Court: Car Insurance Doesn’t Cover Van Fire that Burned Down House

A federal appeals court has ruled  the damages from a van fire that burned down a house under construction should not be covered by a Virginia auto insurance policy covering the van because the van was not being used “as a vehicle” when the fire erupted.

According to court documents, the case originally began in 2008, when John Robins was performing construction work on Steven and Cathy Ivey’s house in Virginia.

Robins had been working on the house for several weeks and was using his Ford Econoline van basically as a storage shed for tools and equipment, powering his equipment with a battery charger and electric splitter that he kept in the van.

He had his van parked there for about a month, driving to and from the house in a separate vehicle.

Robins left the work site for the weekend on Friday, August 15. On Sunday, a fire started in the van that spread to the house and caused nearly $293,000 in damages.

A handful of fire investigators all concluded that the fire had started as the result of “malfunction of equipment kept in the rear of the van, most likely an electrical problem with an extension cord or battery charger,” according to court documents.

After the fire, the company insuring the house paid the Iveys for the fire damage and sought reimbursement from Robins, saying that the incident was a result of his negligence.

Robins then sought coverage from State Farm, the provider of his Virginia car insurance policy, and Nationwide, the provider of his commercial general liability policy.

Each of the companies said the other should cover the damages.

Nationwide said that it should not have to pay the claim because it excluded coverage that was the result of Robins’s use of a vehicle. And State Farm said that it should not have to pay the claim because Robins was not technically using the vehicle at the time of the accident.

The 4th U.S. Court of Appeals found in favor of State Farm. The court noted that Virginia law says for a car insurer to cover the damages caused by a vehicle in an accident, it must be used “as a vehicle.”

The court wrote in its opinion that Robins was using the vehicle as a storage shed, not as a vehicle, and therefore fell out of the jurisdiction of an auto insurance policy.

The court reversed the district court’s ruling that State Farm pay for the damages, and the case was sent back to the district court for further proceedings.

Oklahoma Bills Aim to Crack Down on Uninsured Drivers

Oklahoma police could get new tools to combat the state’s uninsured motorist problem if state lawmakers approve two new bills.

One of the bills would broaden the situations in which police could tow a resident’s car for being uninsured, while the second would make it so that police could stop motorists if a state database indicates that they’re driving an uninsured auto.

The Sooner state has one of the worst uninsured motorist problems in the nation. According to Insurance Research Council reports that used data from 2007 and 2009, about 24 percent of drivers in the state were on the road without any Oklahoma car insurance coverage.

That’s double the nationwide average of about 14 percent.

In an effort to better identify uninsured cars, the state established a database that matches vehicle registrations up with policy information supplied by car insurance companies issuing policies in the state. When a car in the database is registered but has no matching policy, it’s likely to be uninsured.

But police currently cannot pull a driver over simply because that driver appears in the database to be driving an uninsured vehicle.

Rather, Oklahoma law dictates that driving without a policy is a secondary offense, meaning that you can only be cited if you’re already stopped for another type of infraction.

House Bill 2525 would change that.

If the bill passes, police would be legally allowed to run the license plate numbers of a vehicle on the road to see if it come up as a no-match on the database. And if it did, they’d be able to pull over the offending motorist and cite them for that reason alone.

Last year, lawmakers passed a bill that barred certain recovery rights for drivers who were uninsured at the time of an accident.

Under the so-called “no pay, no play” law, which took effect in November 2011, uninsured drivers injured in a crash cannot collect for pain and suffering damages that were the result of the accident, regardless of who was at fault.

Supporters of the law said it would discourage motorists from getting behind the wheel without a policy.

A first-time offense for driving uninsured in the Sooner State brings with it a $250 fine, and offenders can have their licenses suspended until they pay the fine and can prove that coverage are in place. Police were also authorized by the Legislature in 2010 to seize and tow any uninsured vehicles.

Court: Penn. Insurer’s Fine Print Negated Coverage Rejection

The Pennsylvania Superior Court ruled on Monday that some additional language included in a form that Unitrin policyholders sign to reject underinsured motorist coverage actually invalidated the rejection form, meaning that many of Unitrin’s Pennsylvania automobile insurance policyholders could be entitled to compensation under a type of coverage they chose to reject.

All Pennsylvania car insurance policies by default include uninsured/underinsured motorist (UM/UIM) coverage, which provides coverage when the policyholder is injured in a car accident caused by an uninsured, underinsured, or hit-and-run driver.

But drivers can reject this coverage by signing a form contained in the pages of their auto policies. The language of that form is dictated by law so that this section of all Pennsylvania policies reads the same way.

Unitrin, however, added an extra 20 words to the statement policyholders sign to reject the coverage.

The extra sentence seemed innocuous enough to Unitrin and the trial court that ruled in the insurer’s favor: “By rejecting this coverage, I am also signing the waiver on P. 13 rejecting stacked limits of underinsured motorist coverage.”

The opinion of both Unitrin and the lower court was that the additional sentence was “clarifying” language that did not affect the terms of the rejection.

But a majority of state Superior Court judges who reviewed one Unitrin policyholder’s appeal said the fact that the language deviated from what had been prescribed in the state’s financial responsibility law is enough to make the Unitrin UM/UIM rejection void.

The lower court’s decision was reversed.

Decision Could Be Significant for Unitrin Policyholders Who Have Made UIM Claims

The case originated in July 2009 when Unitrin policyholder Lee Jones was injured in an accident while riding as a passenger.

After being treated for injuries, it turned out that Jones’s damages exceeded the limits of the at-fault driver’s bodily injury liability policy–a scenario in which underinsured motorist coverage would kick in and cover the remaining damages.

But Jones had signed the UIM rejection form, meaning she would likely have to pay for the remaining damages out of pocket.

After Unitrin denied her claim, the two parties went to court over whether the rejection form Jones had signed complied with state statutes and, in effect, whether she was covered under the policy. The trial court said the language did not negate the policy and sided with Unitrin in the end, but the Superior Court ruling reversed that decision.

This may not be the end of the Unitrin case. But if the Superior Court’s decision is upheld, it could mean drivers who were denied UIM benefits because they had rejected the coverage may still be able to collect for their damages.

Washington Auto Insurance Bills Approach Deadline for Vote

Washington State lawmakers have until February 14 to pass a pair of bills that would pave the way for vehicle-sharing programs in the state and make insurance regulations more hospitable to insurers who want to offer usage-based options to Washingtonians, according to the Office of the Insurance Commissioner.

Insurance-Friendly Car Sharing

Following similar legislative moves in California and Oregon, lawmakers in Washington are pushing to eliminate the negative coverage implications of participating in car-sharing programs.

Currently, auto owners in the Evergreen State would likely see their personal Washington car insurance policies invalidated if they lent their cars out in exchange for money, since the vehicle is being used commercially.

House Bill 2384 fixes that by transferring liability from the car owner to the car-sharing service when the automobile is being used by people other than the owner. So any damages that occur while the car is being rented would be covered by the service’s policy, not the owner’s.

Policies provided by the sharing service would have to provide at least $180,000 worth of total liability coverage–three times the minimum required by the state–as well as comprehensive and collision coverage.

Paving the Way for Usage-Based Programs

There has been rapid growth over the past few years in demand and supply of usage-based insurance options.

Usage-based options often involve an insurer providing a small electronic device that plugs into a diagnostic port on a car. That device then sends policyholder driving data back to the insurer, showing how many miles are put in behind the wheel, how often drivers of the insured car brake hard, and where and at what times of day the car’s driven, among other factors.

These programs in theory reward drivers who put in fewer miles behind the wheel and display safer driving habits.

House Bill 2361 would allow insurers to keep from public inspection the rating methodology used when incorporating usage-based information in pricing formulas. It also states that location data recorded by the devices cannot be collected without the user’s consent and that “individually indentifiable usage information” that’s collected may not be used in any way other than in premium calculations.

Public testimony summarized in a report from the House Business and Financial Services Committee indicate that the legislation would help only one company: Progressive Insurance.

Progressive championed usage-based coverage options with its Snapshot Discount, which is available in nearly every state in the country. But Washington remains one of the few where Snapshot is still not available.

According to a summary of public testimony include in the committee report, a supporter said, “The concerns raised about this bill appear to be based on an inability to compete with a product that is available in most of the country. That product will not be sold in this state without some type of confidentiality protections.”

Progressive owns a handful of patents regarding usage-based coverage, but supporters of the bill noted that the rate filings would be open to public inspections, which would expose the company’s information and possibly lead to the company’s having to defend its patent in court.

The summary of the testimony from individuals “with concerns” said that Progressive–although the company is not named outright in the testimony–is suing other insurers who have tried to develop similar products, and it “should not be given even more protection than their existing patents.”

Progressive Using Image-Capture Technology for Insurance Quotes

Progressive Insurance recently announced that it’s making it easier for consumers to get quotes and buy car insurance online through their mobile phones.

The direct-to-consumer car insurer will make available to 15 states in February and more throughout 2012 a new function on its mobile app that allows users to get quotes just by taking pictures of pertinent documents and supplying a little additional information.

The technology is called Image Capture, and it will be integrated right into the mobile quoting process.

Instead of manually inputting personal data–like address, driver’s license number, and vehicle make, model and year–users can just take a photo of their driver’s license and VIN bar code or current insurance card, and the data fields on the app will autopopulate.

“The number you get through our mobile app is a valid quote, not a ballpark,” said Matt Lehman, Progressive’s mobile business leader. “We think it’s important to give consumers an accurate rate, and this technology helps them get that rate quickly.”

After going through the quoting process, users have the option to buy the policy they’ve been quoted for.

The new Image Capture function adds to Progressive’s mobile app capabilities, which already included its cost-to-insure rating function.

That function allows users to punch in up to three vehicles’ make, model and year–or to automatically input that information by taking a photo of their VINs–and they get back a comparison of the cost to insure those vehicles on a scale of 1 to 10.

Although the function didn’t deliver actual quotes, it provides what could be helpful information to shoppers who are looking for a new car and don’t want to be shocked when they see the cost to insure it after driving off the lot.

Rhode Island Lawmakers Seek to Limit Insurance Pricing Factors

Members of the Rhode Island House of Representatives have submitted a pair of bills this session that would bar insurance companies from taking into account a consumer’s education level, homeowner status and credit history when determining how much to charge for a policy.

House Bill 7411 would enact the credit-history ban, while House Bill 7193 would take care of education level and homeowner status.

All of the representatives who introduced and co-introduced the bills are Democrats.

Rhode Island is only one of many states where legislators have pushed to ban insurers’ use of credit scoring in recent years, but practically every one of those pushes has failed. The only state that successfully got a credit-scoring ban into law in recent memory was Massachusetts, and that state already had a regulatory ban on the practice in place.

Many consumer groups say that partly basing the price of coverage on a policyholder’s credit history unfairly hurts lower- and middle-income motorists. But members of the insurance industry–backed by a number of government studies–say that a driver’s credit history has proved to be a relatively accurate predictor of the frequency at which a driver will file claims, as well as the size of those claims.

Rhode Island auto insurance providers are currently free to use information about a person’s credit history to help gauge the risk that he or she poses, but they have a couple restrictions:

Insurers must demonstrate for regulators that their credit-scoring practices do in fact correlate with the actual risk posed by policyholders. They cannot use scores incorporating variables such as whether a consumer has had any credit inquiries, coverage inquiries or collection accounts that have a medical industry code. And a negative credit trend that’s the result of an “extraordinary life event” cannot be taken into account.

The only current regulatory restriction on use of education level and homeowner status is that insurance providers must be able to statistically show that those factors correlate with a driver’s likelihood of filing a claim.

Both bills have been referred to the House Corporations Committee for review.

Recent Recovery Reports Highlight Usefulness of Insurance Reviews

Recent reports showing that regulators in California, Michigan, Georgia, Montana, Ohio and North Carolina together recovered nearly $150 million last year on behalf of consumers who had been wronged by coverage providers highlights the valuable insight shoppers can get by researching auto insurance reviews and complaint data online.

A large portion of the $150 million recovered for policyholders was the result of coverage disputes, overcharges and unfair denials of claims.

State regulators returned the sum while acting as an objective mediator between insurers and policyholders.

When consumers and coverage providers cannot settle their differences themselves, policyholders can bring their complaints to state regulators for some resolution.

For the past three years, consumers have consistently filed the most grievances because they were dissatisfied with the way their insurers handled their claims, according to data compiled and made available by the National Association of Insurance Commissioners.

More specifically, consumers most frequently complain about delays and denials of claims, as well as dissatisfaction with a claim settlement. Complaints of this type accounted for more than half of the total complaints resolved between 2009 and 2011.

Once a complaint is resolved, the regulatory office enters it into a database and eventually publishes a report showing how many complaints each company had for a given year. Many consumers are encouraged to consult these reports when looking for a new provider so they can get one that has a good track record.

But the fact is that consumers can only gain so much insight into a company’s performance by looking at complaint statistics.

Another, more personal way of getting past and present policyholders’ opinions about a specific policy provider is to research user-submitted car insurance reviews on the Internet.

One place to read and post comments about a company is the car insurance reviews section of OnlineAutoInsurance.com.

The site, which was originally launched in the summer of 2011, has already accumulated hundreds of reviews for 14 of the country’s largest coverage providers.

In a press release issued when the site launched, the company said using both regulator-provided complaint statistics and the user-submitted reviews should give consumers a full picture of a company’s history for customer satisfaction.