc:creator><![CDATA[Barry Zalma]]></dc:creator>
<pubDate>Sat, 10 Sep 2022 02:01:23 +0000</pubDate>
<category><![CDATA[2022]]></category>
<category><![CDATA[September 10]]></category>
<category><![CDATA[On My Radar]]></category>
<guid isPermaLink="false">https://www.insurance-advocate.com/?p=13394</guid>
<description><![CDATA[<p>Effective, Professional Arson Investigation Defeats Claims of Bad Faith Plaintiffs Donald Lemon and Candice Lemon (the Lemons) sued State Farm Fire & Casualty Company (State Farm) because it alleged it breached an insurance contract, that State Farm acted in bad faith and that the Lemons are entitled to an award of punitive damages. In Donald Lemon […]</p>
The post <a href="https://www.insurance-advocate.com/2022/09/10/no-bad-faith/">No Bad Faith</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description>
<content:encoded><![CDATA[<h3 class="p1"><span class="s1">Effective, Professional Arson Investigation Defeats Claims of Bad Faith</span></h3>
<p class="p1">Plaintiffs Donald Lemon and Candice Lemon (the Lemons) sued State Farm Fire & Casualty Company (State Farm) because it alleged it breached an insurance contract, that State Farm acted in bad faith and that the Lemons are entitled to an award of punitive damages.</p>
<p class="p1">In Donald Lemon and Candice Lemon v. State Farm Fire & Casualty Company, No. C20-3018-LTS, United States District Court, N.D. Iowa, Central Division (June 28, 2022) the court was asked to rule on motions for partial summary judgment.</p>
<p class="p3"><b>RELEVANT FACTS</b></p>
<p class="p1">This case arose out of an insurance dispute between the Lemons and State Farm regarding a claim the Lemons submitted after a fire destroyed their residence.</p>
<p class="p1">The Lemons had been married for roughly two years at the time of the fire and their relationship was at times turbulent. For example, law enforcement officers had responded to domestic disturbances at their home. On April 26, 2019 – less than one week before the fire – Candice called the Franklin County Sheriff’s Office to advise that Donald had moved out of the residence and she was afraid he would “ransack” the place.</p>
<p class="p1">At the time of the fire, the couple was separated and proceeding to a divorce. While the Lemons deny their finances were dire, they admit they were seasonally behind on bills. Candice had inherited more than $100,000 in 2015, but the Lemons had spent all of that money by May 2019.</p>
<p class="p1">Candice provided inconsistent statements regarding whether Donald was at the house in the hours leading up to the fire. The day after the fire, she told a State Farm representative that Donald had been home roughly one hour before the fire to retrieve some of his fishing equipment. She later denied saying this. Donald denies being at the residence in the hours before the fire.</p>
<p class="p1">After the fire, the Lemons submitted a timely claim to State Farm. At the time of the fire, the home had a value of $76,900. The Lemons submitted a personal property inventory that totaled $173,137.57, although it is not clear that their home could accommodate the number of items claimed.</p>
<p class="p1">State Farm hired Independent Forensic Investigations Corporation (IFIC) to investigate the fire. Lonn Abeltins, an investigator with IFIC, traveled to the home on May 7, 2019, and June 12, 2019, to conduct his investigation. As part of his investigation, Abeltins collected four pieces of debris from the rubble and subsequently sent them to the Armstrong Forensic Laboratory to be tested for accelerants. One of the samples tested positive for gasoline. Stacy Niemann, an investigator with IFIC, conducted multiple interviews with the Lemons, McKinney, Craighton, Einspahr, a neighbor and various firefighters who were at the scene.</p>
<p class="p1">In his final report to State Farm, dated May 17, 2019, Abeltins wrote: “This fire originated in the southeast corner area of the house. There is a door at that location with steps going down into the basement. Heavy fire damage and charring, consistent with the use of an ignitable liquid, was noted in the southeast corner of the house. Gasoline was found in the sample from the doorway area at that location. In my opinion, this fire loss was incendiary in nature.”</p>
<p class="p1">On March 31, 2020, State Farm denied the Lemons’ claim, because:</p>
<p class="p1">1. the fire was intentionally set and does not meet the insurance agreement of an accidental, direct physical loss;</p>
<p class="p1">2. the fire was intentionally caused or procured by an insured;</p>
<p class="p1">3. you violated the Concealment or Fraud condition of the insurance policy by intentionally concealing or misrepresenting material facts and circumstances relating to the claim.</p>
<p class="p3"><b>ANALYSIS</b></p>
<p class="p1">State Farm’s investigation of the facts and circumstances surrounding the fire revealed both Named Insureds had an opportunity to set the fire and both Named Insureds had motive to set the fire, including but not limited to financial motive. The home was overinsured. It was purchased for $40,000, had an assessed value of $86,900 and was insured for $276,100 with an additional $207,075 of coverage on the contents.</p>
<p class="p1">The investigation revealed the Named Insureds misrepresented or concealed material facts and circumstances surrounding the fire including, but not limited to both providing new information during their examination under oath that was more likely than not, fabricated to explain the presence of an ignitable liquid being present in the area of origin. Additionally Candice misrepresented and concealed information regarding their financial condition at the time of the fire by representing they had so much money in savings that the bank assigned them a personal banker. However, bank records show little money in the bank accounts at the time of the fire.</p>
<p class="p1">After filing this action, the Lemons retained an expert, David Gossman, to conduct an investigation into the cause and origin of the fire who concluded that the fire was “accidental” that it “started on the west or northwest side of the property.”</p>
<p class="p1">Count II – Bad Faith</p>
<p class="p1">Under Iowa law, Count II is a first-party bad faith claim, as it involves an insured’s attempt to recover for his or her own losses allegedly covered under the insurance policy. To prevail on such a claim, the plaintiff must show</p>
<p class="p1">· that the insurer had no reasonable basis for denying benefits under the policy and,</p>
<p class="p1">· the insurer knew, or had reason to know, that its denial was without basis.</p>
<p class="p1">The first element is objective and the second element is subjective.</p>
<p class="p1">With regard to the first element, a reasonable basis exists for denial of policy benefits if the insured’s claim is fairly debatable either on a matter of fact or law. State Farm argued it had a reasonable basis to deny the Lemons’ claims.</p>
<p class="p1">They admitted the amount of personal property found in the fire debris does not come close to approaching the quantity of personal property the Lemons claim was in the home on the day of the fire, even accounting for the fact that some personal property may have been completely reduced to ash.</p>
<p class="p1">A defendant can defeat a bad-faith claim by showing that it had only one reasonable basis for denying coverage – not by proving that all of its coverage positions were reasonable. In short, when it decided to deny the Lemons’ claim, State Farm had before it a great deal of evidence suggesting that the fire was incendiary in nature and that either or both of the Lemons had motive to start an intentional fire.</p>
<p class="p1">Courts and juries do not weigh the conflicting evidence that was before the insurer; they decide whether evidence existed to justify denial of the claim. State Farm met its burden of showing, as a matter of law, that reasonable minds could conclude that the Lemons were not entitled to coverage.</p>
<p class="p1">As such, the Lemons’ bad faith claim failed with regard to the first element – whether their insurance claim was “fairly debatable.” State Farm was entitled to summary judgment as to Count II of the Lemons’ state court petition.</p>
<p class="p1">Under Iowa law, a mere breach of contract, without an accompanying tort, cannot sustain a claim for punitive damages. State Farm is therefore entitled to summary judgment on Count III, which asserts a claim for punitive damages.</p>
<p class="p1">Because States Farm is entitled to summary judgment on the bad faith s claims the only substantive claim remaining for trial is Count I, the Lemons’ claim for breach of contract.</p>
<p class="p3"><b>CONCLUSION</b></p>
<p class="p1">For the following reasons:</p>
<p class="p1">Plaintiffs’ motion for partial summary judgment is denied.</p>
<p class="p1">Defendant’s motion for partial summary judgment is granted. As a result, Counts II and III were dismissed.</p>
<p class="p1"><span class="s2">The case will proceed to trial on Count I.</span></p>
<p class="p3"><b>ZALMA OPINION</b></p>
<p class="p1">The evidence available to State Farm established beyond doubt that the Lemon’s attempted to defraud State Farm by causing a fire at their house, made claims for personal property in excess of the potential for the property to be in the house at the time of the fire, that they had overinsured their property, and that they had a financial motive to set the fire. No reasonable jury would – when presented with such facts – believe that the fire was accidental and that the claim presented was fair and reasonable.<span class="Apple-converted-space"> </span></p>
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<title>Small Fraud Defeats Claim</title>
<link>https://www.insurance-advocate.com/2022/09/10/small-fraud-defeats-claim/</link>
<dc:creator><![CDATA[Barry Zalma]]></dc:creator>
<pubDate>Sat, 10 Sep 2022 01:00:47 +0000</pubDate>
<category><![CDATA[September 10]]></category>
<category><![CDATA[On My Radar]]></category>
<guid isPermaLink="false">https://www.insurance-advocate.com/?p=13389</guid>
<description><![CDATA[<p>Withdrawal of fraudulent portion of claim does not eliminate fraud Star Casualty Insurance Company appealed a summary final judgment and attorney fee award entered in favor of Gables Insurance Recovery, Inc., as assignee of Star Casualty’s insured, Ana Maria Correa. Star Casualty alleges that the trial court erred by granting summary judgment due to genuine […]</p>
The post <a href="https://www.insurance-advocate.com/2022/09/10/small-fraud-defeats-claim/">Small Fraud Defeats Claim</a> first appeared on <a href="https://www.insurance-advocate.com">Insurance Advocate</a>.]]></description>
<content:encoded><![CDATA[<h3 class="p1"><span class="s1">Withdrawal of fraudulent portion of claim does not eliminate fraud</span></h3>
<p class="p1">Star Casualty Insurance Company appealed a summary final judgment and attorney fee award entered in favor of Gables Insurance Recovery, Inc., as assignee of Star Casualty’s insured, Ana Maria Correa. Star Casualty alleges that the trial court erred by granting summary judgment due to genuine issues of material fact concerning whether Correa’s medical bills for diagnostic imaging procedures were medically necessary and related to the underlying accident for purposes of section 627.736, Florida Statutes. Additionally, Star Casualty alleged that the trial court reversibly erred by striking four affirmative defenses from its amended answer that could have exempted it from liability for the claim.</p>
<p class="p1">In Star Casualty Insurance Company v. Gables Insurance Recovery, Inc., a/a/o Ana Maria Correa, Nos. 3D21-0033, 3D21-0377, Florida Court of Appeals, Third District (July 20, 2022) the Court of Appeal was faced with an attempt to avoid the consequences of being caught on a partial fraud only to have the plaintiff withdraw the claim and contend the rest of the claim was honest.</p>
<p class="p3"><b>FACTS</b></p>
<p class="p1">Correa was involved in a vehicle accident on January 19, 2009 and sustained injuries. Subsequently, Correa received diagnostic imaging procedures costing a total of $3,375.00, and Gables, as her assignee, submitted a claim to the insurer for reimbursement of eighty percent of the reasonable medical expenses pursuant to section 627.736(1)(a). After the insurer paid only $400.71 and denied the remainder of the claim, Gables sued to recover the remaining costs.</p>
<p class="p1">Star Casualty proffered an affidavit by Edward A. Dauer, M.D., opining that the charges were not medically necessary or related to the accident. This affidavit also noted that three of the imaging procedures performed on Correa appeared to have been improperly upcoded or unbundled with other procedures.</p>
<p class="p1">Based on Dr. Dauer’s affidavit, Star Casualty amended its answer to add affirmative defenses asserting that it was exempt from paying the entire because the three charges were fraudulent, upcoded, or unbundled. Prior to the summary judgment hearing, Gables voluntarily withdrew its claims for reimbursement of the three charges on which Star Casualty based its affirmative defenses. Gables then moved to strike the defenses from Star Casualty’s answer, alleging that the withdrawal of the claims for those three charges made the corresponding defenses irrelevant and moot.</p>
<p class="p1">The trial court granted partial summary judgment on the relatedness and necessity issues and granted Gables’ motion to strike the affirmative defenses based on plaintiff’s withdrawal of the part of the claim found to be fraudulent.</p>
<p class="p3"><b>ANALYSIS</b></p>
<p class="p1">The Court of Appeal noted that the trial court erred by finding that Dr. Dauer’s affidavit did not create a genuine issue of material fact. An issue of fact is “genuine” for summary judgment purposes when a reasonable jury could potentially return a verdict in favor of the non-moving party. A factual dispute is “material” when it may affect the outcome of the case under the applicable substantive law.</p>
<p class="p1">The sole basis for Star Casualty’s assertions of a factual dispute as to relatedness and necessity comes from Dr. Dauer’s affidavit. In the affidavit, Dr. Dauer opined that the images conducted were “not medically necessary and not related to the accident of 1/19/2009” because “there were no objective findings and documentation to warrant the ordering of the x-rays in this case.” Because these findings created a genuine issue of material fact as to relatedness and necessity, the Court of Appeal concluded that the summary judgment must be reversed and remanded.</p>
<p class="p1">On remand, the trial court’s order striking Star Casualty’s affirmative defenses was reversed, as the defenses were not wholly irrelevant to the claims in the operative complaint. An affirmative defense may not be stricken merely because it appears to a judge that the defendant may be unable to produce evidence at trial to sustain such a defense.</p>
<p class="p1">The trial court’s reasoning for striking the defenses was based solely on the fact that the claims for reimbursement of the charges relating to those defenses had been voluntarily withdrawn. Conversely, Star Casualty claims that because the defenses asserted fraud, upcoding, and unbundling, such defenses pertained to the remaining charges.</p>
<p class="p1">Any insurance fraud voids all coverage. arising from the claim related to such fraud under the personal injury protection coverage of the insured person who committed the fraud, irrespective of whether a portion of the insured person’s claim may be legitimate.</p>
<p class="p1">An insurer is not required to pay a claim or charges that are upcoded, or that is unbundled when such treatment or services should be bundled and Florida statutes relieve both the insurer and the insured from paying the claims of any person who knowingly submits a false or misleading statement relating to the claim or charges.</p>
<p class="p1">Evidence of insurance fraud necessitated summary judgment in favor of an insurer to the entire PIP claim comprising two separate and distinct claims for medical expenses and lost wages, since allowing for payment of one portion of a claim would nonsensically allow an insured to engage in a cost-benefit analysis with respect to the contemplation of such fraud.</p>
<p class="p3"><b>ZALMA OPINION</b></p>
<p class="p1">A party seeking insurance benefits may not commit a little fraud any more than he or she can be a little dead. When caught in fraud, as evidenced by an expert, the fraud attempt cannot be ignored by simply deleting it from the claim since the insurer, by proving some fraud, will convince the trier of fact that the entire claim was fraudulent or that the attempted fraud voided the right to the benefits of the policy. Attempted fraud whether large of small; whether related to one part of a claim or another.</p>
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