My Test of Intelligence From The Big Boss....
"Please find me cases saying insurance companies cannot hide behind technicalities to avoid payment of insurance policy; also showing causal relationship between loss and technicality issue."
My Response:
Memorandum
To: Big Boss
From: Me
Date: 9/17/2008
Re: Insurance Company’s Duty to Indemnify
You have asked me to prepare some research as to cases addressing insurance company’s inability to hide behind technicalities to avoid payment of an insurance policy.
Our state looks unfavorably upon insurance companies using technicalities written into their policies for the obvious purpose of discouraging lawsuits. The court has stated that to allow an insurance company to take advantage of a technicality of its own making would be a poor precedent and a gross miscarriage of justice(1). While statutory provision requiring insurance companies to make immediate payment of claim would not deter an insurance company from refusing payment on a claim that it had reasonable cause to believe was factually or legally insufficient, it does express intent of legislature to impose upon insurance companies an obligation to pay a valid claim on a policy promptly(2). Insurers have implied duty to deal fairly and act in good faith with their insured. Violation of that duty gives rise to action in tort for which consequential and, in proper case, punitive damages may be sought. However, tort liability may be imposed only where there is a clear showing that insurer unreasonably, and in bad faith, withheld payment of the claim of its insured(3).
Because insurance contracts are contracts of adhesion due to the unequal bargaining positions of the parties, the Court adopted the “reasonable expectations doctrine” and held that it may apply as a tool to aid the courts in discerning the intention of the parties when the policy language is ambiguous or exclusions in the policy are masked by technical or obscure language or hidden in a policy's provisions(4). Under this doctrine, when construing an ambiguity or uncertainty in an insurance policy, the meaning of the language is not what the drafter intended it to mean, but what a reasonable person in the position of the insured would have understood it to mean.
Consumers signing such adhesion contracts are susceptible to unpleasant surprises prepared for the protection of the corporation, not the consumer. The law has begun to take a more active role in the protection of the consumer against such abuses. That consumers have not read or do not understand the implications of contract provisions has been implicitly recognized in our insurance case law by the use of the phrase “hidden-in-policy-provisions”. As a result, new rules in such adhesion contracts have been applied to protect the “reasonable expectations” of the parties.
Footnotes:
1. Casualty Reciprocal Exchange v. Waggoner Drilling Co., 1959 OK 43, 340 P.2d 490
2. 36 O.S.1971, §§ 4405, subd. A, par. 8, 4505
3. Christian v. American Home Assurance Co., 1977 OK 141, 577 P.2d 899
4. Max True Plastering Co. v. U.S. Fidelity and Guaranty Co., 1996 OK 28, 912 P.2d 861
My Response:
Memorandum
To: Big Boss
From: Me
Date: 9/17/2008
Re: Insurance Company’s Duty to Indemnify
You have asked me to prepare some research as to cases addressing insurance company’s inability to hide behind technicalities to avoid payment of an insurance policy.
Our state looks unfavorably upon insurance companies using technicalities written into their policies for the obvious purpose of discouraging lawsuits. The court has stated that to allow an insurance company to take advantage of a technicality of its own making would be a poor precedent and a gross miscarriage of justice(1). While statutory provision requiring insurance companies to make immediate payment of claim would not deter an insurance company from refusing payment on a claim that it had reasonable cause to believe was factually or legally insufficient, it does express intent of legislature to impose upon insurance companies an obligation to pay a valid claim on a policy promptly(2). Insurers have implied duty to deal fairly and act in good faith with their insured. Violation of that duty gives rise to action in tort for which consequential and, in proper case, punitive damages may be sought. However, tort liability may be imposed only where there is a clear showing that insurer unreasonably, and in bad faith, withheld payment of the claim of its insured(3).
Because insurance contracts are contracts of adhesion due to the unequal bargaining positions of the parties, the Court adopted the “reasonable expectations doctrine” and held that it may apply as a tool to aid the courts in discerning the intention of the parties when the policy language is ambiguous or exclusions in the policy are masked by technical or obscure language or hidden in a policy's provisions(4). Under this doctrine, when construing an ambiguity or uncertainty in an insurance policy, the meaning of the language is not what the drafter intended it to mean, but what a reasonable person in the position of the insured would have understood it to mean.
Consumers signing such adhesion contracts are susceptible to unpleasant surprises prepared for the protection of the corporation, not the consumer. The law has begun to take a more active role in the protection of the consumer against such abuses. That consumers have not read or do not understand the implications of contract provisions has been implicitly recognized in our insurance case law by the use of the phrase “hidden-in-policy-provisions”. As a result, new rules in such adhesion contracts have been applied to protect the “reasonable expectations” of the parties.
Footnotes:
1. Casualty Reciprocal Exchange v. Waggoner Drilling Co., 1959 OK 43, 340 P.2d 490
2. 36 O.S.1971, §§ 4405, subd. A, par. 8, 4505
3. Christian v. American Home Assurance Co., 1977 OK 141, 577 P.2d 899
4. Max True Plastering Co. v. U.S. Fidelity and Guaranty Co., 1996 OK 28, 912 P.2d 861