by eaob3 » Tue Apr 10, 2012 12:04 am
State Farm paid a claim filed by an intermidiary of my mortgage co. after the property had been foreclosed on. To add insult to injury, the deductable was $1000 and State Farm paid out $700 to the intermidiary, recording it as if I filed the claim. Now my ins. rates are going up. Can they get away with this?
Posted: Tue Apr 10, 2012 12:48 pm Post Subject:
Well... yes.
State Farm should have attempted to be in contact with you. Did you speak to them and tell them that, as the named insured, that you did not want to file a claim and did not want the claim to be paid?
The mortgage company has certain legal rights and they are listed on the policy. The policy _might_ give them the right to have the claim paid and/or local laws _might_ give them this right. The insurance company is in tough spot as they are required to protect the mortgage companies interest in the property but usually the policy does not give the mortgage company any rights under the policy.
I asked if State Farm attempted to contact you as they should have done this. If they did not get a response then you really did not object to the claim being paid and if it's a valid claim, it's owed. If I was the adjuster and you objected to the claim, I'd need to look over the policy but might actually not pay the claim... as long as the mortgage company did not have any rights under the policy as an insured. It's a tough situation as the mortgage company is going to come back and tell the insurance company that they are under breach of contract. It's probably not true but that becomes a legal issue.
If the claim has now been paid then State Farm can't go back and "unpay" it. So what are you going to do? You can certainly argue with State Farm that they had no right to pay the claim without your permission and as such, should not have paid the claim and increased your rates. I suspect that they will not change their minds and then it would be up to you to fight that decision.
If State Farm did not pay the claim then your mortgage company would most likely be looking to you to pay the $1700 in damages.
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