U.S. District Court holds that mortgagee can require flood insurance higher than the amount of the mortgage

In 1994 Susan Lass took out a mortgage on her house, which is an area that is designated under the National Flood Insurance Act as a special flood hazard area. (For older posts on flood insurance legislation, see here and then scroll down.)

As a named plaintiff in a class action lawsuit Lass alleged that Bank of America, the mortgagee, breached her mortgage contract by requiring her to have more flood insurance than was required under the terms of her mortgage and more than BOA's financial interest in the property.

In Lass v. Bank of America, N.A., 2011 WL 3567280 (D. Mass. 2011), the United States District Court for the District of Massachusetts noted that the NFIA prohibits federally-regulated lenders from giving loans secured by real estate in a special flood hazard area in which flood insurance is available unless the property is covered by flood insurance "in an amount at least equal to the outstanding principal balance of the loan or the maximum limit of coverage made available . . . , whichever is less."

Lass's original lender, RMC, required her to maintain insurance in the amount of her loan balance. In 2007 she chose to increase her coverage to $100,000.

RMC transferred the loan to BOA, which required her to increase her flood insurance to $145,086, the replacement value of the improvements to her property. When she did not purchase the additional insurance, BOA purchased it for her and paid for it out of her escrow account.

The court held that BOA did not breach the mortgage contract, because the contract requires Lass to maintain flood insurance "in the amounts and for the periods that Lender requires."

The real question is: Why would a homeowner with property in a flood zone not insure the property to replacement value? Weather patterns are getting more extreme. Insurance protects your investment. We quibble over exclusions and exceptions, but overall: Insurance is good. Make sure you have enough of it.

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How to Choose Fleet Insurance

Currently many companies that offer fleet insurance. If you require fleet insurance, you should consider a few things below.

When you are running a company that transports items back and forth it can be expensive. However, if you know what to find in fleet insurance it will be easy to locate the plan which can help save you quite a bit of money. Some of the items you should be looking for includes the amount of money you have to pay for the coverage, what kind of coverage is present for you to have, and even the reputation of the company when it comes to handling the accidents your company can have.

Reputation the company has in the industry is something you should be looking at as well. When you are able to review the reputation, it will be easy for you to determine if the company is the best one for representing your company properly should an accident happen. Without this type of review on the reputation it is easy to select a company which may not represent your company or industry properly.

Amount you need to pay for the coverage can be important to view. When you have this information it will be easy for you to get the best deal possible, but also know how much money you have to factor into the cost you process to your clients to guarantee you have the proper payment in place. Without knowing this, it is easy for you to lose more than what you are making.

Types of coverage which is present is important for you to know about. When you know about this, it will make it easy for you to determine if the coverage will be enough for your fleet or not. Without having this information it will be nearly impossible for you to guarantee if the coverage is enough to pay for any of the bills you have.

Being able to have the best company possible can be a great thing to do. However, you will need to know this type of company can be expensive to run at times. Once you know about what to find in the fleet insurance it will be easy for you to select the proper company to help you with your insurance needs. A few of the things you should be looking for will be how much you have to pay for the coverage, know what type of coverage is present for you to use, and the type of reputation the company has in relation to the industry in general.

Hopefully this information can assist you in determining fleet insurance options you'll use.

Read More >>

How to Choose Fleet Insurance

Currently many companies that offer fleet insurance. If you require fleet insurance, you should consider a few things below.

When you are running a company that transports items back and forth it can be expensive. However, if you know what to find in fleet insurance it will be easy to locate the plan which can help save you quite a bit of money. Some of the items you should be looking for includes the amount of money you have to pay for the coverage, what kind of coverage is present for you to have, and even the reputation of the company when it comes to handling the accidents your company can have.

Reputation the company has in the industry is something you should be looking at as well. When you are able to review the reputation, it will be easy for you to determine if the company is the best one for representing your company properly should an accident happen. Without this type of review on the reputation it is easy to select a company which may not represent your company or industry properly.

Amount you need to pay for the coverage can be important to view. When you have this information it will be easy for you to get the best deal possible, but also know how much money you have to factor into the cost you process to your clients to guarantee you have the proper payment in place. Without knowing this, it is easy for you to lose more than what you are making.

Types of coverage which is present is important for you to know about. When you know about this, it will make it easy for you to determine if the coverage will be enough for your fleet or not. Without having this information it will be nearly impossible for you to guarantee if the coverage is enough to pay for any of the bills you have.

Being able to have the best company possible can be a great thing to do. However, you will need to know this type of company can be expensive to run at times. Once you know about what to find in the fleet insurance it will be easy for you to select the proper company to help you with your insurance needs. A few of the things you should be looking for will be how much you have to pay for the coverage, know what type of coverage is present for you to use, and the type of reputation the company has in relation to the industry in general.

Hopefully this information can assist you in determining fleet insurance options you'll use.

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Fraud on pet insurance increasing in England

Read all about it here.  But only if you want to be outraged and saddened.

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Okay -- an insurer should be bound by a mutual mistake over the terms of the policy . . . sometimes

Last week I wrote a somewhat snide post about a Superior Court decision in Caron v. Horace Mann Ins. Co., a decision that was reported in Massachusetts Lawyers Weekly but that I have not seen. The judge apparently held that an insurance company is bound by a mutual mistake between an insured and an agent over the terms of the policy.

My knee-jerk reaction was that the terms of the policy always trump, and that an insured is presumed to have read and understood the policy. But I can certainly see how a case could be made that if an insured believes that he or she is purchasing certain coverage, and the insurance agent, acting on behalf of the insurer, believes that he or she is selling that coverage, such coverage should be read into the policy.

Such a result could only apply in specific circumstances. Take, for example, Welch Foods, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, __ F.3d __, 2011WL 5027445 (1st Cir.), the other case I discussed in last week's post.

If the insured had said to the agent prior to purchasing the policy, "I want to make sure that there is coverage for claims of deceptive trade practices," and the agent, speaking on behalf of the insurer, had looked at the policy and said, "Yep, there's no exclusion for that," but there actually was such an exclusion hidden under a label "AntiTrust Exclusion," then it would be fair that the insurer be bound by the mutual mistake. And maybe as the insurer is suing the agent for negligence, it could send a memo to its underwriting department to label the policy provisions more accurately.

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New Federal Insurance Office to compile financial data on insurers

Here's a detailed article that explains upcoming changes in the public availability of financial data on insurers.

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Keep your policies forever

I can't say it too often: Keep copies of your insurance policies, forever, in a place you can find them. If at the beginning of your policy year your insurer or agent sends you only the coverage selection (or "declarations") page -- the page that summarizes your coverages -- ask for a copy of the entire policy. Do it immediately or you may never get it. And when you get it, make sure that the policy forms and endorsements provided match the forms and endorsements listed on the coverage selection page.

In almost every insurance coverage dispute I have ever been involved with, whether on the side of the insurer or the insured, the first challenge is obtaining a copy, preferably certified, of the policy. Whichever side I'm representing, it generally takes months.

Don't just keep your most recent policy. Keep all of them. For decades. Forever. If you have an occurrence-based policy and get hit with a Superfund suit -- say a property you owned for five years in the early 1990's has been discovered to be a site of toxic waste -- there might or might not be coverage under policies issued for each year that you owned the property. If the policies differed from one year to another, even if issued by the same insurer, there may be coverage under one year but not others.

Chances are that if the policies were issued not too long ago the insurer can, eventually, provide or recreate a copy. But at some point old documentation, especially but not exclusively from before the advent of computers, is lost. Insureds have the burden of proving coverage under a policy. The easiest way to do that is to provide the court with a copy of the policy, not to guess, "When my grandfather owned the company he was friends with an adjuster at Acme Insurance, so . . ."

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Disagreement between First Circuit and Superior Court on whether terms of insurance policy control coverage

Welch Foods was sued by a competitor and by consumers for placing a label on a three juice blend bottle that pictured mainly pomegranates, even though the juice blend consisted primarily of apple and grape juice. A jury in California found that the label had a tendency to deceive a substantial number of customers. (Really? You really think that a three juice blend will consist primarily of pomegranate juice?)

Welch requested insurance coverage from National Union Fire Insurance Co. of Pittsburgh, PA. National Union denied the claim on the basis of an exclusion labeled "Antitrust Exclusion," which, in addition to excluding antitrust claims, also excluded coverage for unfair competition and deceptive trade practices.

In Welch Foods, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, __ F.3d __, 2011WL 5027445 (1st Cir.), the United States Court of Appeals for the First Circuit found that although the exclusions for unfair competition and deceptive trade practices were listed under the antitrust exclusion, the claims were effectively excluded. The court noted that the policy provided, "the description in the headings of this policy are solely for convenience, and form no part of the terms and conditions of coverage."

The court quoted the familiar language, "an insurance contract is to be interpreted according to the fair and reasonable meaning of the words in which the agreement of the parties is expressed. . . . Every word in an insurance contract must be presumed to have been employed with a purpose and must be given meaning and effect whenever practical."

By contrast, this week's Massachusetts Lawyers Weekly has a cover story on a Superior Court decision drafted by Judge Cornetta, Caron v. Horace Mann Ins. Co., which apparently held that an insurance company is bound by a mutual mistake between an insured and an agent over the terms of the policy, even if -- quoting Eric Parker, who represented the plaintiffs -- "some 50- or 75- page boilerplate policy they've been printing for years says [that different terms apply]. It's going to be changed to reflect the understanding of the parties."

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