Mechelsen, Inc. Risk Management Forum

Claim Horror Story: Recent verdicts/settlements

Claim Horror Stories:  Recent jury verdicts and settlements

King County - Improper Lane Change:  Defendant changed lanes into plaintiff on I-90 causing a three-car accident.  Injured Plaintiff suffered a strained neck and underwent chiropractic care.  Plaintiff was awarded $487,550 on 11/9/06. Defendant had only a $25,000 limit of liability on her auto policy.

King County - Intersection Accident:  Defendant attempted to turn left onto Sahalee Way in Sammamish and pulled in front of Plaintiff's vehicle.  Plaintiff suffered a fracture of her T5-T6 (back), a closed head injury, and secondary Staph infection while hospitalized.  Plaintiff can no longer work as a transplant nurse.  Settlement on 12/4/06 for $5,000,000.

King County - Failure to Yield:  Defendant made a left turn in front of Plaintiff who was travelling in the opposite direction on Guide Meridian Road.  Plaintiff suffered a broken tibia/fibula, broken rib, broken wrist, and fractured C-1, and closed head injury.  Defendant had $1,000,000 Liability limit and Plaintiff had $50,000 Uninsured Motorist limit.  Medical expenses totaled $286,394 and lost wages totaled $116,531.  Demand of Plaintiff into trial of $4,169,631.

Pierce County - Intersection Collision:  Defendant tried to cross intersection and struck Plaintiff on his motorcycle.  Plaintiff fractured his foot, his tibia, his fibula and suffered several cuts and bruises.  Settlement on 10/24/06 for $1,000,000.  Insurance contribution amounts unknown.

Pierce County - Snowboard Accident:  Defendant ran into Plaintiff while snowboarding at Crystal Mountain.  Plaintiff suffered a broken leg and a knee injury requiring surgery.  Settlement on 11/21/06 for $137,500.

Yakima County - Head-on Collision:  Defendant crossed centerline on SR 12 and struck Plaintiff.  Plaintiff broke her ribia, fibula, kneecap, ankle, wrist, ribs, and three teeth.  Defendant had only a $25,000 Liability limit and Plaintiff had only a $25,000 Uninsured Motorist limit.  Medical bills totaled $325,293.  Negotiated settlement of $785,000 will be pursued against assets of Defendant.

Claim Horror Story: Golf carts

Claim Horror Story:  Golf carts not where they're supposed to be.

More common at the seasonal residences of our clients in California and Arizona, living in a community where most residents commute through the neighborhood in their golf carts sounds like a lot of fun.  Getting to the clubhouse, a neighbor's house for bridge, or taking the dog for a "walk", taking a golf cart while inside a gated residence community makes a lot more sense than driving a car.  But beware, because losses that occur while in/on the golf cart may not be covered by an underlying insurance policy!

Case in point:  Two octogenarians living in a golf community traveled down the street to a friend's house where a summer night's party was held.  After some cocktails another friend asked if they would give him a ride home on the back of their golf cart.  Trying to stand on the back of the golf cart, the friend lost his grip and balance as the golf cart went over a speed bump and he fell, fracturing his hip and sustaining a severe head injury.

The insurance company who provided the home insurance for the operator of the golf cart had recently made a change to their policy's language concerning the exclusion related to operating a golf cart (a change made, not insignificantly, to better match similar changes in competitors' policies).  Because of this change, what may have been considered "covered" just a few months before the accident was denied because of the policy language that was changed at renewal.  The sad result of this claim was that none of the costs of the loss was covered by the insurance policy of the golf-cart operator (who was found partially at-fault for the accident).

There are two points to make.  The first, remember that policy language is not necessarily static from term to term.  There are constantly-changing coverages, exclusions, and conditions.  In fact, when the above-referenced policy change was made there were other changes made to the home insurance policy and the document written to outline the scope and rationale of the changes totalled 700 pages (for a 27-page policy)!  Do not think that what was covered yesterday is necessarily covered today and commit to having regular insurance reviews completed for your client.  The second, if your client owns a golf cart, discuss with your client's insurance agent any concerns regarding insurance policy coverage. 

Mechelsen, Inc.                  Darren McGraw, MBA, CIC                  mechelseninc.com

Claim Horror Story: Car Clubs & Race Tracks

Claim Horror Story:  "I wasn't racing, I was just going really, really fast"

Most auto insurance policies specifically exclude any coverage for participating in an organized racing event.  But what is often misunderstood is that many policies expand on this to also exclude the more common occurrence of sports-car-clubs meeting at a racetrack to enjoy taking their cars to the track as a hobby.

Case in point:  An owner of a Porsche 911 met the rest of his Porsche Club at a local speedway.  The members were allowed to take their street-legal Porsches onto the track and "open it up" on the course.  No prizes, no organization, no timing, etc, just a group of car enthusiasts free to go as fast as they could.

Unfortunately, the Porsche 911 got too wide on a turn, clipped another car, and flipped it several times.  The driver of the other car was ejected from his vehicle and was paralyzed from the waist down.  The at-fault driver's claim for liability coverage and defense was denied and the entire settlement with the other driver was paid out of the at-fault driver's liquidated investment savings.

No two policies are the same and the specific language pertaining to this (and all) exclusions is a critical detail.  Where some may find the wording of one company's exclusion to be vague, other insurance policies are extremely specific.  In this case, the at-fault driver's policy was extremely specific as to exclude anything that had anything to do with driving, riding, or being at a racetrack for any reason.

The lesson:  Know what your client enjoys doing as a hobby and make sure the insurance agent is made aware of it so there can either be a discussion concerning the known exclusions, or to try and find acceptable coverage (if available).

Mechelsen, Inc.                  Darren McGraw, MBA, CIC                  mechelseninc.com

Claim Horror Story: Home Insurance Liability Limits

Claim Horror Story:  Home insurance liability limits aren't just for the home!

A lot of people are careful about their liability exposures at home.  They manage the risks of slip & falls, dog bites, and falling trees by being good maintenance people, good neighbors, etc.  All of that is good, but don't forget that negligence and liability exposures exist away from the home, too!

Case in point:  A Saturday golfer teed up his first shot of the day and sliced it over the trees, into the adjacent fairway, and into the cheekbone of another golfer.  The injured golfer suffered a blowout fracture of the orbital bone and eventually lost his eye.  The injured golfer just happened to be a dentist who kind of needed both of his eyes to do his job well.  The result was a settlement over $800,000.  Fortunately, the at-fault golfer carried a $500,000 limit of liability on his home insurance and a $2,000,000 personal umbrella policy so the entire settlement (including defense costs) was paid for by his insurance company.

Be sure your clients understand that the liability limit on their home insurance policy isn't just for liability exposures on their premises, and be sure that the limit selected on the home insurance policy meets the underlying limit required by the umbrella.

Mechelsen, Inc.                 Darren McGraw, MBA, CIC                mechelseninc.com

Claim Horror Story - Boats & Umbrellas

Real-life Claim Horror Story - A gap between boat liability limits and the umbrella coverage.

A boat owner pulling a friend on waterskis wasn't paying attention and hit another waterskier.  The injuries were serious and the total lawsuit judgment against the at-fault boat owner came to $750,000.  The at-fault boat owner had a boat insurance policy with a $300,000 liability limit and an excess liability (umbrella) policy with a $1,000,000 limit.  Enough insurance to pay for the $750,000 loss?

Nope!  The umbrella policy required that the underlying boat insurance policy carry at least $500,000 worth of liability coverage before it would continue paying the judgment.  Because this underlying requirement wasn't met, here's how the $750,000 judgment was met:

$300,000 paid by the boat insurance + $200,000 paid by the boat owner (personal investments were liquidated) + $250,000 paid by the umbrella insurance company.

The lesson:  underlying insurance requirements are not the same for all insurance companies and they do change over time.  Gaps = bad news.  Be sure that someone is watching this for your clients!

Mechelsen, Inc.               Darren McGraw, MBA, CIC            mechelseninc.com