Volume 9, Issue 5 - October 2007

Insurance Talk
policy briefs

Appeal Filed Against CT Insurers
A case filed against Hanover Insurance Co. by two glass shops is now under review in trial court in Connecticut. The suit, filed late last year, was last heard in the Connecticut Court of Appeals when Judge Gruendel sided, in part, with Auto Glass Experts and Ed Steben Glass Company in a consolidated appeal in which the two glass shops took on Hanover Insurance Co. over the contention of a “doctrine of accord and satisfaction of a negotiated instrument.” 

In appealing the decision of the Superior Court, the two glass shops claim that “the court improperly applied the doctrine of accord and satisfaction” when it ruled that the payments Hanover issued via Safelite were “tendered in good faith” and that the insurance company’s “written communication contained a conspicuous statement to the effect that the instruments were tendered as full satisfaction of claim,” among other things.

The judge disagreed with the assertion that the payments issued to the glass companies were “not tendered in good faith,” stating that “[t]he evidence supports the court’s finding that the defendant acted in good faith” and it “demonstrates that the defendant’s rates were based on the National Auto Glass Specifications (NAGS) and were in accord with reasonable commercial standards.”

Additionally, Judge Gruendel ruled against the glass shops’ argument that by “routinely printing ‘FAIR AND REASONABLE PAYMENT’ and ‘REASONABLE & CUSTOMARY ADJ.’ on all of the explanation of benefits forms that accompanied the … checks at issue demonstrated the defendant’s lack of good faith.” In siding with Hanover, the judge’s opinion is that “the defendant acted in good faith when it offered payments that matched those included in the letters sent to the plaintiffs periodically. Furthermore, there was no misunderstanding as to whether the amount was disputed because, in every case, the payment was less than the amount the plaintiffs had submitted. There is nothing in the record that evinces a lack of good faith on the part of the defendant in consistently including the language with the payments.” Judge Gruendel did, however, agree with the glass shops’ assertion that the inclusion of the “FAIR & REASONABLE PAYMENT” and “REASONABLE & CUSTOMARY ADJ.” was not enough indication from Hanover that “the payments were intended to be full and final settlements of the claims.” The judge further stated that “although a reasonable person inspecting the checks undoubtedly would have noticed the conspicuous language, the evidence presented does not comport with the assertion that the statements contained in the instruments clearly indicated that the payment was intended to be tendered as full satisfaction of the claims.” 

As part of the court case, the national claims director for Hanover “testified that auto glass repair companies have the option to accept payment of the claims and sue for the remaining portion” and additional evidence provided “shows that several of the glass repair companies were paid less than the amount of the invoices that they had submitted. Although the plaintiffs were the only ones to sue the defendant, the conspicuous language contained in the explanation of benefits form does not relieve the defendant of the obligation to state that the payment is full and final.”

In light of this, the judge ruled that “[t]herefore, the defendant has failed to prove that the instruments or an accompanying written communication contained a conspicuous statement to the effect that the instruments were tendered as full satisfaction of the claims, and thus the plaintiffs’ claims were not discharged under § 42a-3-311(b).”

On these grounds, Judge Gruendel reversed the previous judgments and remanded the cases for further proceedings. 

Following the above decision of December 26, 2006, the judge sent the case back to the trial court. The Connecticut Supreme Court declined to review the court of appeal decision on February 8, 2007, and the case is now under review in the trial court based on the evidence that was presented at trial.

Harmon Solutions Institutes $35 Fee for Warranty Claims
Harmon Solutions Group, a third-party administrator based in Eau Claire, Wis., has announced that for all glass replacement claims on or after September 1, it will assess a $35 administrative fee for any and all warranty claims and occurrences to the shop that did the original warrantied work. 

“Warranty claims require an extraordinary amount of administrative effort and yield a poor customer experience,” writes Harmon in a letter to glass shops, “so it is our hope that you will do all that you can to eliminate the need for warranty claims to be filed.” 

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