An effective anti-harassment policy and training to supervisors may provide a defense against claims of harassment asserted by an employee against a supervisor or co-worker.
news | Schwartz Kelly Deals Blow to Insurance Co.
SCHWARTZ KELLY, LLC DEALS ANOTHER BLOW TO AN INSURANCE COMPANY FOR WRITING AN INCOMPREHENSIBLE INSURANCE POLICY
On April 9, 2007, the Honorable Estela M. De La Cruz, J.S.C., sitting in Bergen County, New Jersey, ruled in favor of a policyholder implicated in a natural gas explosion that destroyed a 24-unit apartment complex in Bergenfield, New Jersey. The insured put its carrier Evanston Insurance Company on notice of the loss. Relying on a self-insured retention endorsement in the policy, Evanston demanded that the insured advance $50,000 per claimant, or over $1.5 million, toward its own defense before Evanston contributed to the losses. On behalf of the policyholder, Schwartz Kelly, LLC filed a lawsuit against Evanston and sought a ruling that the policy required the insured to pay only a single $25,000 deductible no matter how many claimants and losses arose from the explosion.
In September of 2006, the Honorable Robert Contillo, J.S.C., threw out Evanston’s policy because the carrier failed to notify its insured that it was increasing the $25,000 deductible to a $50,000 self-insured retention during the process of renewing an earlier policy. Evanston also slashed the coverage limits in half without notifying the insured. Judge Contillo reinstated the pre-renewal policy finding that the carrier violated New Jersey law and its duty of good faith in failing to notify the policyholder about these major changes in coverage. Judge Contillo referred to Judge De La Cruz the interpretation of the deductible in the earlier policy and whether it applied once to all claims or whether the insured had to pay a deductible for each claimant.
Evanston insisted that the earlier policy required the insured to pay $25,000 for every person who made a claim for injuries. Since there were over 30 claimants, the insured would have been forced to pay an enormous deductible before it received the insurance benefits provided by the policy. In rejecting Evanston’s strained interpretation of the deductible, Judge De La Cruz found that the policy was ambiguous. The Court could not find “clear language” supporting the insurer’s coverage position. Judge De La Cruz found, as the insured had argued, that the Evanston policy was riddled with “layers of ambiguity.” That ambiguity is interpreted in favor of the insured. Judge De La Cruz criticized Evanston for writing a policy containing a “cluster of baffling cross-references” that were “bewildering even upon careful reading.” The Court also agreed with the policyholder’s argument that repeated references to a deductible identified on the declarations page was ambiguous and confusing because the declaration page failed to mention any deductible whatsoever. This omission was crucial because, under New Jersey law, the declarations page is the primary source of information to the insured.
The Court was likewise convinced that the insurer’s handling of earlier claims under the deductible endorsement was inconsistent with its current interpretation. The Court reviewed earlier claims submitted by the insured under the same policy where Evanston applied a different coverage analysis at odds with its current “per claimant” interpretation. Only a few months before the Bergenfield accident, Evanston told its insured that the deductible applied “per occurrence,” meaning that all claims arising from the same accident triggered only one deductible. The Court refused to allow the insurer to adopt a different coverage position for the Bergenfield disaster.
Lastly, the Court emphasized that the insured’s “reasonable expectations” of coverage were defeated by the carrier’s “per claimant” interpretation. Judge De La Cruz noted that insurance contracts can “often be confusing and misleading.” New Jersey courts recognizing this reality apply the “reasonable expectations” of the policyholder to ensure that policyholders receive the insurance benefits they believe they purchased.
As this case reveals, policyholders need not give up when an insurance company denies a claim and says “no coverage” or, even worse, says there is coverage but that you have to pay a million dollar deductible. It is important to have your insurance policies and the relevant facts reviewed carefully to determine whether the carrier is acting to protect itself from paying claims or is really looking out for the best interests of the policyholder. Unfortunately, insurance companies often win the coverage battle simply because policyholders choose to give up. If your claim is denied, have it looked at by someone qualified to sue insurance companies.
6/4/2007