Agent, insurer liability for failure to procure flood insurance
This decision in a little long in the tooth, blogosphere-wise, but I've had it sitting around for a while and was reminded of it when I saw it recapped in Mealey's recently. U.S. District Court Judge Peter Beer, of the Eastern District of Louisiana, granted partial summary judgment on May 2 to State Farm and one of its agents, Nora Vaden, over a claim that they were negligent in failing to procure a flood insurance policy for the homeowner, Liselotte Morice. Here's a copy of the very short order written by Judge Beer.
According to the order, Morice maintained a flood insurance policy since 1987 on a rental property in Metairie, Louisiana. In 2003, she allegedly wanted to transfer her coverage from one property to the other, and contacted Vaden, her agent, about doing so. She also allegedly completed a flood insurance application, but State Farm has no record of receiving an application for flood insurance on the property and has no record of receiving a policy premium to purchase flood insurance for the second property.
After Hurricane Katrina hit in 2005, Morice spoke with Vaden at a State Farm mobile disaster claims office, where she learned she had no flood insurance on the second property. She sued in state court, and State Farm removed the lawsuit to federal court based on diversity of citizenship.
The basis for the judge's decision was that Morice should have known as early as 2004 that no flood policy was in effect. She thought that higher premiums withdrawn directly from her account, she said, meant the payments were going for flood insurance. However, they apparently were merely a rate increase on the insurance she already had. According to Judge Beer's order, she admitted she received no confirmation of the flood policy, nor did she receive any documentation from Vaden about the supposed flood coverage. The claims were therefore pre-empted by a Louisiana statute creating a one-year limitations periods for suits involving agent negligence.
"Morice also contends that she took a deposit check to State Farm and that her further payments to State Farm came by way of direct withdrawal from her bank."
Apparently there is no record of this deposit check either. If there was I would think it would have been presented as evidence. I did not even see any additional mention of it.
If she had a flood policy on the first property she would know that the only way a flood policy premium can be paid is annually. The NFIP does not allow premiums to be paid monthly. They require the entire annual premium be paid when the application is submitted.
What about a Federal Tort Claim against the Postal Service for failing to deliver a check she's certain she sent? Or the company that made the glue on the back of the stamp she licked that must have come off? Nora should be happy she's in Louisiana, because if she were in the Southern District of Mississippi she'd be the target of a a couple of criminal investigations, one led by Attorney General Hood and the other by Dunnica Lampton.
People need to become personally responsible for themselves and their lives.
People need to check their business affairs and not depend on others to do that for them.
People ought to check their personal checking account statement each month to insure that the proper amount of money has been withdrawn and directed to the area it should be.
Until we do that we are dependent on others for actions we ought to be preforming ourselves.
We live in a busy world, but we need to not to be too busy to take care of ourselves and our families.
Frank, to my suspicious ears, it sounds like you're suggesting that after we reach a certain age, say 19 or 21, we should behave like grown-ups.
The claim was not pre-empted. The claim is perempted. It is ok though, even the Federal Court judge got it worng.
I agree that customers should keep records of everything - receipts, policies, etc. If State Farm is anything like my company, which is a state company in SC, they send a statement every time the bill's due with my entire policy on it in detail so I can review the policy to be sure nothing has changed. This protects me and them I suppose, but it's good to know what's covered and what's not covered.