After flooding Up North, insurer won't pay

  • Article by: JANE FRIEDMANN , Star Tribune
  • Updated: November 12, 2012 - 12:13 PM

Properties in communities that aren’t part of the NFIP are ineligible for federal flood insurance. But Auto-Owners Auto-Owners Insurance mistakenly issued the policy anyway.

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janderson2Nov. 3, 12 8:58 PM

Typical insurance company. Ins Co easily loses this one and I hope the couple gets punitive damages as well. That's what's wrong with business these days. No sense of responsibility...just looking out for the almighty $$$$. I predict Auto Owners will regret this decision.

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rvd420Nov. 3, 12 9:58 PM

The insurance company should have to honor the policy and get hit with 2.1 million in punitive damages. If the insurance company is not hit hard enough to feel some pain then there is no incentive to make changes to prevent a similar "error" from happening again.

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edinawaterNov. 3, 1210:16 PM

If an agent sells an invalid insurance policy, the agent is personally responsible for the policy. In some cases the insurer can be responsible for it as well (and they have the option to turn around and sue the agent to recoup their losses). This is one of the key reasons insurance agents get errors and omissions insurance.

My HOA recently dealt with a similar issue. The insurance company repeatedly refused to pay the claim. The moment we hired an attorney the insurance company cut a check for the full amount.

The Grey's are going to win this case. It is just a question of who pays the claim, Auto-Owners or their agent.

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sallyawalkNov. 3, 1210:55 PM

We used to have Auto-Owners insurance on our house. They were awful about paying claims, AND jacked the rates up by an obscene amount. Left them a year or so ago for another insurer. I am not surprised they aren't paying...

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davehougNov. 3, 1211:01 PM

So the company's position is I can sell bogus goods and if caught the only recourse is to send back premiums collected.......I think any jury would say not.

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poolboy17Nov. 3, 1211:48 PM

I am an insurance agent myself (different company) and although the agent did write the policy and is culpable the issuing company should also likely be held accountable. After all, their underwriting company had to have signed off on it. This is not just the error of one person. Even the city had a role...they were going to enroll and just hadn't gotten around to it? Pretty casual attitude toward their constituents if you ask me. They will get money to rebuild the cabin and to replace their stuff. My guess is...it will be an out of court settlement for an undisclosed sum. This is the kind of thing that gives insurance companies bad names. Go with companies you know. The big companies have procedures in place to help eliminate these kind of mistakes. Those who buy from unproven companies based solely on price are putting everything they own in jeopardy.

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mglovettNov. 4, 1212:50 AM

Why build on an uninsurable flood plain?

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comment229Nov. 4, 12 3:38 AM

"This is the kind of thing that gives insurance companies bad names." No, there are plenty of other things that give insurance companies a bad name but this space is limited. I learned that if you watch TV commercials enough, you will find the ones that happen the most, are insurance companies, oil companies, and drug companies all telling you that they are your friends. Now, what do they all have in common? Middle class Americans don't stand a chance.

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mmediaNov. 4, 12 5:14 AM

So the company is willing to refund about $1200 in premiums to get out of $200,000 in claims. Nice.

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brandrexNov. 4, 12 5:31 AM

Why am I not surprised? This is an example of profit first at the expense of others. Even with our court system, it will be years before he will be able to enjoy his cabin.

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