Author: Bill Wilson
I've often said that it's inexcusable when a claim is denied for no other reason than "It's not covered." The insured is owed a reason for a claim denial, by contract or law. However, sometimes when I hear the reason, I think perhaps that it's better I didn't know because, to paraphrase Art Linkletter, "Adjusters sometimes say the darnedest things!"
Years ago, I jointly developed a seminar with faculty member John Eubank called "How to Battle an Adjuster...and Win Every Time!" (Without boring you with the specifics, or elaborating on the death threats, we later renamed the seminar "How to Win Friends...and Influence Adjusters."
The seminar focuses on policy gray areas and, through dozens of case studies (actual claims and court cases), applies a methodology to convince the adjuster that the insured's/agent's interpretation for coverage is just as valid as the adjuster's initial basis for claim denial.
However, sometimes a claim denial arises that defies logic and reason. So now John is suggesting that we develop a seminar called "Adjusters Say the Darnedest Things" (being wary of more death threats, I'm currently balking on this challenge). Here's a personal lines example of such a claim that faculty member David Thompson passed along:
"An insured was moving and loaded clothes and personal property into her car. She placed a magnifying glass on the leather seat of her car and left it there for a few hours. When she returned, she discovered that the focused sunlight had burned a hole in the seat. The adjuster denied the claim on the premise that it was not within the definition of 'accident' in the policy, defined as 'a sudden, unexpected, and unintended occurrence.'”
The applicable policy defines "accident" to be "a sudden, unexpected, and unintended occurrence." The same policy defines a "loss" to include "direct and accidental loss of or damage to your car." Under the other-than-collision (OTC) coverage, the insuring agreement says, "We will pay for loss except loss by collision, but only for the amount of such loss in excess of the deductible."
So, for the insuring agreement to be triggered, there must be a "loss." For there to be a "loss," we must have "direct and accidental loss." (As an aside, note that we have a definition within a definition..."loss" is essentially defined to be a "loss." These types of "circular" definitions don't hold up well in court, so that alone is enough to warrant redrafting of the contract.)
Now we see that the key word is "accidental." Was this "accidental" as defined by the policy? Was this a "sudden, unexpected, and unintended" occurrence? As David pointed out in his email, it's unlikely that the insured intended to burn a hole in her car seat. As such, the damage was probably unexpected. That leaves "sudden."
Since the loss took place over a period of time, perhaps the adjuster interpreted that to not be "sudden." However, most courts do not interpret the term that way. "Sudden" usually applies to the insured's discovery of the loss. In other words, if an insured knows that a loss has been continuing over a period of time, that's usually not covered...any many, if not most, policies have an exclusionary provision for "neglect."
In addition, as David's research discovered, dictionaries define "sudden" to mean: (1) “An unexpected occurrence; a surprise” (Webster's 1998 edition), (2) “Happening without warning; unforeseen” (American Heritage dictionary), and (3) “Happening or coming unexpectedly” (Merriam-Webster). In other words, "sudden" means unexpected or unforeseen, a surprise...and it appears likely that the insured did get a surprise.
Yes, indeed, adjusters do sometimes say the darnedest things. For an example of a commercial lines case on this premise, click here.