General Insurance Dispute Information

Homeowner Liability Insurance Coverage Upheld for Harmful Accident

Published on: February 10, 2011 | By Berniard Law Firm

The Fourth Circuit Court of Appeals in New Orleans recently affirmed that a policyholder was covered by his Homeowner’s policy for injuries inflicted during a brutal accident where another was seriously injured. While leaving a party, Hurst – the policyholder – fashioned a lock pick out of wire to open the door of his truck in which he had locked his keys. After gaining access, he flung away the wire and it bounced off the back of his truck and into the open window of another departing guest, Ms. Baker, injuring her severely.

Hurst held two liability insurance policies with Liberty Mutual: a $300,000 Homeowner’s policy and a $30,000 Automotive policy. The injured Baker sued Hurst, Liberty Mutual Insurance, and her own Uninsured Motorist carrier: Allstate. Through procedural motions, both Baker and Liberty Mutual asked the lower court to make a determination as to whether Hurst was covered by the higher limit homeowners’ policy at the time of the accident.

The Homeowners’ policy included a provision excluding coverage for personal liability and medical payments for bodily injury “arising out of the ownership, maintenance, use, loading or unloading of motor vehicles.” The heart of the issue became whether Hurst’s use of the wire to gain access to his vehicle and throwing it into his truck bed was “use or loading of the vehicle” such that it would bar the coverage of the Homeowners’ policy.

The lower court ruled that Hurst’s throwing of the metal object onto the hard surface of the truck bed had no connection to the use of the truck; it was the disposal of the object itself that was negligent. This is because courts consider the role the vehicle played in the entire scheme. Here, the Fourth Circuit reasoned that the vehicle must be central to the theory of liability and that here it was not – the flinging of the wire was at the heart of Hurst’s liability for injuring Baker. Applying the relevant legal standard from a case called Carter, the Court considered whether (1) the conduct of the insured was a proximate cause of the injury (it was); and (2) whether it was a use of the automobile (it was not). The Court therefore ruled that the exclusion for automobile use did not apply and Hurst’s conduct at the time of the accident.

Homeowners’ policies often include higher limits for liability than do automotive or other policies that people who injure you might have. Given the tragic nature of Ms. Baker’s injury, it is somewhat clear why she sought the Homeowners’ $300,000 policy coverage and why Liberty Mutual sought to deny coverage on that claim.

Legal expertise is very often required to achieve the best outcome for your injuries because insurance companies like Liberty Mutual will skillfully and zealously attempt to limit the amount payable to injured persons – as they did here.

Insurance Policy Exceptions in Automobile Accidents

Published on: February 8, 2011 | By Berniard Law Firm

Automobile insurance policies are a means of protecting car drivers and accident victims. It creates a pool of money so that any party at fault can make the victim of his or her negligence whole. When a business holds itself out as a car dealer, policy terms are a little different based on each party and insurer. An insurance policy agreement between the insurer and the insured is a contract between the parties. Under Louisiana law, words in a contract are presumed to have the plain and ordinary meaning they are generally given. The basic intent of the parties is construed through the words of the contract, and no court can disturb the intent of the parties. If an insurer is attempting to show that a certain provision in an insurance policy exempts coverage, the insurer has the burden to prove any exception.

In a recent case, a court discussed how insurance policy language will be interpreted. The facts giving rise to the cause of action in McKay v. W & J Farms, are as follows:

The plaintiff, Connie McKay, was driving South on Highway 153 in Richland Parish. As she travelled through an intersection, her vehicle was struck on the side by a tractor driven by Kyle Mills. Ms. McKay claims that an insurance policy held by the seller of the tractor extended to Mr. Mills when he was driving the tractor. The way in which Mr. Mills came to be driving that vehicle at the very moment are interesting and are crucial in relation to the cause of action. Mr. Mills works on a farm with his brother and another individual, Mr. Livingston. The three individuals decided that it was important that they purchase another tractor to increase productivity on the farm. Mr. Livingston and Mr. Mill’s father went to a Peterbuilt tractor dealership in order to check prices of tractors. Mr. Livingston brought a tractor to the farm to test it out. Mr. Mills was advised to drive the tractor from the farm to the elevator. During this fateful drive, he struck Ms. McKay at the intersection with Highway 153.

Ms. McKay argued that the Peterbuilt dealer’s insurance coverage extends to Mr. Mills as he was driving the tractor. The insurance company’s policy with the Peterbuilt dealer states in relevant part:

The following are insured for covered autos…anyone else while using with your permission a covered auto you own, hire, or borrow, except…Your customers, if your business is shown in the Declarations as an auto dealership.

In the Peterbuilt dealers business declaration, the business was declared a car dealership. Ms. McKay argued that there is a distinction between auto dealership, as is stated in the insurance policy, and car dealership, as is stated in the declaration. There is obviously no real distinction between these terms. From a logical perspective, a person reading these two terms would find that they are identical. The next question is whether Mr. Mills was a customer of the Peterbuilt dealer. The facts in the case showed that Mr. Mills’ brother was going to be the actual purchaser of the tractor. However, under Louisiana law, a person test driving a vehicle in order to help a purchaser make a decision of whether to purchase that vehicle is considered an extension of the purchaser. This means that the test driver is a customer in the eyes of the law. Therefore, when Mr. Mills was driving the tractor he was a customer and under the terms of the dealer’s contract with the insurance provider, Mr. Mills was not covered under the policy.

Insurance policies are difficult and complex contractual agreements. In order to understand policies, a general understanding of the law is essential. If you have been involved in an accident, you are likely going to have to deal with an insurance company.

Insurance Coverage for Lender Vehicles Affects Louisiana, Other Residents

Published on: January 29, 2011 | By Berniard Law Firm

Buying a car usually entails walking around a car dealership, spotting a car you potentially want to buy, and then test driving the car to see if satisfies what you are looking for in a vehicle. However, one aspect that you may not take into consideration, is what happens if you get into a car accident while driving the car dealership’s vehicle? Who is is liable? Who ultimately has to pay? This all depends on the insurance contract the car dealership has, and whether or not you, as the test driver of the vehicle that has been damaged, is insured. Oftentimes, there is a limiting provision commonly found in insurance contracts called a “garage policy”, it excludes customers of an automobile dealership unless the customer does not have liability insurance of his/her owner is statutorily uninsured. But what exactly does this mean?

A garage policy is a provision designed to limit coverage under certain circumstances. For instance, the recent case of Chretien v. Thomas, the Louisiana Second Circuit Court of Appeal explored garage policies in depth due to the existence of one in a service station’s insurance policy. The course of events in the Chretien case involved the defendant, Thomas, bringing in a vehicle for repair. He was provided with a vehicle to drive while his vehicle was being serviced. Significantly, the car being serviced was his girlfriends and was listed as a covered vehicle under a policy issued by Allstate Insurance Company. The service station lent the vehicle to Thomas in hopes his employer would purchase the vehicle. The service station was insured by Stonington Insurance Company, which had the infamous garage coverage provision included in the insurance agreement. The garage policy excluded coverage for customers of the service station IF the customer had other insurance available. Shortly after being provided the “loaner” vehicle, Thomas was involved in an accident with the Plaintiff, who sued Thomas, the service station, as well as both insurance companies, Stonington and Allstate. The dilemma the court faced was determining who is ultimately responsible for coverage, and for how much. Under the garage policy, one would assume that Thomas would be responsible, since the vehicle he brought in for service was covered by insurance, thus, preventing him from relying on the service station’s coverage. However, the issue is not so easily resolved.

Both insured parties have a burden to meet, and a burden to prove in order to avoid liability. When determining whether or not a policy affords coverage for an incident, it is the burden of the insured to prove the incident falls within the policy’s terms. On the other hand, the insurer bears the burden of proving the applicability of an exclusionary clause within a policy, such as the “garage policy” provision found in Stonington’s agreement with the service station. To begin with, an insurance policy is a contract, as such, the party’s intent is reflected by the words of the policy, this determines the extent of the policy’s coverage. When looking at the policy’s language, one cannot read too much into the words, phrases and words are to be construed using their plain, ordinary, and generally prevailing meaning. Thus, interpretation or paraphrasing is not encouraged when exploring insurance policies, to put it simply, just look to the four corners of the document, and to nothing else, in order to understand what the policy means.

Lake Charles Payment Delays Cost Insurer in Court

Published on: January 27, 2011 | By Berniard Law Firm

Lake Charles resident Ginger Hinch Durio sued her Insurer, Horace Mann, over the extent of payments she received for the damages she sustained during Hurricane Rita. Durio’s house was severely damaged, including her garage where her family’s belongings were being stored while they were in talks to sell the house. The ceiling inside the garage collapsed onto their stored belongings. Additionally, an engineering report obtained by Durio four months after the hurricane indicated the structural and mechanical integrity of the house was compromised, and the HVAC, electrical, and plumbing systems had failed.

Durio’s policy with Horace Mann provided for several categories of damages for which the Insurer would pay her up to their respective policy limits: Structure ($173,300), Adjacent Structures ($17,330), Contents ($103,980), and Additional Living Expenses ($103,980). After Durio submitted a claim in September of 2005, Horace Mann made several payments to her that fell far below the category policy limits. Despite Durio’s submission of re-evaluation materials, Horace Mann ultimately honored in full only her Contents claim (for all the belongings contained in the garage) of $47,061.44. This, however, was after the Insurer issued her a “sarcastic” check for $6.90 for a broken flowerpot.

The Third Circuit Court of Appeal affirmed the damages awarded by the Trial Court for a total in excess of $1.5 million. Durio received Contractual damages for the difference between what she was paid by Horace Mann and the policy limits for Structure and Adjacent Structure damages. In addition, the Court affirmed an award of $39,000 for thirty-eight months of living expenses based on Durio’s own estimation for the period in which the Insurer worked on the claim.

Court of Appeals Awards Bad Faith Damages Against Insurance Company Who Refused to Pay

Published on: January 17, 2011 | By Berniard Law Firm

For the family of someone killed in a tragic car accident faced with mounting medical bills there is nothing worse than learning that the driver at fault for the accident did not have insurance. Luckily, when that happens, you should be protected by the uninsured or underinsured motorist (UM) coverage on your vehicle. For the Jones Family, however, their UM provider refused to tender the policy limits even after undisputed evidence was provided that damages exceeded that amount. This nightmare happens to far too many families and is a sad reality during a time in which insurance companies try to limit payouts in any way possible.

Thomas Jones was severely injured when his motorcycle was hit by a vehicle driven by Bertha Johnson, and his wife Mary was killed. Johnson was entirely at fault for the accident but neither she, nor the owner of the car she was driving, had insurance coverage at the time. The Jones’ sought their policy limits of $100,000 per person/$300,000 per accident from their UM insurance and at one point the parties agreed that $200,000 would be paid. However the amount was not tendered due to disputes regarding liens from the Jones’ healthcare providers and the company’s concern regarding future claims.

Luckily the Jones had redress when their UM provider refused to pay. The Jones’ brought an additional claim against their insurer, the Markel American Insurance Company, and were awarded $100,000 in (additional) penalties as well as $10,000 in attorneys’ fees. In a recent decision (available here: 45,847-CA) the Louisiana Court of Appeals upheld that ruling.

Fire Claim Difficulties Show Need for Skilled Attorney

Published on: December 23, 2010 | By Berniard Law Firm

In the legal world, one of the most important things to do is to make sure that all necessary documents are submitted to the court, and the opposing party, in a timely manner. The procedural aspect of the legal process has many deadlines that need to be met. The result of not meeting these deadlines could lead to the end of a litigation with no chance of bringing the same claim before court.

In Tapp v. Shaw Environmental Inc., we see an example of the results of waiting until the very last second to bring a claim against parties. Tapp, the plaintiff, brought a claim against a number of sellers and manufacturers of trailers. The basis of the complaint was a fire that occurred, in the trailer, on February 27, 2007. The statute of limitations, the time within which a claim could be brought for this event, was one year. Tapp waited until the very last minute to file a complaint on February 26, 2008. The complaint was literally filed on the very last day under the statute of limitations. On a later date, after the time period to bring the claim had passed, Tapp realized that there were other defendants that should have been added to the original complaint. The problem was that Tapp could not simply file a complaint against these new defendants. Tapp needed to add these defendants by a provision within the federal rules of civil procedure called “relation back.” The “relation back” procedure is like adding defendants to the original complaint as if they were actually on the original complaint. The purpose is to allow plaintiffs to add defendants even if the statute of limitation has expired. The federal rules of civil procedure explain that if the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out in the original complaint, and if there are new defendants, that these defendants are notified and added in the amendment within 120 days after the filing of the original complaint. This provision of civil procedure is a last second, last chance, opportunity to add new defendants. It is by no means the most efficient or effective way of adding defendants to a case.

The complaint filed against the first newly added defendant was filed on June 13, 2008. This defendant executed a waiver of summons on June 25, 2008, which was exactly 120 days after the filing of the original complaint. The Court ruled that, as to this defendant, the federal rules of civil procedure requirements for adding a defendant post-expiration of the statute of limitation had been met. Thus, this defendant was properly added onto the original February 26, 2007 complaint. Another amended complaint was filed adding another defendant on August 8, 2008. Using the same “relation back” procedure, the Court ruled that this newly added defendant was added outside the 120-day period allowed by federal civil procedure. Therefore, this defendant was not added to the case, and thus the plaintiff could seek no relief from this defendant for this claim. Tapp lucked out because at least one of the new defendants was added to the case. However, as this case clearly demonstrates, it is essential that claims are brought as soon as possible within the statute of limitation period, so that if anything needs to be done within the period, it can be done while time still remains to take action.

It is essential that if you have a claim, or your think you have a claim, you should seek the advice of legal counsel as soon as possible so that time does not run out on your ability to take any kind of action on your claim.

Hartzo Case Illustrates Difficulties with Insurance Policies, Disputes

Published on: December 19, 2010 | By Berniard Law Firm

The Court of Appeals of Louisiana, First Circuit, recently defined the way in which the Court would look at implied permission for the use of ones car. Depending on the terms of the auto insurance policy, the policy may provide protection for damages that even extend to the passenger in a vehicle driven by someone who has permission to drive the vehicle. This means that if the passenger died in the car accident, the passenger’s family may be able to collect by filing a petition for damages against the insurance of the actual owner of the car, not just the actual driver at the time of the accident.

In Hartzo v. American National Property and Causualty Insurance Company, the driver of a Ford Taurus crashed into a Toyota Tacoma. The driver and passenger of the Taurus were killed in the accident. The driver of the Taurus was the brother of the owner of the vehicle. The family of the passenger filed a petition for damages against American National Property and Casualty Insurance Company (ANPAC) and another insurance company. The insurance policy through ANPAC had provisions that extended such benefits if the driver of the vehicle had express or implied permission to drive the vehicle.

ANPAC thought that they had a good argument that the driver of the Taurus had no permission to drive the vehicle. The Court of Appeal looked at the facts and the policy that the owner of the vehicle had. The Court found that deciding whether there was express permission would not dispose of the case. The Court spent its time analyzing what factors they would look to in order to find implied permission. The Court stated that “the issue of implied permission involves a balancing of legal and public policy issues and must be inferred from the totality of the facts and the relationships involved.” With this statement the Court seems to be saying that both customary use and relationship can be used to find implied permission. The Court of Appeal later stated that the following factors were indicative of implied permission: (1) At the time of the accident the driver and owner of the vehicle were living in the same household, (2) On the day of the accident, the driver of the vehicle had already driven the vehicle with the knowledge of the owner, (3) In the past, the driver had driven the Taurus on many occasions. Therefore, the Court looked at both the relationship involved (i.e. the fact that driver and owner lived under the same roof) and the custom between the parties (i.e. the fact that the driver had driven the car on many occasions). Thus, ANPAC was liable under the petition of damages.

It is very important to clearly understand your insurance policy. The policy may be confusing and many different, and what may seem insignificant factors, can change the entire outcome of a litigation. It is essential that prior to settling any issues with your insurance company, that you seek the advice of competent legal counsel to help you maneuver through complex insurance policy determinations.

Progressive Insurance Slapped With Penalty for Failing to Pay in Covington Car Wreck

Published on: December 5, 2010 | By Berniard Law Firm

Previously on this blog, we have explored several cases that profiled the often contentious role that insurance companies play in auto accident litigation. In the interest of seeing that consumers get the benefits of the policies they pay for and to promote a speedy resolution for third parties who have legitimate claims, the Louisiana legislature enacted a law that requires insurers to pay claims within 30 days of being notified with a satisfactory proof of loss by the insured. La. R.S. 22:1892. An insurer’s failure to do so, if “arbitrary, capricious, or without probable cause,” can mean a penalty for the insurer of up to 50 percent of the claim amount, in addition to attorneys’ fees and costs. This requirement was at the center of the recently decided case, Krygier v. Vidrine.

On October 11, 2006, Kenneth Krygier was a passenger in a rented Chevy Cobalt being driven by his co-worker, Billy Toon. Krygier and Toon were on the way to their employer’s office in Covington when their vehicle was rear-ended by a Ford Explorer operated by Karen Vidrine and insured by Liberty Mutual. Toon also carried an insurance policy with Progressive that provided uninsured/underinsured motorist (“UM”) coverage to all occupants of an “insured” vehicle. Vidrine’s policy with Liberty Mutual had a limit of only $30,000 per incident, so when Krygier filed suit against Vidrine for the injuries he suffered in the crash, he also named Progressive and his employer as defendants. Progressive first denied responsibility for UM coverage because it alleged the rented Chevy wasn’t an “insured vehicle” under Toon’s policy, Krygier was not a “covered person” under the policy, and Vidrine was not underinsured. The parties filed cross-motions for summary judgment on these questions, and in December, 2007, the trial court determined that coverage under Progressive’s policy extended to Toon’s rental car and to Krygier as a guest passenger.

As part of the discovery process, Liberty Mutual served on all parties a copy of the policy with the $30,000 limit it had issued to Vidrine covering her Explorer. Nevertheless, Progressive took the position that it did not have sufficient documentation establishing that Vidrine was underinsured at the time of the accident. In January of 2008, Krygier gave a deposition during which he testified about his injuries, his ongoing medical treatments, and his pain and suffering. Krygier also provided documentation regarding his employment, lost earnings, and medical treatment in response to Progressive’s discovery requests. In November, 2008, Krygier filed an amended petition for damages in which he sought penalties, attorneys’ fees, and costs based on Progressive’s failure to tender its policy limits upon receipt of satisfactory proofs of loss. Krygier received only $15,000 from Vidrine’s Liberty Mutual policy (the balance of which was paid to Toon). Krygier alleged that, based on this result and the outcome of prior proceedings in the matter, Progressive was well aware that Vidrine did not have sufficient insurance to cover the damages he sustained in the accident. Progressive’s failure to pay, Krygier argued, amounted to a violation of the statute requiring a timely tender of payment. Accordingly, Krygier asked for $50,000 in penalties (half the policy’s $100,000 limit), together with reasonable costs and attorneys’ fees. The trial court granted Krygier’s motion, finding that Progressive was “arbitrary and capricious in failing to promptly tender policy limits,” and awarded penalties in the amount of $50,000 to Krygier. The judgment further awarded Krygier “the remaining interest owed on the policy limits, plus attorneys’ fees and costs.” Progressive appealed to an unsympathetic First Circuit. The court stated, “we find reasonable persons could reach only one conclusion, i.e., that Progressive acted arbitrarily, capriciously, or without probable cause in not tendering its policy limits within thirty days of” first learning of Krygier’s legitimate claim. The court affirmed the $50,000 penalty awarded by the trial court.

In this case, Krygier’s misfortune was only compounded by Progressive’s efforts to protract the litigation and delay payment. In situations like this, it is especially important for an accident victim to have an experienced attorney on his side to ensure he gets the recovery he deserves.

Court Examines Question of Insurance Policy Coverage Limitations After Tragic Car Accident

Published on: December 3, 2010 | By Berniard Law Firm

Many employees routinely use their own automobiles in the course of their employment. Whether running an occasional errand on behalf of the company, or using a car to make door-to-door sales calls, employees who drive their vehicles for the benefit of their employers may wonder how liability is affected if they are involved in an accident. Generally speaking, an employer is responsible for the negligence of its employees who operate motor vehicles on behalf of the company. For this reason, employers maintain liability insurance policies that cover them for losses that may arise from auto accidents caused by employees. Like other policies, these liability policies can be subject to specific limitations to coverage as arranged between the employer and the insurer. One example where the language of the policy exceptions proved determinative is the 2010 case of Anderson v. State Farm Fire & Casualty Insurance Co.

Donald Anderson worked for Labor Finders, a staffing agency with offices throughout the state of Louisiana. Anderson was killed when an oncoming motorist, Gordon Pugh, Jr., crossed the center line and struck his car as Anderson was driving to an appointment for work. After her father’s death, Monica Anderson filed a wrongful death action which named Pugh, Pugh’s insurer (State Farm Fire & Casualty Insurance Company), and National Union Fire Insurance Company as defendants. National Union was included because the company had issued a liability policy to Labor Finders which was in effect at the time of the accident. This policy, which applied to employees of Labor Finders, contained an endorsement for uninsured/underinsured motorist (UM) coverage. National Union answered, denying that Anderson was covered under the policy. Monica settled with Pugh and State Farm, after which National Union filed a motion for summary judgment. The trial court concluded that under the clear and unambiguous terms of the policy, Donald Anderson was not covered.

On appeal, the First Circuit conducted its own detailed analysis of the policy language. After noting that “insurers have the right to limit coverage in any manner desired, so long as the limitations are clearly and unambiguously set forth in the contract and are not in conflict with statutory provisions or public policy,” Campbell v. Markel American Insurance Co., the court found that an exclusion within the National Union policy which denied coverage to any employee who was injured in the course of operating an automobile applied to Anderson’s death. The court also concluded that Anderson was not covered under the policy’s UM endorsement because it extended coverage only to a “partner or officer” of Labor Finders, of which he was neither. Accordingly, the court concluded that the trial judge correctly found that Anderson was not eligible for liability coverage under the National Union policy, and affirmed the decision.

The Anderson case provides a warning to employees that they should not assume they will necessarily be covered by their employer’s insurance policy if they are involved in an accident–particularly, as here, one where they are not at-fault. We can presume, though it is not stated in the court’s discussion, that Monica Anderson settled with State Farm (the at-fault driver’s insurer) for a sum that was within the policy limits. The suit against National Union was, perhaps, an understandable attempt to obtain more funds beyond those she received in the State Farm settlement. While Monica’s situation is tragically sympathetic, the court made it clear that an issuer can use the language of a policy to limit coverage substantially, even to the detrmiment of an “innocent” party.

Katrina Victim Denied Benefits Under Lender-Only Flood Insurance Policy

Published on: October 31, 2010 | By Berniard Law Firm

By the terms of most mortgage agreements, homeowners are required to maintain adequate insurance on their houses. In New Orleans and other coastal areas, this requirement can include both a standard homeowner’s policy as well as flood insurance. Mortgage lenders insist on insurance coverage to help protect their financial interest in the properties for which they issue mortgages. If a borrower fails to purchase or maintain adequate coverage, the lender is permitted to “force-place” a policy–that is, to purchase an insurance policy on the property for its own benefit. A force-placed policy allows the lender to protect its exposure on a home up to the then-owed amount of mortgage on the date of issuance.

When Hurricane Katrina hit New Orleans, the home of Latisha Williams sustained significant flood damage. Williams had purchased the house with a mortgage issued by Homecomings Financial, the terms of which required her to maintain a flood insurance policy on the property. In June of 2005, Williams let the flood policy lapse, at which point Homecomings Financial force-placed a new policy on the property that was issued by Lloyd’s of London. Following the Katrina disaster, a Lloyd’s adjuster inspected the property and issued a loss estimate that Williams believed was below the true amount of loss on the property. Williams sued Lloyd’s seeking to recover for the full amount of flood damage to the house. At trial in the district court, Lloyd’s filed a motion to dismiss Williams’s claim, arguing that she lacked standing to bring the action. Standing is the right to initiate a lawsuit which arises from the plaintiff’s direct connection with or involvement in a legal dispute. The district court granted Lloyd’s motion, and Williams appealed.

The Fifth Circuit of the U.S. Court of Appeals examined the facts to determine whether Williams had standing to sue Lloyd’s. The issue centered around the question of whether the insurance policy, which was an agreement between Lloyd’s and Homecomings Financial, was intended to benefit Williams in any way. Without this intent to benefit Williams, she would have no standing to bring suit. Under Louisiana law, which the federal court applied, a contract for the benefit of a third party is called a “stipulation pour autrui.” See Paul v. Louisiana State Employees’ Group Benefit Program, 762 So.2d 136, 140 (La. App. 1st Cir. 2000). According to the court, “[t]he most basic requirement of a stipulation pour autrui is that the contract manifests a clear intention to benefit the third party; absent such a clear manifestation, a party claiming to be a third party beneficiary cannot meet his burden of proof.” The court found ample evidence that Homecomings Financial and Lloyd’s did not intend to benefit Williams in any way. The court noted that the policy specifically stated that Homecomings Financial was the “sole insured” under the policy, notwithstanding “the insurable interests of the owner,” (Williams). Furthermore, the policy specified that Homecomings was Lloyd’s “sole insured under this policy” and that benefits paid would be “made directly to [Homecomings].” Thus, the court affirmed the district court’s dismissal of Williams’s action.

The lesson from this case is that a homeowner should always maintain the appropriate level of insurance for his or her property. Because a mortgage issuer is able to force-place a policy only up to the value of the outstanding balance on the mortgage, any equity the homeowner may have in the property is left unprotected in the event of a catastrophe. It is no stretch to imagine that a mortgage issuer would be happy to accept a settlement offer that covers its exposure without regard to any equity loss the homeowner may personally sustain.