Who Can Accept My Notice of Loss?
(Note: This Guest Blog is by Corey Harris, an attorney with Merlin Law Group in the Tampa, Florida, office. This is the third part in a series he is writing on post-loss duties).
While speaking to a potential client about a agent negligence claim, she told me that the individual she believed to be her agent for the past three years had turned out to be the real agent’s secretary. This struck me as extremely odd, especially since the woman had referred to the secretary as her agent in the secretary’s presence and had never been corrected. While this situation likely seldom arises, it does highlight a very important point, mainly, that most individuals are not very familiar with their insurance company and the hierarchy of employees and agents.
Many people rarely, if ever, have to submit a major insurance claim dealing with their property. The extent of their knowledge and involvement is sending in the premium check when due. Is it any wonder that the typical homeowner might be confused about who their insurance agent is and where they should send a notice of loss?
Possibly contemplating such confusion, some policies specifically state where the notice of loss should be sent. The language varies; it may be the home office or it may be the individual agent who sold you the policy. No matter who or where the policy designates, the policyholder should do their best to comply.
The situation becomes more complicated when the policy is silent or states that the notice should be given to an “authorized agent” of the insurer. Individuals who are authorized agents of an insurer have actual authority to conduct the business of the insurer. Therefore, notice provided to an authorized agent would normally be sufficient if the policy language allows as much. The appropriate authorized agent of an insurer may be spelled out in the policy or in some cases in relevant statutes, so reading and understanding these is always a good idea.
The plot thickens when the individual accepting the notice of loss is not an authorized agent of the insurer. Many times, direct employees of the insurer are not authorized agents and service of notice of loss on them may be ineffective. While this is never a good situation, the courts have provided some leeway when dealing with this type of case.
First, if the person accepting the notice would be deemed to be an authorized agent by a reasonable person, the individual may be deemed to have apparent authority to transact business on behalf of the insurer and, thus, the notice was effective. This apparent authority might come from the actions and representations of the insurer or the individual; either has the potential to impose apparent authority and cause the notice to be effective.
If a policyholder finds himself in a situation where he must submit a claim, he should read the policy first. Many times, the policy states specifically where the notice of loss should be sent. If it is not listed in the policy or the policy is ambiguous, it is never a bad idea to pick up the phone and call the insurance company. Your local agent might be able to help, and, if not, try the home office. Get an answer and follow up in writing to avoid any confusion later, and then send the notice to the designated person or place. Following these simple steps could prevent problems with the claim and keep the file from ever crossing an attorney’s desk.
Chip,
The notice of loss blog was an informative post. I realize your blog was literally referring to the agent who sells the policy, however there is an even broader problem that insured's deal with when facing claims, and that is "who is an agent of the insurer during a claim" and to whom does "agency" apply in terms of negotiating a claim? We deal with this issue on a daily basis when it comes to insurance adjusters working for insurance companies whether it be TWIA, NFIP, or State Farm. Some adjusters are "independent", some are "staff" and some should not be there at all. Often times adjusters make statements that the insured's rely upon to their detriment. When does an individual become an "agent" of the insurance claim? When considering estoppel, does this principle apply only to staff adjusters, does it apply to independent adjusters and does it apply to adjusters working for a for profit adjusting group who works for a for profit insurer who is a TPA for NFIP? Where does the buck stop? There is a popular study book for PA's who are studying for their CPPA and SPPA called "Claim Handling Principles and Practices" written for IIA by Donna Popow, JD, wherein she states in Section 2.31 the following: "Estoppel is a legal bar to asserting certain contractual conditions because of a party's previous actions or words to the contrary. Estoppel results when one party's actions causes another party to rely on that behavior or those words with detrimental resuts". She goes on to illustrate: "For example, a claim respresentative who tells an insured that damaged goods can be discarded before they are inspected cannot later deny the claim on the grounds that the damaged goods were not available for inspection. The claim representative is estopped from denying the claim on that basis." After which, she continues with another long and detailed scenario as another example. Unfortunately, it seems that many times the insurers like to pretend this principle does not exist at all. You and I have had discussions about this very subject. What is the difference between your case with the secretary acting in an agent capacity and an adjuster acting in a claims settlement capacity for the insurer? Are the sales agent's actions more binding than the claims adjusters actions? I realize there are two topics here, but it would be very informative if you could enlighten the subscribers as to who may become an "agent" of the insurer during a claim, when estoppel applies, to whom it applies and if there is any case law on this issue.
Clay,
Great request.
I will try to have these topics broken down and try to get them commented on in future posts not so far in the future by some of the attorneys in our firm.
And, I would suggest that everybody get in writing agreements made with adjusters and never rely on the field adjuster for a national flood claim where estoppel or waiver will never exist.
Clay,
The example in the post was intended to speak more to the fact that many people do not understand exactly who their insurer is. Your comment further highlights this point because even seasoned individuals in this industry can have trouble determing this in some circumstances. When looking at whether estoppel may apply to an individual the main two things to look at are actual and apparent authority. If the person has "actual" authority they are truly authorized to act for and bind an insurer. Apparent authority however is when they do not actually have such authority. This hinges more on the facts of the situation. If the person has held himself out through his actions or statements to have authority to bind an insurer he may have apparent authority and there may be an estopel. Also it is important to look at the actions and staements of the insurer. If an insurer has held the individual out as someone who can bind the company then estopel may work there as well.
There are a myriad of different people which may have actual or apparent authority. Generally being on the sales or adjustment side will not make as much of a difference as the individual facts. One caveat is that apparent authority will only exist if there was a legitimate belief that the person was able to bind the insurer. A court would not likely find that a person could reasonably believe the janitor could have this authority.
There is case law on this topic. I will follow this up with post of specific instances where courts have found different insurance representatives' actions to be binding next week.