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johnpostava
USA
35 Posts |
 Posted - 11/21/2002 : 09:54:47
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This just came across my computer (just food for thought):
A civil lawsuit filed by two area residents against the Oklahoma Farm Bureau Mutual Insurance Company is now certified as a class action lawsuit in Pottawatomie County District Court.
The suit was filed last year by the West Law Firm on behalf of Hilton and Ramona Melot.
OFB policy holders with an insured home loss involving three or more trade specialties may be eligible to join the class action. The class is attempting to collect monies allegedly not paid for general contractor's overhead and profit on claims.
Conclusions of law filed by District Judge Glenn Dale Carter in this case show that "76 percent of the insureds owed payment of general contractor's overhead and profit were not properly compensated..."
A "general contractor's overhead and profit is paid to assist the insured in obtaining the services of a general contractor to handle various issues arising from the covered loss," court records read.
Class action could benefit the Melots as well as other policy holders who hired three or more trade specialty contractors for covered repairs, rather than hiring a general contractor to sub-contract that work.
An evidentiary hearing in this case concluded that as many as 480 claim files could be affected by a class action, with as many as 7,000 potential class members involved over the last five years.
Attorney Terry West said anyone with a fire loss may need the expertise of a painter, a roofer, a plumber and other specialty contractors. Homeowners who avoid a general contractor to sub-contract that work are supposed to be paid profit and overhead, he said.
While this case has a potential for appeal, the public will be notified so those eligible can join this class action, West said.
Most of the claims that could be involved are small, he said, between $2,500 and $7,500.
"Those amounts are too small to sue individually," he said. "By having everyone in the class, one lawsuit will determine if they should have recovered those monies. Everybody with a small claim now has access to court."
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Last time I looked insureds are not entitled to "profit" from an insurance claim - they are only intitled to be put back in the same place they were before the loss. This class-action attorney thinks policyholders are entitled to overhead and profit when these costs are not incurred. When a policyholder goes out and hires three or more contractors he incurs no "general contractor overhead" - overhead is the cost to cover the overhead of a general contractor (insurance, trucks and other costs not necessarily directly associated with any one particluar repair job). And policyholders should never profit off an insurance claim. I don't know if there is exact wording in HO policies but if there isn't there should be.
It will be interesting to see how this case turns out because there are several other states with similar litigation pending.
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KileAnderson
USA
875 Posts |
Posted - 11/21/2002 : 10:29:25
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| Don't worry, John. The insureds in this situation can't possibly make a profit. As with any court case or class action suit the only person who stands a chance at making a profit is the lawyer. The insureds will be lucky to ever see a dime if any money is awarded. Our legal system is a joke. It won't be fixed until politicians have the cojones to stand up to the trial lawyers and pass some meaningful tort reform and "loser pays" legislation. If it isn't done soon, those among us who are NEVER at fault will sue all of us responsible, hardworking people out of existence. |
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Darryl
USA
36 Posts |
Posted - 11/21/2002 : 11:22:44
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| I agree with John as to the theory of insurance that an insured cannot profit from a loss. However, he might well be entitled to some overhead. As I'm sure John is aware some companies will pay this to insureds. |
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Gale
USA
231 Posts |
Posted - 11/21/2002 : 16:26:38
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| If you take a two hat view of this case then it may make more sense. The O&P is going to the person that is in the roll of the GC. Those of us that have played that roll knows there is missed work and other cost. Has the carrier's payout increased in theory just because the insured and GC are one and the same if the adjuster has done a good job of settling the claim? |
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Darryl
USA
36 Posts |
Posted - 11/22/2002 : 11:07:41
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| It makes no difference what the carrier's payout is, the question is whether the insured is entitled to make a profit off of his loss. It is a long standing insurance principle that an insured cannot profit from a loss. As I mentioned before he can, under some circumstances be entitled to overhead. If an insured is a general contractor or owns a general contracting business and he does the work through his company than most carriers will pay the company O&P. We get into an area that would really muddy the waters if we start judging insurance claims on whether or not the carier's payout would increase or not. This would put a monetary value judment on a claim instead on the merits of the claim and how it relates to the contract (policy). |
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Gale
USA
231 Posts |
Posted - 11/22/2002 : 15:28:43
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| This subject might be similar to the auto question that was the rage on CADO years ago in that it can be debated forever but of course the judge can in effect create law. That subject was does the carrier only have to pay for the repair of the damamge or the amount equal to the value of the car after a quality repair job if being wrecked would cause it to have a lower resale value. |
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Newt
USA
657 Posts |
Posted - 11/22/2002 : 18:20:38
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O/P All the fault finding and whinning going on bugs me to tears.
If a person manages his own damage, theres enough in the line items
to cover the labor at the going rates. If you do a lot of the work yourself you will make money for your time. Been there and done that, didn't make any money but I sure made some improvements. I didn't get the O/P but I got indemified. I wouldn't make a good jury person.
The auto situation changes with the new regulations requiring the disclosure of collision damage along with the mileage. If you trade a vehicle in you must disclose collision damage or leave yourself open for a suit. The last three vehicles I traded in I had to sign a statement concerning these items.
My neighbor, Louie bought a '99 Jeep Cherokee, used, 2 years ago
and had an accident last year. The adjuster said the Jeep had been wrecked before. It was not disclosed when he bought it. If he had not had the accident it might have made a difference, however since he crunched it up, it would have made no difference when he sold it so this was a free ride for the dealer and previous owner. He could have made a case but Louie had rather ride the dealer for the rest of his life, he is a friend of ours so thats permitted. |
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ChuckDeaton
USA
373 Posts |
Posted - 11/22/2002 : 20:28:03
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| The first step in handling a property claim is to determine coverage. If coverage is in doubt proceed unde a detailed reservation of rights. The ROR will be sent return receipt requested or handed to the policy holder. The next step is to investigate the cause of loss. Then determine if any portion of the loss is covered. Proper investigation is required by states with Fair Claims Practices Acts. Scope the loss with the person who is responsible for repairs, this may be the policy holder and it may be a contractor. Then from the scope an adjuster writes an estimate. A blind bid sheet is sent to the person responsible for the repairs. The person responsible for the repairs prices the scope. Then the adjuster and the responsible party compare prices and come to an agreed price. A payment based on ACV less the policy deductible is due and payable at this point.In my opinion while the policyholder should not profit from the loss, the policy holder is entitled to overhead in any event. RCV and any profit is not owed until repairs are complete. If the Oklahoma claims were handled this way Atty West and his clients will have a long row to hoe. |
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johnpostava
USA
35 Posts |
Posted - 11/23/2002 : 08:51:51
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If the insured does his own repairs (physically) I believe he is entitled to an overhead payment to INDEMNIFY him for his time to get materials and other repair process related expenses. The monies in the estimate line items INDEMNIFY him for the actual work. If the insured takes time off from work, do we owe him for that? What if the insured is a highly paid professional that likes to fancy himself a jack-of-all-trades handyman? Do we owe him for his lost time at his job? Do we calculate what a contractor would have charged for overhead on the job and pay the insured up to that amount?
If the insured only makes calls to repair services and does not physically do the work, should he only be modestly INDEMNIFED for those calls and making sure someone is home to let the professional do the work? If a policyholder stays home from work 2-3 days to let repair folks into his home and coordinate their combined activities should he be compensated no more than what he would have been paid at his regular job. Should stay-at-home moms, dads and retirees only be paid Fed. Min. Wage? The more you think about it the more these class action folks do have a point. Just my thoughts... |
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Ghostbuster
476 Posts |
Posted - 11/23/2002 : 10:19:18
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Oh Lordy... Here we go again. This O&P argument is going down the same rocky road as the waste factor withheld on roofing thread and the why aren't we organized thread and all the rest of the "inequities" of the game.
Face it folks, until I get to be King of the World, we're just agonna have to get used to the various insanities of the carriers and their attempts to squeeze blood out of the turnip.
In the meantime, I heard on the VH1 channel the other day that the adult entertainment industry made $38 BILLION last year, which is more than professional football, baseball, and basketball combined. Ya know, that ain't bad for a little moaning and groaning in front of the camera. And the funny thing is, no one filled out a Reservation of Rights letter or had to deal with a crashed Xactimate. |
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KileAnderson
USA
875 Posts |
Posted - 11/23/2002 : 11:35:29
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| So that's what happened to all of my money. |
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Cecelia
USA
25 Posts |
Posted - 11/24/2002 : 17:33:55
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Same thing happened in CA a year or 2 ago involving a major carrier. The class action lawsuit was settled before trial. The carrier pulled thousands of files for a certain number of years. Each file was reviewed to see whether O & P should've been paid, if it WAS paid and,if not paid, then it went to the check writers. The issue of who repaired the damages, or even IF the damages were repaired, was not an issue. The insured making a profit on his/her own claim was not an issue.
I know for a fact that some insureds made a profit on their losses. There are no rules anymore. |
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ALANJ
USA
159 Posts |
Posted - 11/24/2002 : 23:03:50
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This should be a good one to keep our eyes on. If they win here, they'll take the show on the road to other states and carriers.
What ever happened to the old phrase, we owe only the actual amount to repair or replace. |
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Proper application of O&P
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