Insurance Company Settled With Loss Payee

[ideaman]

What is the name of your state? Georgia

My company had a theft of some leased equipment. I submitted a claim and a few weeks later the lienholder submitted their own claim. However, my insurance company settled with the lienholder without my knowledge and for $12,000 less than our outstanding balance. The lienholder then held my company to the outstanding $12,000 balance and the insurance company basically said they did not need my permission to settle with the loss payee even if I was still obligated by an outstanding amount after the settlement. It seems as though my company was not represented by the insurance company since we still got stuck negotiating a payoff to the lienholder. Hypothetically speaking, it seems to me that if my house gets burned down, I should not have to pay anything to the mortgage company if they have supposedly settled with the insurance company? Am I missing something here? Do I have a case against the insurance company for the $12,000 or whatever payoff we negotiate with the lienholder?

 

[I AM ALWAYS LIABLE]

What is the name of your state? Georgia

My company had a theft of some leased equipment. I submitted a claim and a few weeks later the lienholder submitted their own claim. However, my insurance company settled with the lienholder without my knowledge and for $12,000 less than our outstanding balance. The lienholder then held my company to the outstanding $12,000 balance and the insurance basically said that they would not get involved. It seems as though my company was not represented by the insurance company since we still got stuck negotiating a payoff to the lienholder. Hypothetically speaking, it seems to me that if my house gets burned down, I should not have to pay anything to the mortgage company if they have supposedly settled with the insurance company? Am I missing something here? Do I have a case against the insurance company for the $12,000 or whatever payoff we negotiate with the lienholder?

My response:

First, your insurance company doesn't need your permission to settle with the lienholder. Read your policy about that.

Second, your insurance company is only obligated to pay the "fair market value" to the lienholder - - not the contract price. Again, read your policy about that.

Third, an insurance payment does not obviate, or vitiate, a contract deal you have with the owner of the equipment. All because you had a payable loss, doesn't mean the equipment owner loses too; i.e., Doesn't get the benefit of their contract bargaining.

In short, you're still on the hook for the balance because of the contract; not because the value was less at the time of the loss. If you paid for a guaranteed replacement value insurance policy, and paid the higher premiums, you wouldn't be in this bind.

Let's look at this from another angle: Let's say you didn't have insurance at all. Would you say, that because of the theft, that you wouldn't still be responsible for the contract price? No? Why, then, would your equipment owner have to suffer because you sustained an uninsured loss?

The contract for the equipment is separate and apart from any insurance you had at the time of the loss - - and that contract stands.

IAAL