I don’t know what point you’re making with this. What does any of this discussion have to do with bad faith claims or losses not covered under contract?
You were responding directly to this from Procrustes.
I’m pointing out that some regulators do in fact make that distinction in contemplating profits/setting of rates.
Perhaps there’s some confusion as to what Procrustes meant. I assumed s/he was saying extra contractual-payments. Perhaps s/he meant extra-contractual payments.
But regardless of what Procrustes meant, my point is unchanged. What we’ve been disussing here is the notion that courts will find that insurers are legally responsible under the terms of their contracts for STDs caught in cars (and presumably, other harm with a similar connection to the vehicle). If that happens, then the insurance regulators will not exclude those claims from the calculation of rates.
Do you disagree with that? If so, why?
I agree with that. My point was that this particular case, with presumable huge extra contractual payments, would not effect rates.
In any event, this story has been poorly covered by the media. Let me summarize:
Geico denied coverage and refused to defend the claim. They also filed a dec action in federal court, attempting to get a judge to rule that they did the right thing. That is case is still pending. In the meantime, their insured and the plaintiff agreed to a binding arbitration. The arbitrator awarded $5.2 million to the plaintiff. The Plaintiff filed a motion to reduce the award to judgment. Geico got wind of that motion and filed a motion to intervene and re-litigate the merits. The trial court said it was too late for Geico to argue the merits and entered judgment against the defendant. Geico filed an appeal and was again told it was too late for them to join in to re-litigate the merits. There is no judgment against Geico. They were not ordered to pay a dime. They might very well win their dec action and never be ordered to pay.
The post you originally responded to (Riemann, post #21) was explicitly not about this particular case, but about the idea that this case would be a precedent for other such awards.
Maybe we were misunderstanding each other. Here’s what I said. I wasn’t talking about covering SDTs in cars under basic car insurance (which I agree could theoretically increase payouts and rates) but I was talking about insurance companies having to pay more than their policy limits because they screw up. (I don’t know how much insurance the defendant had with GEICO, but it almost certainly wasn’t $5 million.)
I don’t believe extra contractual liability can be used as a basis for raising rates generally
Anyway, it sounds like we’re all on the same page now.
Good summary, this is also what I gathered (I found a link to the court decisions here).
So if I understand it correctly, Geico probably thought like most of us that the claim was ludicrous and didn’t bother to intervene in the case. Maybe they got scared when the claimant was awarded such a high amount, so then they tried to intervene at a later stage, just in case it would turn out that the policy covered this case. I can understand that the courts denied that belated attempt.
But as you say, Geico doesn’t have to pay anything yet, as far as we know. The real question is whether the policy covers this case, and no court has decided anything about that, apparently. So a lot of baseless news reports.
Here’s the part I don’t understand.
If the case before the arbitrator did not involve Geico, then not only was Geico not a party to that case, but the facts at issue were also not necessarily relevant to them. If A sues B for giving her an STD in a car, then what’s relevant is whether B is liable to A. Those facts are not necessarily anything that has any connection to whether the auto insurer is liable. The arbitrator would be considering whether B, as an individual, did a harm to A, for which B is liable under the law.
So even if Geico decided for strategic legal reasons that they wanted to mix in, and even if they were legally allowed to do this, how could they do this? What would they have to say about what B did to A? The only thing they can talk about is the car and the insurance policy, but this would presumably not even have been a factor in the arbitrator’s award, if indeed that was purely on the A-versus-B issue.
I made the same point earlier.
If B had umbrella liability insurance that would certainly cover any liability, it seems natural (both legally and ethically) for the insurer to be involved from the outset in the arbitration.
But here we have only an incredibly remote possibility that the car insurance covers this. So it really seems inappropriate for Geico as a third party with deep pockets but negligible interest in the A vs B case to come in and pay for B’s defense. I don’t know if they could legally do so, but it certainly seems ethically dubious.
If seems to me more appropriate that if B loses to A, and subsequently wants to come after Geico on the remote chance that a court rules they must cover his liability, he’s free to do so. But that should be conducted separately, at B’s own expense.
But then, A apparently agreed at arbitration that she would only ultimately pursue the insurer for payment, and not go after B’s personal assets. What’s the purpose in this, if there is virtually no chance the a court will rule that Geico must pay? Presumably B has no substantial assets. But this then makes the ethics of the arbitration situation even murkier. Under such an agreement, B has no incentive to defend himself at all.
Umbrella policies don’t usually cover liability not covered in the underlying policies…it’s there to provide higher limits across multiple coverages.
No, that’s not correct. An umbrella policy usually has a requirement for certain minimum primary liability coverage in your car & home policies. But that does not mean that the liability coverage is limited to what’s covered in those policies.
I don’t know that an umbrella policy would necessarily cover a $5 million award for giving someone an STD, that would depend on the specifics of your policy. But it’s more likely to than your car insurance!
Umbrella Insurance - How it Works & What it Covers | GEICO
Umbrella insurance provides coverage beyond the limits of your other insurance policies, or for claims that may not be covered by liability policies. Umbrella insurance generally provides liability coverage for:
- Injuries
- Damage to property
- Certain lawsuits
- Personal liability situations
But wouldn’t personal liability ordinarily be covered under a homeowner’s policy - if my dog bites someone not on my property or my kid accidentally throws a ball through the neighbor’s window? I thought that coverage was sort of typical - although I suppose it could be just my state that includes personal liability coverage in homeowners/renter/co-op/condo insurance.
Yes. So does auto. Umbrella coverage both increases the $ limit, and broadens the coverage.
I wasn’t clear - my auto insurance covers liability that somehow involves my car ( let’s leave how involved my car has to be out of it for now). But my homeowner’s insurance covers liability that has nothing to do with my property - the kid breaking the neighbor’s window or my dog biting someone at the park. And even umbrella insurance doesn’t provide coverage if my criminal or intentional act causes damages to someone else. So I’m kind of wondering what the umbrella policy would cover that wouldn’t be covered by either an auto policy or homeowners/renters/some other personal liability policy. And you pretty much have to have homeowner’s/renter’s/etc to get an umbrella policy.
From your GEICO cite-
GEICO requires a minimum bodily injury limit of $300,000/$300,000 and a property damage limit of $100,000 or $250,000/$500,000 and a property damage limit of $100,000 on your auto policy to qualify for an umbrella policy. Homeowners/Renters Personal Liability coverage of $300,000 is also required. Contact us to receive a quote for increased auto insurance limits.
Seems they won’t sell you an umbrella policy without underlying personal ( not auto) liability coverage.
Yes, exactly as I already said:
I don’t know exactly what the areas are in which it broadens coverage, but there are some. It is not just an increase in $ limits.
Maybe giving someone an STD in the back seat of a parked car is covered by your homeowners’ liability, who knows.
Some may, and some (like my umbrella) only raise the limits and do not broaden coverage. As always, you have to read the policy. As far as I know, there is no umbrella policy in play in the case we’ve been discussing.
Sure, and I was clearly stating a counterfactual hypothetical - that with umbrella liability covering the bulk of the exposure it would be appropriate for the insurer to get involved from the outset with defending at arbitration. Perhaps even with homeowners’ liability, if the general personal liability coverage that comes with that would extend to this scenario. But not so much with car insurance.