Insurance companies often have many subsidiary insurance companies that issue the insurance contract providing coverage. Many making property insurance claims file claims forms mistakenly referring to the parent corporation and not mentioning the subsidiary that actually issued the insurance contract and is responsible for payment of the claim.

I thought about this and why it is important to select experienced property insurance attorneys when a law firm sued the wrong insurance company and lost the case for homeowners who otherwise had a legitimate fire loss claim.1 The federal court of appeals approved the judgment against the policyholders, noting:

The Steinhauers knew early in the case that they had sued the wrong party, both from opposing counsel and from the court, yet they failed to substitute or add the correct defendant in a timely manner.

This piqued my interest about why they did not simply amend the complaint and name the insurance company listed as the insurer. The brief for Liberty Mutual was clear about the entity that should have been named and was paying the claim benefits:

[A] separate entity, Liberty Insurance Corporation, issued homeowners policy no. H37-261-181750-70 to plaintiffs…plaintiffs had reported the loss to Liberty Insurance Corporation in a timely manner . . . Liberty Insurance Corporation issued a check to plaintiffs . . . based on a preliminary inspection of the damage

The lawsuit should have been amended to name Liberty Insurance Corporation and not Liberty Mutual Insurance Company. The Declarations section of the policy typically indicates the exact name of the insurance company issuing the contract despite having the brand name of the parent corporate insurance company listed.

So, what did the policyholder attorneys argue? The policyholder brief seemed to make the argument that it did not matter that the actual insurer was not named since Liberty Mutual Insurance Company and Liberty Insurance Corporation were essentially the same:

Appellee investigated the claim and prepared an estimate of the loss, summarizing Appellee’s calculations in a letter to Appellants….Ms. Winters, the adjuster writing that letter, admitted Appellee was withholding ‘depreciation’ in the amount of $ 92,908.71. …Again, that letter was on ‘Liberty Mutual Insurance’ letterhead and had a note to contact Winters at Mandy.Winters@Liberty The margin also contained two notations, one saying ‘Visit us Online at’ and the second saying ‘About Claims Process’

All correspondence from the insurer was on Liberty Mutual Insurance letterhead. …There is also an email written by Larry Walker on Liberty Mutual Insurance and Safeco Insurance joint letterhead…

Mr. Adam Blagg, a public adjuster licensed in Oregon and Washington, testified in a declaration that, in his experience in dealing with Liberty Mutual Insurance Companies and Safeco Insurance Companies, these sister entitles ‘are intermingled in their underwriting and claims handling.’ Mr. Blagg testified about his conversations with an in-house attorney for Liberty Mutual and Safeco, Caroline Hopkins. She told him (admitted) ‘that the Liberty Mutual name and subsequent email address can be used synonymously for all the separate companies like Safeco and all the separate subsidiaries for Liberty Mutual Group.’ …Liberty Mutual Insurance Co. and Liberty Insurance Corporation are registered with the State of Oregon as having the same address, the same telephone number and the same registered agent….

Despite this argument, and rather than simply amending the complaint to sue the correct insurer as soon as the mistake was called to their attention, the policyholder kept suing only Liberty Mutual Insurance Company—which is technically not the insurance company issuing the contract. The appellate court affirmed the ruling for Liberty Mutual Insurance Company because it did not issue the insurance contract.

The lesson from this—make the claim with the insurer that is listed as the insurer in the declaration page. File claims forms, proof of loss, and especially lawsuits naming the insurance entity listed in the declaration page as the one issuing the policy.

Thought For The Day

Great industries are never made from single companies. There is room in space for a lot of winners.
—Jeff Bezos
1 Steinhauer v. Liberty Mut. Ins. Co., No. 20-35837, 2021 WL 5632475 (9th Cir. Dec. 1, 2021).