Foolhardy conduct never pays. But every now and again insurance companies truly lose sight of their objectives. A recent case llustrates how unnecessarily difficult insurance companies can make the claims process. In that case, the insurance company ended up paying much more in the long run than it needed to pay if it only handled the claims process in good faith from the outset.
In Albelo v. Southern Oak Insurance Company, the insurance company was sanctioned for its egregious conduct in trying to force a disabled person into probate before it would even consider the claim. Fortunately, the appellate court concluded that the insurance company’s requirement that an insured who suffered from age related cognitive disabilities seek the appointment of a guardian for herself as a condition of maintaining her claim for damages to her home was frivolous, and warranted sanctions against the insurance company. If you find yourself in a situation where the insurance company is giving you the unnecessary run around regarding your insurance claim then please contact us today to discuss further.
Before commenting on the case, a little background is necessary regarding estate planning. As you age you may find it necessary and prudent to execute what is called a Durable Power of Attorney (POA). By doing so you choose who you would like to make decisions for you, and you decide how much authority they have if you’re ever unable to make those decisions for yourself. If you find yourself incapacitated, for instance, later on then the person you elect has the legal authority to make those decisions for you and their actions are as good as if you had acted for yourself.
On the other hand, should you decide not to execute a POA, and you find yourself incapacitated and involved with the court system, then the court will step in and appoint a Guardian for you. A Guardian acts just like the appointed POA. However, you usually don’t get the choice in selecting the court appointed Guardian.
Typically if there’s a valid POA there’s no need for a Guardian if the POA gives the person all the legal rights necessary to act on your behalf. But if you don’t have a POA, then you could find yourself in a situation where drawn out legal battles ensues such as what occurred in the Albelo case discussed in greater detail herein, or worse, what played out nationally with the Teri Schiavo case right here in Florida.
Nonetheless, the 3rd District Court of Appeals recent ruling in Albelo v. Southern Oak makes it clear that some insurance companies don’t seem to understand those distinctions even when they should.
Ms. Albelo, at the time she executed a POA appointing her son, was 78 years old and had all of her mental capacities intact. Only about a month after the POA was executed she found herself the unfortunate victim of a home burglary and a year later she informed her insurance company, Southern Oak Insurance, about the burglary. Despite the time lapse, and purported late notice of the claim, the company acknowledged the loss and cut her a check for $1,690.00. However, a few months after reporting the loss to the company Ms. Albelo submitted a proof of loss form indicating that her damages totaled $57,760.66. Southern Oak argued that Ms. Albelo didn’t initiate the claim, but that it was fraudulently brought by her son. It is undisputed that Ms. Albelo now suffers from age-related cognitive disabilities, hence the POA which provided her son could continue making decisions for her despite any future incapacity.
Southern Oak argued that the claim was fraudulently induced by Ms. Albelo’s son and was not the product of her own capacity. Now, remember, she’s incapacitated and the insurance company knows this. Still Southern Oak pushes the issue of her incapacity, repeatedly stating that Ms. Albelo had to appoint a guardian for her in order to bring the suit. The company didn’t attack the validity of the executed POA nor did they argue that the POA was invalid because Ms. Albelo was incompetent when she executed it; the insurance company simply said that because she was incompetent a guardian had to be appointed for her to sue.
Fortunately for Ms. Albelo, the Appellate Court was so disgusted with the frivolous defense asserted by the insurance company that they issued an opinion solely to explain how ridiculous the insurance company’s actions were and then sanctioned the insurance company accordingly.