auto insurance dispute over info in questionnaire

from state of tennessee
i have a friend from Korea (with limited english abilities) who applied for auto insurance in tenn while his spouse was still out of the country. on the questionnaire when taking out his policy he answered no to the following 2 questions
1) have all residents of your household been disclosed on this application (please explain if no)
2) have all drivers, such as children away from home of in college, or who may operate your vehicle on a regular or infrequent basis, been listed on this application (please explain if no)

Within four months his wife joined him here (with an international drivers license) and had an accident. The insurance company rescinded coverage due to underwriting reasons including material misrepresentation and refunded his premium. In the reservaion of right letter they state that he answered "yes" to both questions. I have copies of the questionnaire from the insurance adjuster and the insured showing that he stated no. The adjuster also included a small separate handwritten note stating that the insurance agent advised him the answer should be yes.

Do we have a chance in small claims court to win this case and recover costs for damage to his vehicle (and possibly damage to the other vehicle--they have threatened lititgation but it has not happened yet)?

If we do have a chance in court, do we sue the underwriter (agent) or the insurance company as they are separate entities.

[Juan Rodriguez]

A quicker and more cost effective method would be to file a complaint with your insurance commissioner. You need to name the carrier, adjuster and agent separately in the complaint. Attach photocopies of all your friends proof (to include plane tickets and travel visas/passport stamps, etc) along with a detailed narative.

Everyone mentioned in the complaint is rquired to respond to the allegations or suffer sanctions.

Your friend would have a very good case....

Korean and in Tennesee Now if he was in New York City with all the people who speak korean, i think he would be outta luck.

Juan,
Thanks for your reply to my questionnaire from TN question. I have contacted the Senior Claims manager at the Insurance company and am waiting for a response. When I told the manager that my friend wanted to recover costs for the damage to his vehicle, the ins rep asked wasn't he refunded his premium?
How do we negotiate $$ amount if the premium was refunded and a new ins policy with a new company put into effect. The new policy was sent to my friend (from the agent) without his consultation. Do we just pay the original ins company a pro-rated fee based on coverage until the date of the accident when they rescinded and the new policy took effect? Or, subtract it from the approx $1500 damage cost owed to my friend.
The amount for the policy with the original company was $541 for 7/12 to 1/12. The cancellation and reservation of right letter is dated 10/10/2001.
The second policy started 11/26 to 5/26.
So, basically for 3 months of coverage $270 seems accurate and fair to me, but I do not understand how they make their calculations.

Do you have any suggestions?

Thanks for your help,
Katie in TN

[Juan Rodriguez]

I hope you filed they complaint with your states DOI. It looks like the retail agent may be guilty of at least three violations (mishandling of fiduciary funds, misappropriation of funds and unfair trade practices).

You wont be able to negotiate the refund with the carrier. It sounds as if they returned the unused portion of the premium back to the agents statement (this is customary). The agent is required to forward the refund to the customer.

Your DOI will be able to do the calculations as to the correct amount of premium that should have been refunded. There is a complicated formula that is used and I don't have all the information to even make a guess.

Insurance policies are contracts that have finite time periods, so there is noway of carring over any prorations of premium. When ever there is a cancelation the insured looses money because most of the premium is used up at the begining of the policy period.

Thanks again. I haven't filed the complaint with the DOI yet. I thought I would give the claims manager an opportunity to resolve the issue. I have informed them that I am prepared to file the complaint if there is no resolution. Do you think I should go ahead and file the complaint irregardless?

Katie in TN

[Juan Rodriguez]

If the claims department is attempting to resolve the issue, then you may want to hold off on them.

But, I would suggest going after the retail agent to determine what happened to the refund money.

Sorry I must have been unclear in my reply. My friend was refunded the $541 but the damages to his vehicle are much greater than that amount. The other party's damage was $2000+ which seems to have been taken care of by their insurance. If the claims dept comes through to cover our damages should I notify the other party so that they can file their own complaint, or are we responsible for collecting that amount and sending it to them? Thanks.

Katie in TN

[Juan Rodriguez]

Answering this issue has been like shooting at a moving target.

If your friend got the correct refund then that is not an issue and the agent's violation is minor but probably still worthy of administrative action by the TN DOI. The refund has nothing to do with the claim.

If they refunded the premium based on the material misrepresentation then they may not pay the claim. If they do pay your friends claim then they will also pay the PD for the other party if your friends spouse was at fault.

Sorry to annoy you with my questions. I stated in the first follow-up that the premium had been refunded. I will take it from here, and I thank you again for your help.