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 Posted: Tue May 26, 2009 4:31 pm Post subject: Claim for borrowed/stolen vehicle |
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I would appreciate any thoughts on the following scenario.
Insured gives friend permission to borrow vehicle for a couple of hours. Friend never returns the vehicle. Insured files police report for stolen vehicle the next day and reports claim to his company.
Company denies claim based on physical damage coverage exclusion stating they will not pay for pd coverage if you give someone your vehicle with permission and they do not return it.
Even though it is written in the policy as an exlusion, I still feel there is something not right about the denial. I do not have a copy of the full policy...just the exclusion language.
Any light that could be shed upon this circumstance would be appreciated. I don't want to beat a dead horse but I would like to assist the insured to the best of my ability.
Thank you in advance for your help.
Daystar |
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daystar
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| Posted: Tue May 26, 2009 4:38 pm Post subject: |
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| I forgot to mention that the vehicle was recovered by Immigration at the border of Mexico and AZ. I am not yet sure of the condition of the vehicle however the company maintains they will not cover any PD to the vehicle regardless of its condition. Insured carries both comp & collision coverage. |
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daystar
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| Posted: Tue May 26, 2009 5:25 pm Post subject: |
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Daystar,
| Quote: | | Company denies claim based on physical damage coverage exclusion stating they will not pay for pd coverage if you give someone your vehicle with permission and they do not return it. |
It reads like a very technical scenario... so, in that mind set, if I had lent it to them, I would insist that only the person that barrowed it from me be the one that returns it to me.
Problem solved..! The person that barrowed it returned it. Now its covered.
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That's my 2¢ worth for now. ( maybe ± a couple ¢ ) 
FK, |
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FK
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| Posted: Tue May 26, 2009 5:43 pm Post subject: |
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| Thank you FK!! |
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daystar
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| Posted: Tue May 26, 2009 7:16 pm Post subject: |
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| Quote: | | Company denies claim based on physical damage coverage exclusion stating they will not pay for pd coverage if you give someone your vehicle with permission and they do not return it. |
I find it hard to believe that this 1st party coverage exclusion would be on a policy. If someone borrows the car and it's damaged, it's covered. If someone steals the car and it's damaged, it's covered. What is the difference here? How can a borrowed car be covered and theft of a car be covered yet, a borrowed car turning into a theft is not? Unless this exclusion is in-line with the covered parts mentioned above I don't see how it's possible.
| Quote: | | The person that barrowed it returned it. Now its covered. |
Seriously... I see no difference. It was loaned, stolen, and now returned.
The only difference between the situation posted and a theft is that the vehicle was loaned out first. Who's to say that the vehicle was not stolen from the person it was loaned to? Let the carrier prove this was not the case. |
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tcope
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| Posted: Tue May 26, 2009 9:43 pm Post subject: |
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Hi Tcope,
My thoughts exactly. I talked to the claims manager who states the individuals driving the vehicle were also taken into custody by INS but he does not know if it was the friend of the insured who was driving the vehicle at the time or not. Well...find out was my response and he said that there was no way they could get information from the Border Patrol?? I asked about the condition of the vehicle and they said they did not have any idea and were not pursuing this matter any further. The CM said he has the exclusion and he is going to "use" it.
The exclusion reads as follows;
"In addition to the exclusions which apply to all coverages in this policy. WE do not provide PHYSICAL DAMAGE coverage 6. When YOU give someone YOUR car or permission to use YOUR car and they do not return it."
Unbelievable huh. I cannot get the company to budge one bit. And this policy filing was approved by the state ins. commission. The company refuses to do anything further. They won't talk to the insured other than to continue denying the claim.
I am going to have to refer him to small claims court for any damages sustained to the vehicle. It is an older vehicle so chances are if there is damage it would be a t/l but I am just really astounded at the policy language. I know if the vehicle is stolen or used without permission that coverage is not afforded but I've never heard of this exclusion!
I looked through my own auto policy and a few other policies and there is no exclusion such as this one. The company maintains the insured should have read the entire policy when he purchased it.
Thank you for your thoughts. I agree with you but I think my hands are tied.
Sincerely,
Daystar |
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daystar
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| Posted: Tue May 26, 2009 10:53 pm Post subject: |
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| Quote: | | "In addition to the exclusions which apply to all coverages in this policy. WE do not provide PHYSICAL DAMAGE coverage 6. When YOU give someone YOUR car or permission to use YOUR car and they do not return it." |
I'd go with what FK mentioned... it was "returned".
I have little down that this is a non-standard policy (?). I think the reason why that exclusion was added into the policy was to prevent crackheads from loaning their vehicles out for drugs and then reporting the vehicle stolen. It's a common occurrence among drug addicts.
Just because the DOI approves a policy does in no way mean it will stand up in court. I could see the insured arguing that the vehicle was "returned"... just not to the same place it was borrowed from. I could also see him argue that the only reason why the vehicle was not returned was that INS arrested the person that borrowed the vehicle. Give me 10 more minutes and I could probably come up with 20 more reason's why that exclusion should not apply. It's easy to poke holes in it as it's pretty vague. What is the definition of "return"? Any ambiguities in the policy go in favor of the insurance as the insurance policy is a Contract of Adhesion.
I'd certainly recommend that the insured take the carrier to small claims court. I'm betting they settle prior to a verdict as a verdict could make case law against this exclusion. Paying the claim prior to a verdict means that they can still use the exclusion for denials.
I really think the insured has a slam dunk case. That is one lousy exclusion. |
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tcope
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| Posted: Tue May 26, 2009 11:09 pm Post subject: |
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Amen Tcope. I ran it buy my supervisor and he agrees that this exclusion is very vague and ambiguous in nature. I believe it will be a slam dunk in court and I'll let you know if I am ever advised of the outcome.
Funny you mentioned the drugs because the claims manager said this claim reeked of fraud and that he believed this vehicle was being used to smuggle drugs or illegals into the country. I questioned him if he was including the insured in his suspicions and he quickly said no. I believe the claim should be paid but I cannot force the company so I will advise the insured and hopefully they will take this to court.
Thanks again! I really appreciate your help. Sometimes I run across an unusual situation and it helps to get a different point of view. This issue really got me riled up!! |
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daystar
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| Posted: Wed May 27, 2009 3:48 am Post subject: |
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Just playing the devil's advocate here, I wonder if the exclusion in question isn't just a plain-language variation on the False Pretenses Exclusion, which seems to have been around a good while. One version of it removes coverage for loss to a covered auto resulting from "somone causing you to voluntarily part with it by trick or scheme or under false pretenses." Just Googling around, it's my impression that the courts haven't been particularly reluctant, either on grounds of clarity or public policy, to give effect to this language. Looking at the exclusion here at issue, I'm not sure I follow ya'll on how it is ambiguous, as applied to these specific facts. And, obviously, something just doesn't "feel" right here.
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flint
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| Posted: Wed May 27, 2009 4:28 am Post subject: |
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| Quote: | | "somone causing you to voluntarily part with it by trick or scheme or under false pretenses." |
I've never heard of that type of exclusion on an auto policy. |
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tcope
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| Posted: Wed May 27, 2009 11:19 am Post subject: |
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Interesting exclusion...can say I've NEVER seen that....OP...is this a standard auto policy?
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Lori
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| Posted: Wed May 27, 2009 1:19 pm Post subject: |
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There's nothing like this in the Texas Personal Auto Policy. I do have a vague recollection, though, of having denied a claim or two, way back when, under the False Pretenses Exclusion in policies issued to auto dealers.
Sounds like this car may have been damaged while the occupants were attempting to evade apprehension by INS.
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flint
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| Posted: Wed May 27, 2009 10:44 pm Post subject: |
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| Quote: | | Sounds like this car may have been damaged while the occupants were attempting to evade apprehension by INS. |
Well there we go that might make alittle more sense...sure haven't ever seen it as the OP has it posted
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Lori
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| Posted: Thu May 28, 2009 4:15 am Post subject: |
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Hi daystar,
I'm interested to know more about the explanation that this gentleman offered while stating that he was not suspecting the insured. Did the CM have any specific reason for believing that the vehicle was being used for drug trafficking?
Steven |
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steven
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| Posted: Thu May 28, 2009 4:41 am Post subject: |
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I decided to search for the "False Pretenses Exclusion" and found this definition along with a recent court case in April 2009 of which the FPE was used by the insurance company against a car dealership. The dealership lost by the company using this exclusion.
"false pretense, trick, and device
Refers to an exclusion in the physical damage coverage portion of a garage coverage form eliminating coverage for losses the insured suffers due to the fraudulent acts of others. Examples of false pretense include a customer absconding with an automobile on the pretense of test-driving it; the insured selling an automobile and receiving a bad check for it; and the insured selling an automobile and being instructed to deliver it to the wrong party because of fraudulent instructions. The exclusion can be negated by adding false pretense coverage on the garage liability policy. This endorsement covers the insured when a covered automobile is taken in a fraudulent manner. It also covers losses caused by the insured's acquiring an automobile from someone who did not have legal title to the vehicle. Coverage is most needed by automobile dealers but may also be desired for banks that sell repossessed autos to the public." There are other definitions on google.
Hey Steven...the insured advised that his wife's friend called him one evening and asked if he could borrow his truck as he needed to "tow" his own vehicle out of a salvage yard. Though the insured did not know the wife's "friend" nearly as much as the wife, he told his wife that it would be no problem for the friend to borrow the truck for a couple of hours. The truck was not returned within a couple of hours and the insured and his wife drove around trying to find this "friend" and his wife. After a lengthy search they went home and figured that the "friend" and "friend's wife" would bring the vehicle back in the morning as maybe there was a delay at the salvage yard.
They never saw the friend and his wife again. I am not quite sure when they were notified by Border Patrol that the vehicle had been recovered and there were suspects being held. I sent out my closing letter to the insured yesterday so I expect to hear back from them by week's end regarding the company denying the claim. Unfortunately there is not anything I can do at this time to assist them other than to tell them to file in court against their "friends" for damages (if in fact the friends were the ones apprehended). I requested the Border Patrol Report but chances are next to nothing that they will send me their report as INS is an entity unto itself and past requests for similar reports have been ignored...but I can try!
I was searching through my own auto policy and I finally found language that actually sounds very similar to the False Pretenses Exclusion only worded in a more "gentle" context. I feel that the carrier in this case was just so out there with the blatant wording of their policy regarding the exclusion. It is a high risk company with cheap rates so perhaps that explains it.
I will let you all know what happens when I hear from the insured. It is a rather interesting claim.
Again, thanks for all the posts. I have a much better understanding of this exclusion now.
Daystar |
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daystar
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