Insurance Companies Owe Duty of Good Faith and Fair Dealing to Additional Insureds

In a recent opinion, the Indiana Court of Appeals decisively ruled that insurers owe a duty of good faith and fair dealing to all insureds, even if an insured is not the policyholder.

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Many insurance policies extend coverage to individuals other than the person or persons specifically listed in the policy. For example, a driver’s automobile insurance policy may cover bodily injury to passengers in her vehicle, or a homeowner’s insurance policy may provide hazard coverage to the homeowner’s mortgage lender if the home suffers damage. In these instances, the individual or entity receiving coverage under another’s insurance policy is referred to as an “additional insured.”

In Schmidt v. Allstate Property and Casualty Insurance Company, Schmidt was injured while riding with a friend, who was insured by Allstate. She sued her friend and the driver of the other vehicle for negligence. Schmidt qualified as an insured under her friend’s Allstate policy, which defined “Insured Person(s)” as “any person while in, on, getting into or out of, or getting on or off of an insured auto with your permission[.]”

After Allstate refused to pay Schmidt the policy limits for underinsured motorist coverage, she amended her lawsuit to include a bad faith claim against Allstate. Allstate argued that it did not owe a duty of good faith and fair dealing to Schmidt since she was not named in the applicable insurance policy.

The Indiana Court of Appeals rejected Allstate’s argument. When a policyholder enters into an insurance contract, the court reasoned, they expect that their family and friends will be treated fairly by their insurance company. The court channeled Gertrude Stein to declare that “an insured is an insured is an insured is an insured” for purposes of an insurance company’s duty of good faith and fair dealing. The court therefore affirmed that additional insureds may be entitled to compensation if an insurance company fails to deal with them in good faith.

The Importance of Preserving Evidence after an Explosion or Fire

In the aftermath of a catastrophic explosion or fire, it is not surprising when victims or their family members do not think about the need to preserve evidence.  But in those cases where there is litigation to determine who or what may bear fault for causing the incident the efforts, or lack of efforts, to preserve and protect the evidence taken in the immediate aftermath of the fire or explosion will prove to be critical to the parties.  Test Data

Preserving the evidence is in everyone’s interest because the ultimate goal of any litigation is to determine the truth of what happened.  If it can be shown that the evidence was in the control of one party or another and the party in control failed to take appropriate steps to preserve the evidence so that other interested parties could examine it, the party in control may be accused of “spoliation” of evidence.  In that case, the court may ultimately instruct the jury that had the evidence been preserved and made available it would have been adverse to the party who could have preserved it — the so-called “adverse inference instruction”.

An enormous amount of information can be gleaned from what may appear to be unlikely sources.  Care must be taken to preserve even some materials that may seem to be inconsequential.  For example, lithium ion batteries such as those used in phones, tablets and laptops have a very high energy density. Although the electronic circuitry in chargers are supposed to prevent overcharging, those circuits can fail allowing the batteries to overheat and catch fire.  Yet, some fire investigators, focused on more obvious causes, can miss this evidence, which gets scooped up with all the other fire debris after the initial scene investigations have been concluded.

It is important for the victims of fires and explosions to have their own experts and investigators review the scene and not rely solely on those sent to the scene by their insurance company.  It is also important to act quickly, before the critical evidence is gone.

If you have questions regarding the need to preserve or protect evidence after a fire or explosion, contact an experienced attorney for help.

The “Professional Services” Exclusion

You run a small business.  Someone allegedly gets hurt while on your premises and you receive a letter from her attorney notifying you of the claim.  You advise your insurance company, fully expecting them to come to your rescue and provide you with counsel to defend your business against the injury claim.

But then, to your amazement, your insurance company sues your business.  Why?  They are asking the court to determine that there is no coverage for your business because of a provision in your CGL policy known as the “professional services” exclusion.  What is this exclusion all about?

“Claims based on negligent performance of commercial or professional services are ordinarily insured under ‘errors and omissions’ or malpractice policies.  For this reason, CGL policies typically exclude claims arising out of professional or other business services.”  Tri-Etch, Inc. v. Cincinnati Ins. Co. 909 N.E.2d 997, 1002 (Ind. 2009), citing Erie Ins. Group v. Alliance Envtl., Inc., 921 F.Supp. 537, 541 (S.D.Ind. 1996).

There may be exceptions to the “professional services” exclusion, and your business may, in fact, have coverage for the claim — even if the insurance company argues there is not.  Every situation is different.  For an evaluation of your situation, contact us.

FDA Releases Report on 5-Hour Energy, Monster Energy, and Rockstar Energy Drink

Have you consumed an energy drink, looking to find that big burst of energy suggested by the advertisements, only to find yourself feeling terrible afterward?  If so, you are not alone.

According to a report recently released by the Food and Drug Administration (“FDA Report”), numerous severe adverse effects following use of energy drinks have been reported and collected in the FDA’s Adverse Event Reporting System (known as “CAERS”).  According to the FDA Report, the FDA “advises consumers to talk with their health care providers before using any product marketed as an ‘energy shot’ or ‘energy drink.'”

The symptoms and outcomes reported included everything from feelings of fatigue, migraines, dizziness, nausea and agitation to more serious reports of anxiety, blood pressure fluctuation, abnormal or increased heart rates, vomiting, hyperventilation, disorientation, convulsions, loss of consciousness, falling, head injuries, and death.

The FDA Report is available here.

If you or a loved one believe you have been adversely affected by consuming an energy drink, please contact Mike or Jim at (317) 269-2500 or toll free at (888) 337-7766.