Reinsurance Law Blog : Oklahoma Insurance Lawyer & Attorney : Stauffer & Nathan Law Firm

In Guideone v. Shore, Guideone (Insurer) wanted Shore (Agent) to pay for all or part of a bad faith settlement it made with its insured.  Apparently Agent had told the insured that her UM coverage did not kick in until after the liability carrier paid its limits.  This is wrong under Oklahoma law.  But, when the insured repeated this information to the Insurer, the Insurer did not correct the error.  In addition, the Insurer did not timely investigate the claim.  As a result, the Insurer was sued for UM and for Bad Faith.  The Insurer settled with the Insured, and then went after the Agent for the money it paid in extracontractual damages.  Summary judgment to the Agent was affirmed.

There was no express indemnity in the Agency contract, so summary judgment was appropriate on that theory.  There was no right to implied indemnity because the Insurer was at fault for the Insured's claims.  There was no right to contribution under the contribution among joint torfeasors statute (12 O.S. § 832) because as an agent, Agency could not be liable to the insured for bad faith. 

 

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The Gibsons were told by their insurance company that their homeowner's policy would not be renewed when it expired on March 28; the Gibsons contacted their agent and thought they had insurance because they had taken down an above ground pool.  But the Gibsons did not pay any premium and heard nothing from the insurance company.  When they had a loss about a month after the policy expired, the insurance company denied it, saying there was no insurance in effect at the time of the loss.  The trial court granted summary judgment to the insurance company and the Court of Civil Appeals affirmed. 

The Gibsons were given proper notice of non renewal; and they did not pay any premiums.  The agent's statements could not bind the insurance company to cover a risk it had declined. There was no policy in effect at the time of the loss and summary judgment was proper. 

Gibson v. The Automobile Insurance Company, 2011 OK CIV APP 16

 

 

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In Kutz v. State Farm Fire & Casualty Company, 2008 OK CIV APP 60, the Kutzes claimed that State Farm was in bad faith for failing to defend them on an auto accident claim that arose after their policy had been cancelled for non-payment of premium. 

Plaintiffs did not deny they failed to pay the full premium due. But they claimed that State Farm did not prove that notice of cancellation was sent to them.  The parties agreed that the policy requires State Farm only to mail the cancellation notice, and not to insure that it is received.

State Farm presented the affidavit of Taylor to prove mailing of the notice (which Plaintiffs said they did not get).  The court found the affidavit was sufficient evidence that the notice was mailed: the undisputed evidence showed that the cancellation notice was prepared on August 26, 2004, the envelope was photographed going through State Farm's automated mail system, it was State Farm's regular practice and pocedure to submit the notices to the post office immediately thereafter, and State Farm did not deviate from that procedure. Taylor could testify as to the procedure, even though the mailing of the notice happened in Arizona, while Taylor was located in Oklahoma. 

A business's regular practice and procedure is admissible as proof of mailing. State Farm's  policy plainly states that mailing of the notice is sufficient proof of notice of cancellation.

Because the Court found that State Farm strictly complied with the cancellation provision in the policy, summary judgment was proper. 
In addition, the court found that the agent was properly dismissed.  The Plaintiffs claimed that the agent should have told them about the impending cancellation.  But the court noted that an agent's duty relates to the procurement of insurance, not to the maintenance of insurance.  Summary judgment to the agent was also affirmed. 

This case was interesting because it discussed the type of evidence which could be used to prove mailing.  State Farm has an automated mailing system.  It provided evidence that the notice was created, and also had a photo of an envelope addressed to the Plaintiffs going through the automated mail system.  The affidavit was not from someone at the mailing center, but from someone in it's local office. 

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