Tacky “Sale”: When Insurance Is Worthless, Get Car Accident Advice

I. Insure or Regret

Listing the benefits of insurance is usually easier to do before an accident happens. As an experienced car accident lawyer will tell you, trying to get an insurance company to cooperate is low on the list of an injured auto driver's immediate concerns. Accident victims often have their hands full with getting better, keeping their work, or caring for family. Taking this worry and weight from the shoulders of car accident victims or family is one of the best reasons to talk to a car accident lawyer after any automobile accident. Even when an insurance company appears to be cooperating favorably, there is always a possibility that any offer may be predicated upon some other, less straightforward calculation. In one significant case from North Carolina, the auto insurance company was even willing to admit that the premiums paid by an injured auto driver were essentially worthless.

II. When Premiums Paid Are Valueless: Is It Fraud?

There are horror stories, known all too well by experienced car accident lawyers, where insurance companies simply refuse to pay what appears to be a perfectly valid claim. This particular case raised a slight twist on this important issue. What happens when a court agrees and relieves the insurance company from any liability from coverage? This Catch-22 requires the expertise of an experienced and knowledgeable car accident lawyer. The successful argument in this case was not (ultimately) whether coverage was valid (it wasn’t), but if the insurance company had committed substantial fraud.  The car accident lawyer asked why the insurer was taking premiums for something that did not have any real value?

III.   An Insurer Offer: Get Legal Advice First

Mr. Davidson’s vehicle was struck by an oncoming driver. Mr. Davidson’s medical injuries multiplied, and costs soared, to well over $100,000. Mr. Davidson's insurance company, however, attempted to avoid making any payments under his under-insured policy.

Mr. Davidson's car accident first lawyer stressed one basic fact: the insurance agent, Knauf, and USFG (the home or issuing underwriter) at no time denied that Davidson had indeed paid for, and expected to be covered by, under-insurance coverage.

A company could argue the car accident lawyer conceded, that they felt the amount Davidson paid ($1) hardly economically justified extending an extra $75,000 in liability to USFG. In earlier court skirmishes on this specific issue of coverage, Davidson’s car accident lawyer had lost. The trial court had agreed with the insurers, and dismissed an earlier lawsuit by the car accident lawyer. In this follow-up case, however, the car accident lawyer stressed the possible fraud. Fraud, however, was a much harder issue for the Appeals Court to simply dismiss. After all, the car accident lawyer pointed out, at no time had Davidson been told that his $1 was insufficient or that he was not covered.

Davidson described to the car accident lawyer how he had been a client with the company for over 10 years. As North Carolina had begun requiring underinsured coverage, Davidson thought he was doing the right thing by adding this insurance. Davidson said “the agent at Knauf insurance represented to me that I was in fact purchasing under-insurance coverage. Is my understanding at the time based upon the discussions the agent that under insurance coverage provided coverage for damages in excess of at-fault drivers insurance coverage up to the amount I purchased, provided my…injuries were in excess of the at fault driver's coverage.”

The car accident lawyer introduced the premiums, the receipts, and the declarations of coverage. Davidson did not want a refund of his $1. He wanted what he had been promised.

IV.  Crossing the Line Between Fraud and Sales?

To prove fraud in North Carolina under these facts, the car accident lawyer had to prove five things: 1. there had been a false representation, or material fact had been concealed; 2. Any statements or actions were reasonably calculated to deceive Davidson; 3. There was some intent to deceive , and that, 4. Did in fact deceive (followed by) and that: 5. the preceding factors resulted in some damage to Davidson.

The harm was obvious, the car accident lawyer noted. The issue of fraudulent “intention” was what was at the conclusion of the argument now, and the court clearly wanted to consider it.

The car accident lawyer was able to point to several cases in North Carolina where there was a valid fraud claim against insurers. To bolster the fraud claim, the car accident lawyer was able to show that there were definite, specific representations in this case that were “materially” false. The car accident lawyer was able to point to only one major, similar case in the entire United States. The State of Illinois had pioneered this question of possible fraud and insurance issuance. That court had come down unilaterally in support of the idea that this was a fraudulent transaction. Though only one case, and from another jurisdiction, the argument by the car accident lawyer was compelling. The court chose to adopt the “Illinois” rule.

The court eventually agreed with the car accident lawyer about the insurer’s possibly false statements. In many ways, the judges obviously viewed it as a matter of “common sense.”

They said “assuming…that the coverage has no value…we find that the insurance company defendants have made a false representation of the value of the coverage by USFG without disclosing that it had no value.”

The car accident lawyer stressed that the premium had not been paid specifically for underinsured coverage. So, what was the payment for? This meant that the insurance company had been put in the untenable position of arguing that they were only attempting to comply with the General Assembly mandate to provide under-insurance coverage. The court agreed with the car accident lawyer that this benefit with no burden was not the standard by which a fraud claim could be simply dismissed. It would instead be up to a jury to decide whether or not someone could prove a substantial case of fraud. The case was reinstated and ordered to trial.

Conclusions:   

We started our discussion here about a possibly “worthless” insurance policy. As it turns out, the key to getting real value after a serious car accident came from talking with an experienced car accident attorney.

So, if you, a family member or a loved one have been hurt in a vehicle accident—or have questions about insurance claims or need help related to a motor vehicle insurance policy, or involving related claims or your legal rights or hearings, please contact us.  You will speak with an auto accident attorney who can best answer your questions.  There is never a fee for this initial consultation.