Part 5- Property, Chapter 27: Insurance Law, Doc 8

Case Problems Summary and Analysis 1. Intoxicated Individual's Liability: The insurer (GICOM) seeks to avoid liability by arguing that Smith’s actions (resisting arrest) were intentional and therefore excluded from the definition of an "occurrence," which must be accidental under the policy terms. Since Smith’s intentional assault falls under the policy’s exclusion for expected or intended injuries, GICOM would likely succeed in its argument to avoid coverage. 2. Insurable Interest in Partnership Property: Harber’s claim for insurance on the collapsed building hinges on whether he held an insurable interest. Courts generally require a direct financial interest at the time of loss. Since Harber’s partnership with Davis was disputed, he may lack the standing needed to claim coverage unless he can show legal ownership or substantial interest in the property. 3. Personal Trip for Business Insurance: The insurer (POI) claims Cope’s trip was personal and unrelated to his business, thus outside policy coverage. Despite Cope’s contention that the trip involved a business associate, POI may argue that business activities were not the primary purpose, potentially making the exclusion applicable and barring recovery under the policy. 4. Unfair Competition and Insurance Coverage: Aamco’s class-action liability claim was based on statutory rather than common law claims. Since "unfair competition" in Granite’s policy refers to common law torts, the statutory consumer protection claims likely fall outside coverage. Aamco may argue for ambiguity, but courts may affirm that statutory violations are not covered under the “unfair competition” provision. 5. Illegal Still and Increase of Hazard Clause: The insurer (Continental) denied coverage due to the increased fire risk posed by the concealed still, a controlled hazard that the insured was aware of. Given the policy’s “increase of hazard” clause, the court may side with Continental, ruling that the illegal still voided the coverage for the fire. 6. Arson Allegation and Consequential Damages: IIC denied coverage based on a good-faith belief of arson. However, since the jury accepted the Plummers’ evidence, they were awarded both compensatory and punitive damages for IIC’s bad faith refusal. Courts can grant punitive damages when the denial of claims is found to be unjustified and harmful. 7. Misunderstanding of Policy Coverage: Ridenour relied on his agent’s statement that the hog confinement building collapse would be covered, though the written policy excluded such coverage. Ridenour sought policy reformation to match the alleged oral agreement. Courts might affirm reformation if it is shown that the agent misled the insured, especially if the insured relied reasonably on the agent’s expertise. 8. Rescission of Credit Life Policy: Enterprise rescinded the policy due to alleged misrepresentations in Milford’s health history. Evidence suggests Milford acted in good faith without intent to deceive. If Enterprise’s rescission pattern shows bad faith, Vining may be entitled to consequential and punitive damages. Courts often favor insureds in disputes over policy rescission based on minor misstatements, especially when insurers rescind routinely. 9. Scope of Employment in Assault: The insurance policy only covered acts within the scope of employment. Since Lane’s altercation was voluntary and outside his job duties, American Family likely would not be obligated to cover the incident, as it was unrelated to his employment. 10.Right of Redemption and Insurable Interest: The Crowells lost their legal title after the redemption period expired, but their right of first refusal preserved a financial interest. Courts may determine that the Crowells’ interest, even after foreclosure, was sufficient for insurable interest, supporting the trial court’s ruling for coverage. Analysis of State Regulation of Insurance Each state's Department of Insurance generally handles consumer complaints, monitors insurance practices, and ensures compliance with insurance regulations. The agency often provides resources for resolving disputes, educational materials, and complaint filing systems. They may also investigate consumer complaints, mediate disputes, and, if necessary, enforce penalties or corrective actions against insurance companies found in violation of state regulations.