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How Will Insurance Cover Self-Driving Cars?

Posted Wednesday, May 9, 2018 by Pivotal Law Group

Self-driving vehicles are already on roads in several cities and are predicted to become normal in the next few decades. How will your insurance cover you if you’re the operator of a self-driving car? If someone else’s self-driving car injures you or damages your property, will the owner have coverage for your loss?

First, it may be a moot point because self-driving cars could reduce accidents to the point where the cost of insurance coverage becomes nominal or coverage becomes totally unnecessary. Preventable human error – texting, adjusting the radio, hasty lane changes, etc. – is estimated to cause 94% of all motor vehicle collisions. One industry forecast projected widespread adoption of autonomous vehicles would reduce premiums by 80% and lead to a $25 billion loss for insurers by 2035 as reduced accidents reduce the need for coverage.

On the other hand, while autonomous cars may reduce the need for liability and collision insurance, they may require new forms of insurance such as cyber security coverage. Even existing conventional cars can be hacked, and self-driving cars are likely to grow more and more vulnerable to electronic intrusion. Imagine if your car were susceptible to the same malware, ransomware or other abuse as your computer or phone. It may ultimately be necessary to procure cyber security coverage for your autonomous vehicle.

One possible answer is manufacturers may simply assume all liability associated with their autonomous vehicles. Google, Volvo, and Mercedes-Benz already assume liability any time one of their vehicle’s self-driving system is at fault for a collision. Tesla has its own insurance program for owners of Tesla self-driving vehicles.

Another suggestion is future drivers may not need insurance because they may not own their cars. Self-driving vehicles may lead to widespread reliance on car sharing services. Unlike Lyft or Uber which rely on human operators, self-driving ride-share vehicles could operate around the clock at a much lower cost, making it practical for urban drivers to rely entirely on ride-sharing for daily transportation. Future autonomous vehicle ride-sharing fleets would likely self-insure, as Google’s subsidiary Waymo intends to do when it launches its self-driving ride-share service in the coming months.

Whatever the result, self-driving cars will ultimately present some form of risk, and manufactures, drivers, municipalities and insurers will have to decide how to allocate that risk among themselves.

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Pivotal Attorney McKean Evans Published in King County Bar Association Bulletin

Posted Thursday, May 3, 2018 by Pivotal Law Group

The May edition of the King County Bar Association’s Bar Bulletin features an artile by Pivotal attorney McKean Evans. McKean discusses the Washington Court of Appeals’ recent decision expanding insurance bad faith claims against individual adjusters and reviews potential future implications of the ruling. Check out the article here.

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Washington Federal Court Rejects Insurer Efforts to Limit Policyholder Recovery to Bare Policy Benefit

Posted Wednesday, May 2, 2018 by Pivotal Law Group

In its April 23, 2018 decision in Williams v. Foremost Insurance Co., 2:17-CV-1113-RSM, 2018 WL 1907523 (W.D. Wash. Apr. 23, 2018), the U.S. District Court for the Western District of Washington analyzed and rejected a frequent argument insurers make in defending bad faith lawsuits: that the insurer can escape a bad faith lawsuit by retroactively paying the benefits it denied in the first instance.

Williams brought a claim for vandalism damage under her insurance policy with Foremost. Foremost denied Williams’ claim for insurance benefits, arguing that the vandalism was caused by people who were Williams’ tenants at the time of the damage. Foremost ignored Williams’ argument the loss was covered because the vandals were former as opposed to current tenants.

Williams brought a lawsuit alleging claims for bad faith and violations of Washington’s Insurance Fair Conduct Act (“IFCA”) and Consumer Protection Act (“CPA”); those claims entitled Williams to damages beyond the amount of the disputed insurance benefit, such as attorney’s fees, court costs and treble damages.

The court promptly ruled that coverage existed and ordered Foremost to pay the disputed benefits. Following that ruling, Foremost paid Williams $187,001.43 in benefits owed.

Foremost then asked the court to dismiss Williams’ claims for bad faith and for CPA and IFCA violations. Foremost claimed that, since it paid the policy benefits Williams claimed, Williams had no right to assert any additional claims. The Court rejected Foremost’s arguments.

First, and most importantly, the court rejected Foremost’s argument that Williams’ remaining claims were barred because Foremost ultimately paid the insurance benefits, and that Williams could not bring further claims without producing “her complete financial records.” The court determined “Foremost’s insurance payment to Ms. Williams is irrelevant to the issue of bad faith” and that “Washington State law does not appear to provide that retroactive payment for an insurance claim extinguishes all the alleged harm to a plaintiff[.]”

Next, the Court rejected Foremost’s argument that its claim denial was reasonable in light of the evidence Foremost had at the time. The Court noted that Foremost’s evidence showed only that the vandalism was caused by former – not current – tenants, and that Foremost had no evidence that the vandals were Williams’ tenants at the time the vandalism occurred. Moreover, Williams explicitly advised Foremost the vandals were not tenants at the time of the damage.

Finally, the Court also emphasized that an insurer’s bad faith denial of coverage injures the insured beyond merely the dollar amount of the policy benefit. In this case, Williams suffered additional damages because Foremost’s wrongful denial delayed her ability to repair the vandalism damage to her building; Williams also had to hire an expert, take construction loans, and perform some repairs herself.

The Williams decision emphasizes an insured’s remedies for bad faith denial of insurance claims are comprehensive, and include losses and injuries beyond the bare policy coverage amount.

If you have questions regarding insurance claim denials or other insurance issues, contact Pivotal Law Group attorney McKean J. Evans today for a free consultation.

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Case law update: City of Seattle potentially liable for slip and fall on metal plate on sidewalk.

Posted Thursday, April 26, 2018 by Christopher L. Thayer

In Sluys v. City of Seattle et al**, No. 76131-5-1 (April 9, 2018), in an unpublished decision the Court of Appeals, Division 1, recently ruled the City of Seattle was potentially liable for injuries suffered by a pedestrian who slipped and fell on a metal utility vault cover (a metal plate) located on the sidewalk.

On January 6, 2012, during a rainy afternoon, Sluys slipped and fell on a wet metal utility vault cover while walking downhill on the 3rd Avenue South sidewalk between Yesler Way and South Washington Street in downtown Seattle. Sluys suffered injuries to both knees requiring surgery and a lengthy recovery. The vault cover is not owned by the City. It was installed by a utility company in the early 1990s. The City issued the permit under the City’s Street Use Ordinance and the installation was completed by Summit in 1992. The vault cover encompasses at least a third of the sidewalk.

Sluys filed suit against the city and the utility company, but initially failed to name the correct utility company entity. In response to a motion to dismiss by the city and the utility company, Sluys offered the sworn testimony of Dr. Gary Sloan, PhD, a psychologist specializing in ergonomics and human factors. Dr. Sloan had conducted a friction analysis of the vault cover and determined it presented an “unsafe condition”. In his opinion, “when wet, it could be anticipated that a metal hatch cover placed in a steeply sloped walkway would pose a potential slip hazard.” The trial court dismissed Sluys’ lawsuit against both the city and the utility company and Sluys appealed.

The Court of Appeals noted government entities in Washington are “liable for damages arising out of tortious conduct … to the same extent as if they were a private person or corporation. RCW 4.96.010(1); Washburn v. City of Federal Way, 178 Wn.2d 732(2013). To succeed on a negligence claim, the plaintiff must prove: the existence of a duty, breach of that duty, a resulting injury, and proximate cause between the breach of duty and resulting injury. The only issue before the court was whether the City owed a duty to Sluys. “Negligence is generally a question of fact for the jury, and should be decided as a matter of law only ’in the clearest of cases and when reasonable minds could not have differed in their interpretation’ of the facts.” Bodin v. City of Stanwood, 130 Wn.2d 726 (1996).

The Court of Appeals summarized municipal liability for streets and sidewalks as follows:

It is well settled that a city has a duty to maintain and repair its streets and sidewalks in order to keep them reasonably safe for ordinary travel. Keller v. City of Spokane, 146 Wn.2d 237, 249, 44 P.3d 845 (2002) … Generally, actual or constructive notice of the unsafe condition is required before liability arises under a city’s duty to maintain streets and sidewalks… Notice is not required, however, if the government entity either created the unsafe condition or should have anticipated the condition would develop… “In sum, if the government entity created the unsafe condition either directly through its negligence or if it was a condition that the governmental entity should have anticipated, the plaintiff need not prove notice.” Nguyen v. City of Seattle, 179 Wn. App. 155 (2014).

The Court of Appeals points out that, while the vault cover was not owned by the City, the City conceded the utility company had applied for a permit to install the utility vault and vault cover within the City sidewalk. The City further concedes that it approved the requested permit subject to Summit complying with guidelines and parameters set by the City as to where within the public right-of-way the facilities could be located. Thus, the only question is whether when approving the permit, the City should have anticipated whether the utility vault could lead to an unsafe condition.

Sluys presented Dr. Sloan’s declaration to support his assertion the vault cover was unsafe. Sloan investigated the site of Sluys’s fall, took various measurements, and then applied a human factors analysis to the pertinent facts. He described his evaluation in a 15-page written declaration accompanied by multiple photographs, charts, and research papers. The City concedes, ·”the declaration of Dr. Gary Sloan … raised a genuine issue of material fact that the vault cover currently presents an unsafe condition. But more than just concluding that the utility vault was slippery, Sloan also opined:

When wet, it could be anticipated that a metal hatch cover placed in a steeply sloped walkway would pose a potential slip hazard. In the safety disciplines, if a hazard can be identified, then reasonable attempts should be made to eliminate the hazard. If the hazard cannot be eliminated, then people should be guarded from exposure to the hazard. Lastly, if residual risk remains following reasonable attempts at elimination and guarding, people should be warned about the hazard and provided direction for how to avoid harm. In the present matter, the hatch cover should not have been placed in a predictable pedestrian travel path having high density pedestrian traffic.

(Emphasis in original).

The Court of Appeals held this evidence was sufficient to raise an issue of material fact, and reversed the trial court’s dismissal of Sluys’ claims against the city.

Although this is an “unpublished” decision, and therefore has no direct precedential value, the Court of Appeals decision in the Sluys’ case is noteworthy in that it found the City could potentially be liable for a condition it did not create or construct – but merely permitted. This is likely because the metal plate was located in the middle of the sidewalk and the City has an independent duty to ensure the sidewalks are reasonably safe for users.

Anyone who lives in the City of Seattle knows the metal plates and grills in the sidewalks can be treacherous, especially on rainy days. If you or someone you know has been injured due to an unsafe condition on a city sidewalk, please contact managing member Chris Thayer for more information: (206) 805-1494 or CThayer@PivotalLawGroup.com.

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Ninth Circuit Decision Shows Life Insurance Pitfalls for Policyholders; Clarifies Diversity Jurisdiction in Insurance Disputes

Posted Tuesday, April 17, 2018 by Pivotal Law Group

The Ninth Circuit’s recent ruling in Elhouty v. Lincoln Benefit Life, Case No. 15-16740 (March 27, 2018) is notable for two reasons. It illustrates the pitfalls of certain life insurance policies that supposedly pay for themselves, and it clarifies the jurisdictional standard governing when insurance disputes can be litigated in federal as opposed to state courts.

Elhouty purchased a flexible premium adjustable life insurance policy from Lincoln Benefit Life Company with a $2 million face value. Adjustable life policies are often marketed as giving the policyholder all the advantages of death benefit protection, an interest-bearing account for investment purposes, and flexibility as to how premiums are paid. The policies often come with a sales pitch that the policy’s investment component will effectively pay off the future premiums, without mentioning that the investment returns are often inadequate to cover future premium increases.

Elhouty’s case illustrates this pitfall: for years, Elhouty arranged for his premiums to be paid directly out of the policy’s net surrender value, but failed to notice when the net surrender value was exhausted and he was sent a bill for $55,061.49 to keep the policy in force. Since Elhouty never paid the additional premium, Lincoln Benefit claimed the policy lapsed. Elhouty disputed Lincoln Benefit properly notified him of the additional premium he owed, and filed a lawsuit seeking a court declaration that the policy remained in force.

Elhouty sued in state court, and Lincoln Benefit removed the action to federal court (conventional wisdom holds federal courts are more insurer-friendly than state courts). To properly remove the action, Lincoln Benefit was required to establish that the amount of money at issue in the lawsuit exceeded $75,000.00. Lincoln Benefit argued the amount at issue was the full $2 million policy face value; Elhouty claimed it was only the $55,880.08 in premiums he allegedly owed Lincoln Benefit. On the jurisdictional issue, the Ninth Circuit agreed with Lincoln Benefit. The court determined the unpaid premiums were not in dispute because Lincoln Benefit did not seek to recover them from Elhouty. Elhouty had had the option to pay $55,880.08 to keep the policy in force, but the real dispute in the lawsuit was the policy’s validity. The court clarified that, in cases where the “controversy relates to the validity of the policy and not merely to liability for benefits accrued,” the policy’s face value is the amount in controversy for jurisdictional purposes. Thus, the court ruled the amount in controversy was $2 million and federal courts had jurisdiction.

The court also agreed with Lincoln Benefit on the merits of the dispute. Elhouty argued Lincoln Benefit’s policy termination notice for unpaid premiums was defective because Elhouty never received notice. But the court ruled that the language of the policy and applicable state law required only that the notice be mailed, not that the policyholder actually receive it.

For insurance lawyers, Elhouty is useful for its clarification of the jurisdictional standard. For policyholders, Elhouty is a reminder of the importance of keeping your premium payments up to date and not taking the insurer’s promotional materials at face value.

McKean J. Evans is an attorney at Pivotal Law Group representing insurance policyholders. If you have questions regarding insurance issues, contact McKean today for a free consultation. McKean blogs regarding insurance and ERISA issues at https://seattleinsuranceanderisablog.com/.

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