Keeping up on the trends of property insurance law is why so many people come to this blog. U.S. District Judge Michael Moore recently made a point that some policyholder protection laws have no teeth because the policyholders that are harmed cannot enforce the insurance laws designed to protect them. He recently wrote:1
For better or worse, Plaintiffs are right to point out that Subsection (5)(a) will, at times, create a violation without a remedy—i.e., instances in which an insurer is found to have violated only the interest provisions of Subsection (5)(a) without any other violations meriting an omnibus benefits suit. For instance, were Plaintiffs’ legal and factual contentions to bear fruit in the case at bar without the ‘sole basis’ clause, the Court estimates that Plaintiffs would stand to recover about $30,000.00 in damages.
The Court is troubled by such a regime: Subsection (5)(a) explicitly prohibits conduct while simultaneously providing that conduct with a safe-harbor. And perhaps more-than-coincidentally, the Court notes a clear pattern of this Defendant facing allegations of failure to pay interest under Subsection (5)(a). We are not here to decide whether State Farm has been a good neighbor. But rightfully or wrongfully, State Farm has been implicated in several similar cases (some of which this Order rests upon.)… Yet the fact remains that any flaw in this framework is legislative in nature, as would be its fix. The Court shall not second-guess a purposeful legislative scheme without firmer statutory or legal basis to do so.