Act broker mortgage ohio violation

Cancellation notice sent to insured and mortgagee, but not to agent

The Illinois Insurance Law, section 143.14, specified that an insurance company could cancel a policy by mailing a notice thereof to the insured and the mortgagee, at the last known address Known to the company. The company mllst maintain proof of mailing by a form recognized by the U.S. Post Office. The section then stated: A copy of all such notices shall be sent to the insured's broker, known, or the agent of record..."

Michael Stewart had secured a fire policy from Republic insurance Company, which had been canceled by the company for nonpayment of premium before a fire destroyed Stewart's home and contents.

Stewart contended he had not received any cancellation notice. He also argued that the Illinois statute required that a copy of such a notice be sent to his broker, or agent of record, and this was not done.

The trial court entered summary judgment for the company, holding the policy had been canceled prior to the loss. This appeal followed. The higher court found that insured.

It held that the failure to receive it by the insured was irrelevant since the company's responsibility, as set forth in the statute, was mailing, not delivery.

While it was shown that, in fact, no copy of the notice was sent to the broker or agent, the court noted that the statute did not make sending a copy of the notice to the agent a condition to the effective cancellation of the policy.

The higher court was convinced that if the legislature had intended such notification necessary to effect cancellation, the statute would have been specific.

The judgment entered in the trial court for the company was affirmed.

Michael A. Stewart, Appellant v. Republic Insurance Corporation--No. 4-93-1129--Appellate Court of Illinois, Fourth District-November 15, 1994--Rehearing denied December 13, 1994--642 North Eastern Reporter 2d 889.

UIM settlement not reduced by workers comp payment

The only question before the court was whether the company could deduct the amounts paid to the insured employee under workers compensation from the uninsured motorist benefits provided under the employer's coverage.

Corbett Allen wag employed by Wilgus Allen Enterprises as a tow-truck driver. He was struck and injured, in the course of his employment, by a car driven by Emilse Jones. His damages exceeded $500,000.

Jones had a policy issued by State Farm with a limit of $500,000, and this was paid to Allen. He received workers compensation benefits of $206,525.

Transcontinental issued a policy to Wilgus which provided for UIM benefits with a limit of $500,000. In its settlement with Allen, the company reduced its $500,000 limit by the $50,000 paid by Jones' carrier, and by the amount paid as workers compensation, so that Allen received UIM benefits of $243,475. Allen filed this action to recover the deduction for workers compensation.

Transcontinental relied upon the following provision in its policy: "The Limit of Insurance under this coverage shall be reduced by all sums paid or payable by or for anyone who is legally responsible. Any amount payable for damages under this coverage shall be reduced by all sums paid or payable under any workers compensation, disability benefits or similar law."

After the trial court entered judgment for the employee, the company appealed.

The court found that two reasonable conclusions could be drawn from the provision for reduction of benefits. It found that the policy mandated reduction of the policy limit. The second conclusion was that the phrase "any amount payable for damages under this coverage' referred back to the initial coverage section wherein the company promised to pay "all sums" the insured was legally entitled to recover as compensatory damages from the owner or driver of an underinsured motor vehicle.

It believed the provision was ambiguous and the trial court's ruling in favor of the employee was affirmed.

Transcontinental Technical Services, Inc.; Transportation Insurance Company, and CNA Insurance Companies, Appellants v. Corbett Allen and Ruth Allen--No. 45A04CV-128--Court of Appeals of Indiana, Fourth District--November 15, 1994--642 North Eastern Reporter 2d 981.

Loss of consortium not subject to policy limit

Myron. Wolff, and his wife, Katherine, were Ohio residents, and were driving in North Dakota when their car was involved in a collision with two residents of that state. Wolff was not hurt, but Katherine was rendered quadriplegic as a result of her injuries

The other two drivers had policies with a total maximum limit of $150,000, and they settled for that amount.

M and Mrs. Wolff had a policy with Erie Insurance Group which provided for UM coverage of $250/500,000, and Erie paid Mrs. Wolff its per-person limit of $250,000, and deducted the $150,000 paid by the other drivers. Mr. Wolff filed a separate claim for loss of consortim under their policy, but Erie denied the claim. He then filed this action for declaratory judgment to determine whether he was entitled to loss of consortium under his policy.

The trial court granted summary judgment in favor of Mr. Wolff, holding that his loss of consortium was a separate claim and was not subject to the per-person limit under Erie's policy. Erie appealed.

The higher court noted that the liability section of Erie's policy specifically included care and loss of services, but the UM section failed to include loss of consortium. The court found that the policy was ambiguous as to which policy limit applied to loss of consortium claims.

The court also decided that the husband's claim for loss of consortium under the UM coverage was not extinguished when his wife settled her bodily injury claim. He did not sign the release of his consortium claim when the company settled with his wife.

Furthermore, the court said that Paragraph Three of a section titled "Others We Protect" read as follows:

"(3) Anyone else who is entitled to recover damages because of bodily injury to any person protected by this coverage."

The court held that this section gave Mr. Wolff, as the named insured, the right to recover for loss of consortium.

(The parties had agreed in open court that if the court ruled in favor of Mr. Wolff, the value of his claim would be arbitrated.)

The judgment entered in the trial court in favor of the insured was affirmed.

Erie Insurance Group, Appellant, v. Wolff et al--C-930028--Court of Appeals of Ohio, Hamilton County--April 6, 1994--640 North Eastern Reporter 2d 583.

Administrator, officers sued over unauthorized use of premiums

Central Benefits Mutual Insurance Company (CBM) and Central Benefits Life Insurance Company (CL) filed this action against RIS Administrators Agency for breach of contract, conversion, breach of fiduciary duty, and violation of Ohio's Corrupt Practices Act. Defendants also included were Daniel Kendall, Charles Aldrin and Alan Clement, who were officers, owners and employees of RIS during the period in question. Before trial, the violation of the Corrupt Practices Act was dismissed.

The agency collected premiums to be remitted to the company, but apparently there was no written agreement with CBM although there was with CBL. hat agreement specified that RIS was to hold such premiums in a fiduciary capacity.

RIS did not hold the premiums in an escrow account, but commingled them. In fact, loans were made to officers of RIS as well as a sister corporation an its parent corporation. The company charged that RIS, in fact, treated the premiums as its own. Delays in remitting the premiums became common.

Daniel Kendall testified that he was a consultant for RIS in the fall of 1983, and during his employment, meetings were held between RIS and CBM, at which time the parties agreed upon a 60-day deferral period for remittance of premiums. Kendall later became acting president of RIS and an officer, director, and shareholder of Capital Group, its parent corporation. He resigned in March 1990.

The trial court granted a directed verdict in favor of Kendall, and the jury returned its verdict against the agency and its employees. At that time, the court reversed its ruling in favor of Kendall. A new trial was granted upon motion of the company.

Kendall appealed.

The higher court ruled that Kendall, as president of RIS, could be held personally liable for the corporation's actions. The evidence showed his knowledge and approval, if only tacit, of the allegedly unauthorized use of the premiums collected by the agency. That evidence was sufficient to be submitted to a jury for a decision as to his personal liability for a breach of fiduciary duty.

The judgment entered in the trial court granting a new trial was affirmed.

Central Benefits Mutual Insurance Company et al v. RIS Administrators Agency, Inc. a/k/a RIS Administrators, Inc.; Kendall, Appellant et al--No. 93AP-314--Court of Appeals of Ohio, Franklin County--March 3, 1994--638 North Eastern Reporter 2d 1049.

Two cases involve cancellation notices to mortgagees