Most Floridians are well aware of the difference between owning a condominium and owning a single-family house. The owner of a house is responsible for everything that has to do with that property: the house and the yard, utilities, water and sewer, insurance, flood insurance … ad infinitum. The owner of a condo, however, is only responsible for maintaining the individual unit. The homeowners association takes care of the rest.
As we said when we started this series of posts, it is rare to find news stories about insurance bad faith cases. This case, against Nationwide Mutual Insurance Co., is remarkable because of the punitive damage award — the $18 million referred to in the headline. That is a drop in the ocean for such a big company (Nationwide reported net income of $1.35 billion for 2013), but, then, the initial claim was worth just $25,000.
A woman we know remembers being in a two-car accident. Her vehicle was drivable, but there was significant damage. When it came back from shop, everyone agreed that it just didn’t drive or ride as well. It was soon a family joke to comment that the Jeep just hadn’t been the same since the accident.
We are talking about a bad faith case against Nationwide Mutual Insurance Co. The policyholders won the most recent round in the years-long litigation, with the court ordering Nationwide to pay $18 million in punitive damages. Nationwide is appealing that decision.
We don’t often have the chance to discuss a bad faith lawsuit against an insurance company. The cases may settle out of court, or they may not be interesting enough to get the attention of even legal periodicals. Whatever the reason, an excellent example of bad faith crossed our desks in a case about a couple’s decades-long fight over an auto claim.
In February, the 5th U.S. Circuit Court of Appeals ruled that the U.S. has jurisdiction over the lawsuits against Chinese drywall manufacturer Taishan Gypsum Co. Ltd. The court also ordered the company to pay $2.7 million to the named plaintiffs in the class action.
We are finishing up our discussion of stranger-originated life insurance policies. If history has taught us anything, it is that the idea is fraught with risk — and not the kind of risk insurance companies like to take on. When we left off, we were going through some of the ways STOLIs can actually harm the seniors involved.
The concept of insurable interest does not come up often in day-to-day discourse. Even for the Florida Office of Insurance Regulation, it must be rare to sit in meetings devoted to questions of insurable interest. A few years ago, however, that was not the case. The subject came up when the OIR launched an investigation into stranger-oriented life insurance schemes, or STOLIs.
The Florida Office of Insurance Regulation looked at third-party, or “stranger-originated life insurance” in some detail before faced with the Pasco County offer. The OIR researched the issue in-depth in 2010 — even holding a public hearing in August that year. Stranger-originated life insurance policies, shorthanded in the industry as STOLIs, had come onto regulators’ radar all over the country a few years earlier, when insurance companies had noticed a decided increase in the number of STOLIs being sold.
It is easy to be cynical these days. Someone offers you a great deal on furniture, for example, and your first thought is, “What’s wrong with it?” Another person does a kind gesture, and you ask, “What’s in it for him?” Expect the worst, and you will never be disappointed.
