Volume 12, Issue 3 - May/June 2010

insurance talk
policy briefs

Connecticut Insurance Department Fines GEICO Companies

The Connecticut Insurance Department has fined four GEICO subsidiaries a total of $177,500 for several items found during a recent market conduct examination. Among the citations noted in the recent report, two specific subsidiaries, GEICO Casualty and GEICO Indemnity, were cited for failure to comply with the state’s law requiring that optional coverage for safety glass repair or replacement be offered at all deductible levels.

“They’ve found instances where GEICO did not offer glass repair or replacement coverage at all deductible levels,” says Dawn McDaniel, a spokesperson for the Connecticut Insurance Department.

The Connecticut insurance statute regarding insurance deductibles for auto glass coverage cited in the report reads as follows:

Comprehensive automobile coverage to include optional coverage for repair or replacement of damaged safety glass without deductible or minimum amount. Each automobile insurance policy providing comprehensive coverage, whether designated as such or included in a policy providing broader coverage, shall provide at the option of the insured complete coverage for repair or replacement of all damaged safety glass without regard to any deductible or minimum amount.

To resolve this, in addition to the associated fines, the Connecticut Insurance Department is requiring that the companies begin complying with the statute, and “re-file these options with the Department.”

According to information from the state, GEICO has said it will comply with the state’s orders and will submit a compliance report to the commissioner within 90 days.

The fines break down as follows among the four GEICO subsidiaries included in the report: GEICO Casualty Company, Maryland ($49,000); GEICO General Insurance Company, Maryland ($31,500); GEICO Indemnity Company, Maryland ($64,500); and Government Employees Insurance Company, Maryland ($32,500).

“Connecticut statutes are in place to protect consumers, and violations of these laws are unacceptable,” says Connecticut insurance commissioner Thomas R. Sullivan.

Florida Body Shop’s Slander Suit Against State Farm Dismissed
A U.S. District Court in Florida has dismissed a slander suit brought by a Florida auto body suit against State Farm in a summary judgment. The ruling was issued in late March by Judge Steven D. Merryday in Tampa, Fla.

Gunder’s Auto Center, based in Lakeland, Fla., brought the suit against State Farm last March, and alleged that State Farm tortiously interfered with at least three customers and made “slanderous and/or tortious statements to those identified prospective customers.” Gunder’s claimed these false statements included State Farm advising that the shop was overcharging its customers; that it doesn’t repair its customers’ vehicles in a timely and efficient way; and that Gunder’s repair equipment does not pass State Farm’s inspection and is lacking in quality.

State Farm argued in the case that “even if State Farm agents uttered false statements about the plaintiff, the statements are privileged.” Florida law defines privileged statements as “a communication made in good faith on any subject matter by one having an interest therein, or in reference to which he has a duty … if made to a person having a corresponding interest or duty, even though it contains matter which would otherwise be actionable, and though the duty is not a legal one but only a moral or social obligation.”

Based on this idea, the company argued that “because it was acting as an insurer and was communicating with a party seeking benefits under the insurance contract about an issue in which they have a common interest—the prompt and full payment of the repairs,” any statements made to insureds were “privileged.”

The judge confirmed this argument, but explained in his opinion that, even privileged statements, if made with “express malice” (defined as “ill will, hostility, [or] evil intention to defame and injure”), can be considered slander.

“Although State Farm’s statements (if false) might be defamatory, the plaintiff offers no evidence (other than the alleged falsity of the statements) from which a juror could infer malice,” wrote the judge in his March 29 opinion. “The statements ‘do not inherently demonstrate express malice.’”

He went on to write, “State Farm neither attacked the plaintiff’s moral character nor accused the plaintiff nor its proprietors of violent crime; each allegedly slanderous statement concerns only the matter of common interest between State Farm and the insured-the quality and value of the plaintiff’s work.”

Gunder’s was represented by Alan Brent Geohagan of Geohagan Law, who advised AGRR magazine/glassBYTEs.com™ in April that he planned to appeal the ruling. However, at press time an appeal had not been filed.

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