Justia Insurance Law Opinion Summaries

At age 56, Newman purchased a long-term-care insurance plan MetLife, opting for one of MetLife’s non-standard options for paying her insurance premiums, “Reduced-Pay-at 65.” From the outset, Newman paid the elevated premium associated with her Reduced-Pay option. When she reached age 65, her premium was cut in half. When Newman was 67 years old, she was startled to discover that MetLife that year more than doubled her insurance premium. The Seventh Circuit reversed the dismissal of Newman’s proposed class action, alleging breach of contract, deceptive and unfair business practices, and common-law fraud. The allegations raised in the complaint were enough to entitle Newman to prevail on the liability phase of her contract claim and to go forward on her remaining claims. The policy language is at least ambiguous, because it can be read reasonably to fix a person’s premium, if she had opted for the Reduced-Pay option. Illinois construes ambiguous contracts against the insurer. Newman’s complaint also alleged facts that plausibly show that MetLife’s policy was both deceptive and unfair under the Illinois Consumer Fraud Act and adequately alleged fraudulent concealment and reasonable reliance. View "Newman v. Metropolitan Life Insurance Co" on Justia Law

At age 56, Newman purchased a long-term-care insurance plan MetLife, opting for one of MetLife’s non-standard options for paying her insurance premiums, “Reduced-Pay-at 65.” From the outset, Newman paid the elevated premium associated with her Reduced-Pay option. When she reached age 65, her premium was cut in half. When Newman was 67 years old, she was startled to discover that MetLife that year more than doubled her insurance premium. The Seventh Circuit reversed the dismissal of Newman’s proposed class action, alleging breach of contract, deceptive and unfair business practices, and common-law fraud. The allegations raised in the complaint were enough to entitle Newman to prevail on the liability phase of her contract claim and to go forward on her remaining claims. The policy language is at least ambiguous, because it can be read reasonably to fix a person’s premium, if she had opted for the Reduced-Pay option. Illinois construes ambiguous contracts against the insurer. Newman’s complaint also alleged facts that plausibly show that MetLife’s policy was both deceptive and unfair under the Illinois Consumer Fraud Act and adequately alleged fraudulent concealment and reasonable reliance. View "Newman v. Metropolitan Life Insurance Co" on Justia Law

The United States District Court for the Western District of Washington certified a question of Washington law to the Washington Supreme Court. The underlying case involved an insurance coverage dispute between two authorized foreign insurers, Ohio Security Insurance Company and AXIS Insurance Company. Ohio Security tried to serve AXIS at its office in Chicago, Illinois, rather than through the Washington State Office of the Insurance Commissioner. The United States District Court asked whether Washington law established service through the Washington State Insurance Commissioner (Insurance Commissioner) as the exclusive means of service for authorized foreign insurers in Washington. The answer to the certified question was yes: RCW 4.28.080(7)(a) provided the exclusive means of service on authorized foreign insurers. View "Ohio Sec. Ins. Co. v. AXIS Ins. Co." on Justia Law

The United States District Court for the Western District of Washington certified a question of Washington law to the Washington Supreme Court. The underlying case involved an insurance coverage dispute between two authorized foreign insurers, Ohio Security Insurance Company and AXIS Insurance Company. Ohio Security tried to serve AXIS at its office in Chicago, Illinois, rather than through the Washington State Office of the Insurance Commissioner. The United States District Court asked whether Washington law established service through the Washington State Insurance Commissioner (Insurance Commissioner) as the exclusive means of service for authorized foreign insurers in Washington. The answer to the certified question was yes: RCW 4.28.080(7)(a) provided the exclusive means of service on authorized foreign insurers. View "Ohio Sec. Ins. Co. v. AXIS Ins. Co." on Justia Law

The Supreme Judicial Court vacated the judgment of the superior court entering summary judgment in favor of Curtis Frye, Daryl Frye, and the Estate of Carroll Frye (collectively, the Estate) on the Estate’s action seeking enforcement of a property insurance contract for the loss of a dwelling by fire. The Court held that the trial court erred by interpreting Carroll’s insurance contract with MMG Insurance Company as providing coverage to the Estate because when the fire occurred, several weeks after Carroll’s death, none of the parties was both insured by MMG and in possession of an insurable interest. Therefore, Me. Rev. Stat. 24-A, 2406 preluded enforcement of the policy as to the dwelling as a matter of law. The Court remanded the case for entry of a summary judgment in favor of MMG. View "Estate of Carroll G. Frye v. MMG Insurance Co." on Justia Law

The Supreme Judicial Court vacated the judgment of the superior court entering summary judgment in favor of Curtis Frye, Daryl Frye, and the Estate of Carroll Frye (collectively, the Estate) on the Estate’s action seeking enforcement of a property insurance contract for the loss of a dwelling by fire. The Court held that the trial court erred by interpreting Carroll’s insurance contract with MMG Insurance Company as providing coverage to the Estate because when the fire occurred, several weeks after Carroll’s death, none of the parties was both insured by MMG and in possession of an insurable interest. Therefore, Me. Rev. Stat. 24-A, 2406 preluded enforcement of the policy as to the dwelling as a matter of law. The Court remanded the case for entry of a summary judgment in favor of MMG. View "Estate of Carroll G. Frye v. MMG Insurance Co." on Justia Law

State Farm issued two policies of motor vehicle insurance to plaintiff, covering a Pontiac Grand Am and a Pontiac GTO. Each policy provided liability, uninsured motorist, and underinsured motorist coverage in the amounts of $100,000 per person and $300,000 per accident. Each contained a “Driver Exclusion Endorsement” that excluded Evans. Plaintiff was a passenger in a Hyundai automobile that was owned and operated by Evans when Evans’s vehicle was involved in an accident with another automobile. Evans was at fault. Plaintiff was injured and had more than $30,000 in medical bills. Evans’s insurer paid plaintiff $20,000, the policy limit. State Farm denied plaintiff's claim for underinsured motorist coverage. The circuit court granted plaintiff summary judgment. The appellate court and the Illinois Supreme Court affirmed, citing the Illinois Safety and Family Financial Responsibility Law (625 ILCS 5/7-601(a)), under which no one may operate a motor vehicle or allow a vehicle to be operated without obtaining sufficient insurance, and the Insurance Code (215 ILCS 5/143a, 143a-2), requiring automobile liability insurance policies to include uninsured and underinsured motorist coverage. The court reasoned that the named driver exclusion violated Illinois mandatory insurance requirements and public policy where the exclusion barred coverage for the named insured. View "Thounsavath v. State Farm Mutual Automobile Insurance Co." on Justia Law

State Farm issued two policies of motor vehicle insurance to plaintiff, covering a Pontiac Grand Am and a Pontiac GTO. Each policy provided liability, uninsured motorist, and underinsured motorist coverage in the amounts of $100,000 per person and $300,000 per accident. Each contained a “Driver Exclusion Endorsement” that excluded Evans. Plaintiff was a passenger in a Hyundai automobile that was owned and operated by Evans when Evans’s vehicle was involved in an accident with another automobile. Evans was at fault. Plaintiff was injured and had more than $30,000 in medical bills. Evans’s insurer paid plaintiff $20,000, the policy limit. State Farm denied plaintiff's claim for underinsured motorist coverage. The circuit court granted plaintiff summary judgment. The appellate court and the Illinois Supreme Court affirmed, citing the Illinois Safety and Family Financial Responsibility Law (625 ILCS 5/7-601(a)), under which no one may operate a motor vehicle or allow a vehicle to be operated without obtaining sufficient insurance, and the Insurance Code (215 ILCS 5/143a, 143a-2), requiring automobile liability insurance policies to include uninsured and underinsured motorist coverage. The court reasoned that the named driver exclusion violated Illinois mandatory insurance requirements and public policy where the exclusion barred coverage for the named insured. View "Thounsavath v. State Farm Mutual Automobile Insurance Co." on Justia Law

Hyland was a passenger in a car owned by Perkins and driven by Smith, age 16. Smith smashed the car into two parked vehicles, seriously injuring Hyland. Smith was convicted of aggravated reckless driving. Neither Smith nor her parents had auto insurance. Perkins had insurance with Liberty Mutual, covering her family, including her daughter Risby and anyone driving the car with the family’s permission. Smith told Liberty Mutual that Risby gave her the keys during a party; Risby denied doing that and said that she gave the keys to “Rob,” who was never identified. The police reported that Smith told many incompatible stories. Liberty Mutual would not provide a defense or indemnity. Smith defaulted. A state court entered a $4.6 million judgment. Smith assigned to Hyland whatever claim she had against Liberty Mutual. The district court concluded that Liberty Mutual’s failure either to defend or to seek a declaratory judgment of non-coverage violated Illinois law, making it liable for the entire judgment, although the policy provided only $25,000 per person in coverage. The Sixth Circuit vacated and remanded for the entry of a judgment for $25,000 plus interest; damages for a breach of the duty to defend are measured by the consequences proximately caused by the breach. The maximum loss caused by this failure to defend is $25,000 View "Hyland v. Liberty Mutual Fire Insurance Co." on Justia Law

Hyland was a passenger in a car owned by Perkins and driven by Smith, age 16. Smith smashed the car into two parked vehicles, seriously injuring Hyland. Smith was convicted of aggravated reckless driving. Neither Smith nor her parents had auto insurance. Perkins had insurance with Liberty Mutual, covering her family, including her daughter Risby and anyone driving the car with the family’s permission. Smith told Liberty Mutual that Risby gave her the keys during a party; Risby denied doing that and said that she gave the keys to “Rob,” who was never identified. The police reported that Smith told many incompatible stories. Liberty Mutual would not provide a defense or indemnity. Smith defaulted. A state court entered a $4.6 million judgment. Smith assigned to Hyland whatever claim she had against Liberty Mutual. The district court concluded that Liberty Mutual’s failure either to defend or to seek a declaratory judgment of non-coverage violated Illinois law, making it liable for the entire judgment, although the policy provided only $25,000 per person in coverage. The Sixth Circuit vacated and remanded for the entry of a judgment for $25,000 plus interest; damages for a breach of the duty to defend are measured by the consequences proximately caused by the breach. The maximum loss caused by this failure to defend is $25,000 View "Hyland v. Liberty Mutual Fire Insurance Co." on Justia Law