American Alliance won't pay claim for not providing info within 30 days

[Dusko]

I live in Chicago, IL. In December 2016, i had an accident involving another car that was insured by State Farm, and i had valid American Alliance liability insurance. We exchanged info, and i went to police station to make a police report since the police didn't respond due to no injuries, only property damage.
18 months later, i am summoned to court by State Farm and a law firm from downtown Chicago, for amount of $3,777.00. American Alliance refuses to pay for the claim, or even give me a legal representative based on a fact that i did not provide them with info about the accident within first 30 days. They have my letter with the info, but they say they only received it in March, therefore they claim i did not cooperate with them.
What can i do? I don't want to settle with State Farm because i feel i was scammed, i had valid insurance at the moment. No lawyer will represent me at court because the claim is too low, expenses will exceed the claim.
A lawyer told me that my insurance agent had to deliver this info on my behalf if i didn't. Can i sue them?

 

[PayrollHRGuy]

Have you read your insurance policy and check what the requirements are for timely reporting to the carrier?

 

[Dusko]

Policy states "Within 30 days of any accidents, occurrence or loss, regardless of fault, the company must receive written notice containing....(time and place, addresses of both parties, use of vehicle, surrounding facts etc.)". I did not know this, it's not usual practice for ins. companies, neither did my agent until this happened. When accident happened, i have contacted my agent and i was advised to start a claim with State Farm, i wasn't told i need to inform my insurance company.

 

[adjusterjack]

Policy states "Within 30 days of any accidents, occurrence or loss, regardless of fault, the company must receive written notice containing....(time and place, addresses of both parties, use of vehicle, surrounding facts etc.)". I did not know this,

Sure you did. It's right there in your policy. That's called NOTICE. You're supposed to read your policy and know what's in it.

it's not usual practice for ins. companies

No, it's not. But that's irrelevant because IT IS usual practice for YOUR insurance company.

neither did my agent until this happened.

You might have an E&O claim against him, but you will have to sue for it if you expect to get anywhere with it.

i wasn't told i need to inform my insurance company.

Again, yes you were. The requirement is right there in your policy.

 

[Taxing Matters]

Most people never bother to read and understand their insurance policies. I realize that he policies are a bit long and are filled with dense terminology and that tends to turn people off so they shove their policy in a drawer somewhere and figure they'll pull it out when they need it later. But it’s important to understand the terms of the policy or you can lose out later. Never assume that all policies are the same or that what you experienced with one company will be what they all do. As you found out here, they are not all the same. When the policy requires notification within a certain period of time and you fail to do that, your failure to provide timely notification can be a valid reason for the insurer to deny coverage. The policy document itself is all the notice that is required. The policy explained what you had to do. There wasn't anything more the insurer had to do to alert you to this requirement.

 

[justalayman]

Actually most insurance policies do include such statements, although usually not so specific. An insured party is obligated to inform their insurer so that the company can act on a timely manner to gather info and other actions so as to be able to adequately defend against any claim made against their insured. If your failure to inform them hamstrings their ability to defend your case such that it causes a loss to them, well, they are simply protecting their own pocket. Can you really blame them?

 

[adjusterjack]

Policy states "Within 30 days of any accidents, occurrence or loss, regardless of fault, the company must receive written notice containing....(time and place, addresses of both parties, use of vehicle, surrounding facts etc.)". I did not know this, it's not usual practice for ins. companies, neither did my agent until this happened. When accident happened, i have contacted my agent and i was advised to start a claim with State Farm, i wasn't told i need to inform my insurance company.

Dusko, the more I think about this, the more I am thinking that notice to your agent of the accident WAS notice to the insurance company.

He should have relayed the information to the insurance company.

If you do settle with the other driver's insurance company insist on a written release.

Then sue your agent in small claims court. That presumes, of course, that you have some evidence (documentation) that you reported the accident to him.

 

[Taxing Matters]

Dusko, the more I think about this, the more I am thinking that notice to your agent of the accident WAS notice to the insurance company.

Maybe if the agent was an employee of the insurance company or at least an agent solely serving that insurer. If the agent is clearly an independent agent representing multiple insurer then I think not.

 

[Dusko]

Maybe if the agent was an employee of the insurance company or at least an agent solely serving that insurer. If the agent is clearly an independent agent representing multiple insurer then I think not.

The agent does not work directly for the ins company, he's only a middle man, also works with other ins companies.

 

[Dusko]

Dusko, the more I think about this, the more I am thinking that notice to your agent of the accident WAS notice to the insurance company.

He should have relayed the information to the insurance company.

If you do settle with the other driver's insurance company insist on a written release.

Then sue your agent in small claims court. That presumes, of course, that you have some evidence (documentation) that you reported the accident to him.

The only documentation i could provide would be a phone listing from Sprint, if it's possible to back trace it 18 months.

 

[adjusterjack]

Maybe if the agent was an employee of the insurance company or at least an agent solely serving that insurer. If the agent is clearly an independent agent representing multiple insurer then I think not.

Depends on the relationship of the independent agent to that particular company. An independent agent who can bind coverage and issue policies on behalf of an insurance company would require that notice to the agent is notice to the company.

In the absence of that kind of relationship, the agent is the agent or broker of the insured for the procuring of insurance from a variety of insurance companies and may have a fiduciary duty toward his client for the relaying of his knowledge of an accident to the insurance company.

"To state a claim for breach of fiduciary duty, a plaintiff must establish: (1) a fiduciary duty on the part of the defendant; (2) the defendant's breach of that duty; and (3) damages that were proximately caused by the defendant's breach. Neade v. Portes, 193 Ill.2d 433, 444, 250 Ill.Dec. 733, 739 N.E.2d 496 (2000). In the instant case, a fiduciary duty would result from a finding that an agency relationship existed between AYH and Avreco. Specifically, "[t]he relationship between an insured and his broker, acting as the insured's agent, is a fiduciary one." Perelman v. Fisher, 298 Ill.App.3d 1007, 1011, 233 Ill.Dec. 88, 700 N.E.2d 189 (1998). "f the principal suffers damage due to any mistake or * * * omission of the agent which constitutes a breach of duty to the principal, the agent is liable to the principal for any loss sustained thereby." Perelman, 298 Ill.App.3d at 1012, 233 Ill.Dec. 88, 700 N.E.2d 189. While the "existence of a duty, a legal obligation to conform one's conduct to a certain standard for the benefit or protection of another, is a matter of law to be decided by the trial court" (Kanter v. Deitelbaum, 271 Ill.App.3d 750, 753-54, 208 Ill.Dec. 215, 648 N.E.2d 1137 (1995)), the existence and scope of an agency relationship is a question of fact (Ervin v. Nokia, Inc., 349 Ill.App.3d 508, 512, 285 Ill.Dec. 714, 812 N.E.2d 534 (2004))." ( Paragraph quoted from AYH Holdings, Inc. v. Avreco, Inc., 826 NE 2d 1111 - Ill: Appellate Court, 1st Dist., 2nd Div. 2005)

The agent/broker may also be liable under common law negligence. Quoting from the same decision:

"Conversely, "[t]he essential elements of a cause of action based on common law negligence are the existence of a duty owed by the defendant to the plaintiff, breach of that duty, and an injury proximately caused by that breach. [Citation.]" Clifford v. Wharton Business Group, L.L.C., 353 Ill.App.3d 34, 40, 288 Ill.Dec. 557, 817 N.E.2d 1207 (2004). In general, "a duty of care arises where the parties stand in such a relationship to one another that the law imposes upon the defendant an obligation of reasonable conduct for the benefit of the plaintiff. [Citation.] Whether a defendant owes a plaintiff a duty of care is usually a question of law to be decided by the court. [Citation.] In making this determination, the court is to consider the following factors: (1) the foreseeability of the injury; (2) the likelihood of the injury; (3) the magnitude of the burden on the defendant of guarding against the injury; and (4) the consequences of placing the burden on the defendant." Clifford, 353 Ill.App.3d at 40, 288 Ill.Dec. 557, 817 N.E.2d 1207."

https://scholar.google.com/scholar_case?case=9612129517698502306&q=insurance+agent+duty&hl=en&as_sdt=4,14

The point is that the agent might be liable under two theories depending on a thorough examination of the relationship between the OP, the agent and the insurance company.

Certainly something that the OP could look into further.

 

[Dusko]

The point is that the agent might be liable under two theories depending on a thorough examination of the relationship between the OP, the agent and the insurance company.

Certainly something that the OP could look into further.

Looks like i would have to try and settle with State Farm and try to at least lower the amount and get monthly payment plan if possible. And after that i will seriously look into a possible law suit against my agent. I have found out about at least 4 more cases like mine, with the same ins company and the same agent, which tells me that the agent has been totally unaware of this 30 day rule before a first court summon appeared.

 

[Taxing Matters]

The point is that the agent might be liable under two theories depending on a thorough examination of the relationship between the OP, the agent and the insurance company.

If the broker/seller is truly an agent (as that term is used in the law) then notice to the agent was notice to the insurer and it would be the insurer that is liable to the OP to provide the coverage stated in the policy. The insurer might have a claim against its agent for failure to tell the insurer of the notice, however.

 

[adjusterjack]

Temporary bump

Took a minute to figure that out.

It puts current threads on the top of the list above the multiple spams.

Good show.