Pay What You Want With Smart Advice From Liberty Mutual | Merlin Law Group

How many readers of this blog are risk management professionals who have studied the risks we face? A few. Liberty Mutual’s new slogan looks smart and catchy. It is misleading because it interferes with the work of insurance professionals and risk managers. Most of us don’t fully understand the real risks we face, and that’s why the most expensive risks lead to the most expensive payouts.

I was thinking about Liberty Mutual’s marketing campaign and researching how a Florida church decided it was unprofitable to remove “hurricane” insurance from its policy before two hurricanes destroyed it. The craziness of this case is that after offering a large discount for “hurricane coverage”, the insurer did not offer a policy that did not include the risk.

The gist of the defendant’s motion for summary judgment was that the hurricane claim was denied, and the policy had no exceptions that applied. Indeed, all insurance company adjusters agreed that the policy and its endorsements did not contain language that would not cover losses from hurricane damage.

The insurer’s motion for summary judgment contained a key point in which the policyholder asked how much less expensive it would be to remove the hurricane risk from the policy and accept a reduced premium in exchange for a policy that did not provide “hurricane” coverage. It also said that during the first amendment, approval was given to remove “the so-called hurricane” for destruction.

When the policyholder has decided to buy a cheap insurance policy in Florida that will provide a great learning difference to learning the most important things in Florida, I bet many discussions begin in a way emphasized on the flow of insurance for a summary decision:

Shiloh’s insurance agent contacted Burns & Wilcox, who manages the policy, about removing the hurricane cover, saying, “[T]He has made an insurance policy and has contacted me about this. They want to know what the revenue would have been without the hurricane. . . please help me with this.

The church asked for and was given cheap insurance. But the reform process showed no change! What happens?

The insurance company argued two points to win:

  1. The work that showed that the spread of the hurricane was not asked is part of the process.
  2. The policy should be amended to meet the policy objectives.

The trial court analyzed the issue as follows:1

The two policies in effect when the Plaintiff’s home was damaged do not say anything about hurricane damage. (See more Doc. Nos. 25-10, 25-14). But Florida law advises that ‘[e]The contract of insurance shall be construed in accordance with all the provisions of this policy and as extended, supplemented, or modified by any service or rider or endorsement.’ Fla. Stat. § 627.419 (1)…see State Farm Mut. Emergency. Ins. Co. v. Mallard, 548 So. 2d 733, 735 (Fla. 3d DCA 1989) (‘When the statute is ‘enlarged, enlarged, or modified’ by provisions or conditions inconsistent with its application, the inconsistencies are not disregarded. Rather, the principle is changed to consider the provisions.’). Indeed, the documents obtained during the application ‘bec[o]I part of the policy,’ and ‘the insurer has the right to rely on the applicant’s request for insurance.’

Applying this standard to evaluating the facts at issue, the undisputed facts clearly show that hurricane coverage was not included in any of Plaintiff’s policies from July 2015 onward….

… the lower interest earned by the Plaintiff as a result of lowering the hurricane coverage was carried over to subsequent policies. Accordingly, Plaintiff continued to receive the benefits of her July 2015 contract with Plaintiff: lower wages in exchange for layoffs. The argument against the plaintiff is based on the fact that the procedures that were carried out during the hurricane were not declared as no hurricane. But to interpret the policy to include hurricane coverage where the parties have agreed to waive such coverage – without a subsequent agreement – would be a “difficult, coercive or impossible construction” of the policy….

The main point in this matter is that the intention of the party at the time of purchase is important. Here, it seems reasonable that the owner wants a non-hurricane plan to reduce the cost.

In this case, the policyholder did not purchase the required training. But it got the treatment it paid for.

Thought of the Day

There’s nothing in the world that someone can’t make a little worse and sell a little cheaper, and only the price-conscious people are legally preyed upon by this man.
—John Ruskin
_______________________________________________
1 Shiloh Christian Center v. Aspen Specialty Ins. Co.No. 6:20-cv-01774 (MD Fla. May 9, 2022).