A young man I represented was involved in a horrific accident and lost a leg. He was on his motorcycle and was run over from behind by a drunk driver. Worse, the drunk driver was uninsured. This was not surprising to me since In Florida about one in every four drivers are "uninsured." Chances are good that if you are in an accident in Florida an uninsured motorist will be at fault. They are the biggest road hazards going. What was surprising was that the young man's father, with whom he lived, had paid for $100,000 in UM insurance but would not let his son make a claim for uninsured motorists benefits.
Why wouldn't he let his son make a claim?
- His father's reasoning showed a lack of understanding of the nature of UM insurance and how insurance companies set their rates.
- Basically, every insurance company decides to takes certain risks based on statistics.
- They know what percentage of drivers on the roads are uninsured, and of that group statistically how many of them will have a wreck.
- They do some sophisticated math and calculate their premiums, figuring how much they need to charge to cover all of their expenses and their losses, and still make a profit. This part of the insurance business is done behind the scenes and is called underwriting.
- When they issue a new insurance policy they build their profit and expenses into the premium. They collect enough from a large pool of people to be able to pay off the losses on a few and still turn a profit.
- They decide that they will make enough money on those drivers who are NOT in accidents with uninsured motorists to cover any losses they will sustain on their own insured drivers who do make claims.
So in this case, the father had paid for insurance and would not let his son make a claim. To me that was like not making a claim for insurance if your house burns down. There must be something else going on so I decided to investigate further. The father was of the mind that it was improper to make a claim when he personally did nothing wrong, even though his son was injured by an uninsured driver. The father thought of this as a "frivolous claim" and the uninsured motorist should pay, not his UM company. This mental hurdle was too big and the father never let his son make the claim. I said, "Who needs the money more, your son or Prudential Insurance?" He had never made a claim in over 49 years and did not want to blemish his perfect record. (It's as if we have the strange idea that we owe premiums to insurance companies, but they don't owe anything back.)
Turns out the father was afraid his own insurance premiums would go up, or he might get cancelled or they might not renew if he allowed his son to make a claim. I suggested that the father call his own insurance agent and ask whether, based on this one claim, they would cancel his own insurance or increase his premiums for the same coverage. He still refused to budge. Gosh, if he wasn't going to allow his son to make a claim I could not imagine any circumstances when he would make a claim for UM benefits.
Cancellation of an insurance policy is serious business. It makes it much harder to get new coverage. Increasing premiums just because of a single claim is also serious. Both cancellations/nonrenewals and premium increases are goverened by Florida laws.
FS 626.9541 contains a list of unfair claims practices which includes:
3 a. Imposing or requesting an additional premium for a policy of motor vehicle liability, personal injury protection, medical payment, or collision insurance or any combination thereof or refusing to renew the policy solely because the insured was involved in a motor vehicle accident unless the insurer's file contains information from which the insurer in good faith determines that the insured was substantially at fault in the accident.
b. An insurer which imposes and collects such a surcharge or which refuses to renew such policy shall, in conjunction with the notice of premium due or notice of nonrenewal, notify the named insured that he or she is entitled to reimbursement of such amount or renewal of the policy under the conditions listed below and will subsequently reimburse him or her or renew the policy, if the named insured demonstrates that the operator involved in the accident was:
(I) Lawfully parked;
(II) Reimbursed by, or on behalf of, a person responsible for the accident or has a judgment against such person;
(III) Struck in the rear by another vehicle headed in the same direction and was not convicted of a moving traffic violation in connection with the accident;
(IV) Hit by a “hit-and-run” driver, if the accident was reported to the proper authorities within 24 hours after discovering the accident;
(V) Not convicted of a moving traffic violation in connection with the accident, but the operator of the other automobile involved in such accident was convicted of a moving traffic violation;
(VI) Finally adjudicated not to be liable by a court of competent jurisdiction;
(VII) In receipt of a traffic citation which was dismissed or nolle prossed; or
(VIII) Not at fault as evidenced by a written statement from the insured establishing facts demonstrating lack of fault which are not rebutted by information in the insurer's file from which the insurer in good faith determines that the insured was substantially at fault.
c. In addition to the other provisions of this subparagraph, an insurer may not fail to renew a policy if the insured has had only one accident in which he or she was at fault within the current 3-year period. However, an insurer may nonrenew a policy for reasons other than accidents in accordance with s. 627.728. This subparagraph does not prohibit nonrenewal of a policy under which the insured has had three or more accidents, regardless of fault, during the most recent 3-year period.
Thus, the insured has major league protections against an insurance company which tries to cancel or non-renew, or which increases its premiums after an accident which the insured was an innocent party to. Violations like these open the insurance company up to possible punitve damages and attorneys fees.
