Articles Posted in Insurance Law

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car-insurance-policy.jpgOne thing is certain, “full coverage” is not what most people think it is.

The only types of insurance coverage required by law of every owner of a motor vehicle registered in Florida are Personal Injury Protection (“PIP”) and Property Damage – Liability. Period.

There are numerous other types of coverages available under a standard Florida motor vehicle insurance policy, but none of them are mandatory like PIP and PD – Liability. Each of the coverages cost extra money, meaning that an additional premium will be charged for each. Consequently, many people forego the non-mandatory coverages.

PIP (Florida Statute 627.736) covers a combination of 80% of allowable medical charges and 60% of lost wages up to the standard policy limit of $10,000 subject to deductibles (usually $500, $1000, and $2,000), while Property Damage Liability covers vehicle damage caused by the at-fault insured. (The minimum mandatory PD – Liability policy limit is $10,000.) Neither PIP nor PD – Liability provides compensation to anyone for pain and suffering.

Only Bodily Injury – Liability (“BI”) and Uninsured/Underinsured Motorist (“UM/UIM”) (Florida Statute 627.727) compensate for pain and suffering. Neither coverage is mandatory. (Many other states make BI mandatory. For years, consumer advocates have tried to make BI mandatory in Florida, but the insurance industry has fought off the efforts. The members of our law firm believe that if any coverage should be mandatory, it should be BI.)
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legal document.jpgTypically, Florida automobile insurance policies recognize two classes of insureds. Mullis v. State Farm Mut. Auto. Ins. Co., 252 So. 2d 229, 238. (Fla. 1971). Class I insureds are named insureds, usually the owner of the vehicle, and their resident relatives. Travelers Ins. Co. v. Warren, 678 So. 2d 324, 326 n.2 (Fla. 1996) (citing Mullis, 252 So. 2d at 238; Quirk v. Anthony, 563 So. 2d 710, 713 n.2 (Fla. 2d DCA 1990), approved, 583 So. 2d 1026 (Fla. 1991); Florida Statute 627.732(4). Class II insureds are lawful occupants of an insured vehicle who are not named insureds or resident relatives of named insureds; essentially, they are “third-party beneficiaries to the named insureds’ policy. Id. Class II insureds “are insured only because they are drivers or passengers in an insured vehicle with the consent of the named insured.” Florida Farm Bureau Cas. Co. v. Hurtado, 587 So. 2d 1314, 1317 (Fla. 1991) (citations omitted).
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crushed vehicle.jpgOwners of motor vehicles registered and operated in Florida are vicariously liable for damages caused by their vehicles while operated by a consensual driver. Car rental companies are exempt from this rule.

This form of strict liability is derived from Florida’s Dangerous Instrumentality Doctrine, adopted in Southern Cotton Oil Co. v. Anderson, 80 Fla. 441, 86 So. 629 (1920), which is based on the proposition that motor vehicles operated on public highways are dangerous instruments and the owners who entrust them to others should be liable for injury to others caused by negligence of the persons to whom the instrumentalities are entrusted.

Until 2005, when the Bush Administration and the Republican Congress carved out an exemption, through the Graves Amendment (49 U.S.C. Sec. 30106), the doctrine applied to the car rental industry. To this writer, the exemption is dangerous because it removes nearly every motivation the industry might have to know who is driving its vehicles. (See this blog for an example of what I mean: Profits Over People – The Willful Ignorance of Florida Car Rental Companies.)
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Florida Statutes section 627.733, entitled Required Security, requires all motor vehicle owners to maintain “no-fault” automobile insurance covering, among other items, 80% of the insured’s own medical expenses. See §§ 627.733(1), (3)(a), 627.736(1)(a). The typical Florida PIP policy has a $10,000 coverage limit with deductibles of up to $2,000.

From a fair reading of the statutes it seems that every vehicle owner who procures the mandatory no-fault coverage is exempted from tort liability for 80% of medical expenses and 60% of lost wages up to the PIP policy limit (typically $10,000).

However, what happens when the fault-free party fails to maintain the required PIP coverage? In other words, the non-negligent party is in violation of the law by failing to maintain PIP.

Until the Florida Supreme Court rules on the issue, the answer depends on where in Florida the accident happens.

Florida’s civil court system is divided into county courts, circuit courts, district courts of appeal, and the Florida Supreme Court. The county and circuit courts are the only trial courts within the system, while the DCAs and the Florida Supreme Court are dedicated appellate courts.
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Florida Statute 627.409 (2010) allows an insurance company to rescind an insurance policy on the grounds of misrepresentation if it can prove:

a) The misrepresentation, omission, concealment, or statement is fraudulent or is material either to the acceptance of the risk or to the hazard assumed by the insurer.

(b) If the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith would not have issued the policy or contract, would not have issued it at the same premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss.

However, in Casamassina v. US Life Ins. Co., 958 So. 2d 1093 (4th DCA 2007), the insurance carrier was prevented from using the statute to rescind the policy by language in its own insurance application.

United States Life Insurance Company issued a $500,000 life insurance policy to John Casamassina on November 6, 1997. Less than two weeks later, Casamassina was diagnosed with a brain tumor; he died on December 4, 1997. After U.S. Life denied the policy claim, the trust beneficiary of the policy and the widow filed suit.
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legal document.jpgJob one of lawyers who represent individuals who have suffered personal injuries and/or property damage losses is to maximize the client’s recovery. The conventional thinking is that the recovery in every case is limited by the measure of actual damages, in other words, the recovery cannot exceed the loss.

Surprisingly, this is a rule that can be broken … with a proviso.

In Despointes v. Florida Power Corporation, 2 So.3d 360 (2nd DCA 2008), a person who was paid $224,567.66 by her own insurance company, CIGNA, for fire damage, was able to pursue a claim for damages, through her estate, against a third party for the amount already recovered from the insurance company.

The device used for this opportunity was an assignment from CIGNA of its subrogation/reimbursement right.

The CIGNA policy provided for the right of subrogation against any third party recovery. This right authorized CIGNA to pursue a claim against the third party responsible for causing the house fire for the amount it paid to its insured. Instead of pursuing the claim, it assigned the right to its insured.

Thereafter, the insured sued the third party, Intermatic, alleging that the fire had been caused by a defective surge protector. The Defendant argued that the insured was not allowed to recover the money she had already received.

The trial court agreed. The Second District Court of Appeal did not.
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doctor.jpgUninsured Motorist (UM) coverage is 1st party insurance maintained for the benefit of individuals injured by uninsured motorists.

See these blogs:

An insurance policy is a contract. Unless preempted by a statute or case law, the terms of the policy determine the rights and responsibilities of the parties to the contract, namely the insurer and the insured.

A common policy requirement is for the insured to submit to what is called a Compulsory Medical Examination (CME). A CME is where the insured, who is seeking compensation under the policy for an injury or injuries, is examined by a doctor selected by the insurance company. When requested by the insurer, submitting to the CME is a condition precedent to receiving benefits under the policy, meaning that the insurance company can deny benefits to the insured for failing to attend the CME.

Disputes have arisen between insurer and insured over what is allowed by the CME provision. How frequently may the insurer force the insured to attend CMEs? How far can the carrier make the insured travel to attend the CME? Is there limit on the type of doctor who may perform the CME?
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Florida lawyers who represent individuals injured in accidents must be aware that some of the proceeds recovered in a case may have to be reimbursed to entities who have paid for accident-related medical care. If benefits were paid through an individual health insurance plan, whether and to what extent the carrier has a right of subrogation is a matter of contract (the insurance policy) and state law, Florida Statute 768.76. With regard to group policies provided in connection with employment, it was long believed that subrogation rights were exclusively a matter of contract, the Plan Summary, and federal law, the Employment Retirement Income Security Act (ERISA). It was felt that Florida Statute 768.76 played no role in determining group insurance subrogation rights.

Coleman v. Blue Cross and Blue Shield of Alabama, Inc. So.3d , 35 FLW D2718 (Fla. 1st. DCA 12-8-2010) may have changed the landscape.

After successfully settling a personal injury action in federal court, Coleman (the plaintiff and a member of a group plan) filed a complaint in state court requesting a declaratory judgment prohibiting the insurer from seeking subrogation against the settlement proceeds. The plaintiff’s complaint alleged that the insurer had not met the pre-subrogation requirements of Florida’s Collateral Source Statute Section 768.76(7). Therefore, according to the plaintiff, Blue Cross Blue Shield had waived its right to subrogation.
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Nationwide, roughly one in seven (13.8%) drivers are not covered by liability insurance and are therefore uninsured. Florida is tied in fourth place with Tennessee and Oklahoma at 24% with the highest percentage of uninsured drivers.

Part of Florida’s numbers are attributable to its motor vehicle insurance laws. Liability insurance is not required to operate a vehicle lawfully on Florida’s streets and highways. The coverage is optional and a premium will be charged to purchase it.

The only coverages that are required to obtain a vehicle registration and, thus, operate a vehicle lawfully, are Personal Injury Protection (PIP) and Property Damage – Liability. (However, in the event of an accident resulting in death or personal injury, if the uninsured motorcyclist or car/truck owner with only PIP/PD is charged with causing the accident, his/her drivers license and all vehicle registrations will be suspended. Sections 316.066(3)(a)1 and 324.051(2)(a) of Florida’s Statutes.) Neither coverage compensates the victim of an at-fault party’s negligence for personal injuries and economic losses.

Little can be done to prevent an accident caused by another person’s fault. However, safeguards can be taken to protect against the one in four chance of finding yourself without insurance coverage to compensate for serious personal injuries and economic losses. The answer is Uninsured Motorist/Underinsured Motorist Coverage. (Florida Statute 627.727.)
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stacking.jpgStacking coverage is one of the most misunderstood areas of Florida’s motor vehicle insurance laws. The goal of this blog is to help clear up the confusion.

Stacked coverage is a type of coverage that is available within the broader type of coverage known as uninsured/underinsured motorist (UM/UIM) insurance. Neither coverage is mandatory under Florida law.

In Florida, the only mandatory coverages are Personal Injury Protection (PIP) and Property Damage – Liability. Every other type of coverage is optional.

One type of optional coverage is Bodily Injury, or BI. BI coverage pays for personal injuries, death, and economic losses caused by the insured’s negligence. Because an additional premium is charged for BI coverage, it is not purchased by every insured.

Uninsured/Underinsured coverage protects against the negligent motorist who does not have BI coverage – UM takes its place – or whose BI coverage limits are not sufficient to cover the losses – UIM. In other words, it performs for the insured (the person who has been damaged) as the at-fault party’s BI coverage otherwise would have.

Whenever BI coverage is purchased, UM/UIM will be included in the policy unless waived in writing by the insured. Like BI, it is not mandatory and a premium will be charged for the coverage.

Stacked coverage is an optional type of coverage that is available with the purchase of UM/UIM coverage. Like UM/UIM, stacked coverage will be included in the policy unless waived in writing by the insured.
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