In early September, I began hearing from readers all across the country who had the same question: “Should I drop my current policy with Farmers Insurance and go with some other company?”

This was the first time in decades that so many people had the same question about one insurance company. The last time was in the early 1990s, in reference to Executive Life Insurance Company in California and New York. They were among the largest failures of life insurance companies in U.S. history.

Prior to their crashes, I wrote a column about them, and to anyone who asked, my advice was to run.

But these recent calls were different, and of course, I wanted to know why. There had to be a common denominator. Now, you might think that it had something to do with the way Farmers’ claims adjusters were handling claims, but it wasn’t.

Every person who called had been the victim of identity theft resulting from a massive data breach that was not caused by Farmers. So, why was Farmers getting such negative attention? And why now?

“Julie” in Greenville, North Carolina, sent me the answer, an innocuous-sounding “Notice of Security Incident” from Farmers about the data breach.

Not so fast, fair and friendly

To paraphrase the notice (you can read it in full here): On May 30, 2025, one of our vendors informed us about suspicious activity of an unauthorized actor who accessed our databases that contained customer information. We conducted a review to determine what personal information had been obtained.

But it wasn’t just the data breach that was so upsetting. Farmers, whose motto is “Fast, Fair and Friendly,” waited almost three months — until the very end of August — to tell their policyholders about the May breach (which involved its third-party vendor Salesforce).

Typically, insurance companies will notify policyholders within 30 to 60 days of a data breach, depending on state and federal laws. California and New York require notification within 30 days.

Farmers would most likely drop you like a ton of bricks within a month of you missing a premium payment, and yet, it took almost three months for it to notify its customers of the data breach.

Adding insult to injury, the first sentence in its security notice begins with these galling words: “Out of an abundance of caution, we are broadly providing notice of a security incident that may have involved personal information of certain individuals.”

“Out of an abundance of caution…”? Three months after the breach was discovered!

One policyholder — a claims adjuster, actually — was furious. He told me, on the condition of anonymity to avoid reprisals, “In my job, I deal with a lot of people who get very angry. If my personal information falls into the wrong hands, both I and my family are at risk.

“The way Farmers handled this data breach is concrete proof of an uncaring, callous attitude and gross negligence bordering on intentional. If one of our insureds had done something like this, I would deny them coverage, as this behavior was so outrageous and isn’t just an oversight.”

He was not alone in feeling that way.

Why a breach of this nature is so dangerous

If you’ve had to deal with identity theft resulting from a data breach — or the fear of becoming an identity theft victim — then you know all about anxiety and sleepless nights. We entrust insurance companies with highly sensitive personal information.

For those impacted by a data breach, the risks often include, but are not limited to:

• Identity theft used to commit financial fraud by obtaining fraudulent loans

• Phishing scams developed from stolen personal information

• Criminal activities such as stalking

What you can do if a data breach affects you

Several class-action lawsuits have already been filed, one by Los Angeles law firm Kabateck LLP. I spoke with managing partner Shant Karnikian, who advises anyone who has been notified that they were affected by the data breach to:

• Enroll in the complimentary identity and credit monitoring service offered by Farmers

• Remain vigilant and regularly review your credit reports and financial statements for signs of suspicious activity

• Be alert for phishing emails or texts that refer to Farmers

• Enable a fraud alert/security freeze with the major credit bureaus — Equifax, Experian and TransUnion — for an extra layer of security

• Keep an eye on your credit report for suspicious activity. You can get a free report weekly through AnnualCreditReport.com

Far-reaching effects of the breach

It is important to bear in mind that the effects of the data breach can extend far beyond the 1.1 million Farmers policyholders whose personal information was stolen.

Beneficiaries of life policies, auto policies with lenders listed as a covered party, homeowners policies listing financial institutions, commercial properties where landlords are listed as additional insureds and many more people connected to the customers affected could also be at risk.

Time will reveal the scope of the damage and just how much could have been prevented if Farmers had acted quickly to notify its policyholders that their personal information had been stolen.

Dennis Beaver Practices law in Bakersfield and welcomes comments and questions from readers,
which may be faxed to (661) 323-7993,
or e-mailed to Lagombeaver1 – at – Gmail.com.

The post A ‘Fast, Fair and Friendly’ Fail: Farmers Irks Customers With Its Handling of a Data Breach appeared first on Dennis Beaver.

Picture yourself running your own little convenience store in a poor section of town with a large, highly superstitious, immigrant population.

It’s Christmas Eve, and normally lots of moms with their kids would be shopping, but now–fortunately — you are all alone.

Suddenly, a car crashes through the front door, headed to where you are sitting behind the cash register. Like a character from The Matrix, you perform back-flips and contortions, avoiding the car, but get one heck of a backache and nightmares.

Fortunately, the out of control car, your landlord, and your business have adequate insurance. Claims adjusters immediately arrange for repairs, so you’re only closed about a week.

But then something very odd becomes clear:

Many of your customers are frightened, some talking about a hex — a spell — on the building, and they have not returned, leading to a substantial reduction in sales.

You also sustained some type of a back injury, and have recurring, horrible nightmares, but have been trying to “tough it out” and not yet been seen by a doctor or psychologist.

To make matters worse, your own insurance company, which should cover lost income, announces that you only have 60 days to make a final claim. But at this time, how could anyone know what the loss will wind up being?

That real fact situation is currently facing Abe, our Central California reader. You and the Law has turned to Hanford attorney, Rissa Stuart for advice on how to deal with claims adjusters, and other steps Abe needs to take to prove his loss of income claim, beginning with good record keeping.

Good financial records +video surveillance evidence = solid proof

“Just as for an individual who may have been off work due to an accident and would prove lost wages with pay stubs from a employer, it’s the same for a business.

“Abe’s situation is unique and could greatly benefit by having more than daily till records and profit and loss statements. His store video surveillance system could play a critical role in proving these substantial losses by showing customers in the store over a period of months prior to the accident,” Stuart points out.

And once again, Abe was a lucky guy, as his video system has an enormous 8 terra bytes of storage, and had been running for almost a year. But what about this 90 day cut off limit?

’90 days to present the claim is unrealistic’

“An insurance company must allow adequate time for you to gather the facts and elements of proof which establishes your claim. Abe’s could easily require help from a forensic accountant, an economist and a cultural anthropologist to establish his present reduction of income and prove what could very well be a permanent loss of customers putting him out of business at that location.

“This 90 day limit to present his claim is unrealistic and sounds like bad faith. Abe is clearly being pushed around by a claims adjuster, likely an attempt to minimize what is paid out.

“That alone is reason to at least have a consultation with an attorney, but as there are three insurance companies involved in the incident, Abe likely cannot handle it by himself,” Stuart believes.

Toughing it our — delaying treatment — weakens the claim

Of course anyone going through something like this would certainly be affected, at least emotionally, and Abe could indeed have experienced some kind of a back injury.

“But if you are hurt, you see a doctor and you do this now. It’s the same thing with emotional injuries, as the longer you wait to be treated, the believability of your injuries can take a nose dive,” Stuart notes.

To superstitious customers the hex or spell is real

Just how serious, how real is the “hex” on Abe’s store and could this be the basis of compensation for lost business?

“It could be very real to his former customers,” anthropologist Dr. Phillips Stevens told us. He is associate professor of anthropology at the Buffalo campus of the State University of New York.

“In many communities all over the United States the belief in magic and the supernatural play a role in everyday life. If a belief in this ‘hex’ can be confirmed through interviews conducted by a cultural anthropologist, it would help to explain his loss of business,” Stevens believes.

Proving the reality of those fears to Abe’s former customers and others to whom the worlds of magic and the supernatural are real then raises one determinative question:

“If Abe cannot somehow convince his customers that it is safe to return, then what?”

In that event, it will be one of the most interesting cases that any lawyer will ever have.

Cross my heart and hope to die!

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

The post Advice for dealing with claims adjusters appeared first on Dennis Beaver.

The proper smoke and carbon monoxide (CO) alarms can mean the difference between having a home to live in and employees not out of a job because the boss wasn’t one of the 80% of deaths from home fires that occur between the hours of 11 p.m. to 7 a.m.

“Anna” and “Danny” were not one of those statistics because they had a CO detector that went off early in the morning of Dec. 28, 2021.

“It was a smoldering, ceiling fire in our attic with little smoke, but which created carbon monoxide. Our Kidde CO detector woke us from a deep sleep, giving us time to call 911. Only a small bathroom and laundry area off of the kitchen were damaged,” Danny said.

“We would appreciate any guidance you can offer so we don’t do the wrong things with our insurance claim.”

Fire? What not to do

I ran Danny’s important question by friends of this column, Los Angeles-based retired homeowners claims adjuster Rachel Greenberg, and insurance broker/expert witness in insurance coverage issues, Karl Susman.

Rachel: Delay in calling 911 when you smell smoke or suspect there is a fire.

Consequences: This raises a suspicion of arson. Policyholders have a duty to mitigate (reduce) damages under the terms of the policy.

Karl: In addition to phoning 911, immediately report the claim to your insurance carrier. Delay in both instances makes the entire claim suspect and may affect payment even if legitimate.

Rachel: Fail to promptly begin making an inventory of what was destroyed or damaged. Be a hero and start co-it-yourself repairs.

Consequences: Homeowners policies generally provide replacement coverage, but you’ve got to know what was lost. Unless you have date-stamped photos–showing the structure and contents of closets and drawers – the further away from the incident, your memory will suffer and you will not be paid for what you can’t prove was in your home.

Karl: By starting to fix things yourself, you might not realize that the damage is far more extensive. If you do it on your own without approval of the claims rep, chances are that you may not be properly reimbursed.

These Things Are Giant Red Flags

Rachel: Have a bad attitude towards the adjusters!

Consequences: They might drag their feet instead of moving things along quicker. This is a time to be patient and cooperative. Their job is to help you. They aren’t your enemy!

Being a jerk, overly anxious and pushy will slow thing down. If you need that money and your need it NOW, there is usually a problem. Adjusters think, “Someone is in a lot of debt and sees the insurance claim as a quick way to get some cash to pay it off.”

Karl: How you react at the scene is important. Carriers receive copies of first responders’ reports. All of that information is passed on to the adjuster. They are trained to sniff out fraud, especially inflating what was lost. If a homeowner is pushy, this will make the adjuster suspicious – and a credit check will be done.

Don’t do it. Don’t pad the list of items destroyed. If caught, in some states, the insurance company can deny the entire claim.

Rachel: Abuse the “Temporary Living Expenses” section of your insurance policy by booking the Presidential Suite at the Ritz Carlton and for breakfast each day have room service bring caviar!

Consequences: “Can I stay wherever I want?” is a frequently asked question. You need to stay somewhere that is similar to where you were. This does not mean a million dollar mansion at Malibu unless that’s where you were living before the loss.

Approval from your adjuster — before renting an apartment or checking into a very expensive hotel — is required or you could face a denial of payments under that section of your policy. Often insurance companies have pre-negotiated room rates with very nice properties, so it is always important to give your adjuster a chance to find lodgings for you.

Karl: You will not be rewarded for extravagant expenses. If you did not order the most expensive item on the menu every day before the fire, you are not going to be reimbursed for doing so after it. “Is this how you and your family normally eat?” an adjuster will ask if presented with a mind-numbing bill for dining at fancy restaurants.

Thinking: “I have been paying my premiums for 20 years and you guys owe this to me! Now is my chance to get my money’s worth,” is not the way insurance works.

It is so important to use common sense before a fire or other loss. With expensive items of jewelry, clothing, anything of unusual value, let your agent know about it, and obtain an appraisal and possibly a rider for it.

Concluding our discussion, both Rachel and Karl stressed this final point:

“Don’t embellish, lie, rush, assume or guess. Do not create an adversarial relationship with your adjuster who is not your enemy!”

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

The post After a fire loss – dealing with your insurance company appeared first on Dennis Beaver.

Here’s what they told an audience ranging in age from 25 to 70 — Which of the following is a true statement?

1) Annuities are straightforward, excellent investments for most people at or near retirement. In fact, the older you are when buying an annuity, financial advantages are increased, making them even more suitable.

2) Sale skyrocketed after the 2008 stock market crash as they became highly attractive to people who had lost retirement money, wanting to assure income they could not outlive.

3) While rare, when a life insurance/annuity company fails, others step in to pay policyholders. In addition, there is protection from the FDIC, just like with banks, making your annuity a safe, guaranteed investment.

Fear — a powerful sales tool

Ingrid Evans (EvansLaw.com) is a financial elder abuse attorney, now in private practice, having prosecuted one of the first cases of this type 10 years ago when she was a deputy city attorney in San Francisco. She has seen firsthand what results when an annuity salesperson’s most powerful tool — fear — is used on the elderly, she told You and the Law.

“Fear is an incredibly effective tool — the fear of not having enough money as we age. Even a mediocre salesperson will either sense that fear or create it by painting a world of gloom and doom in which the only way to safeguard yourself is by purchasing an annuity to assure a source of money that you just can’t outlive,” she explains.

“There is nothing simple about most annuity contracts, but when reduced to their basic elements, you give the insurance company X dollars, and they agree to either start paying some of it back immediately, or at a time in the future. Generally, the big selling feature is lifetime income, where payments can be yearly (from which the word, annuity — annual — comes), monthly or whenever the policyholder specifies,” Evans states.

Stockbroker X, who is a friend of this column and works with one of the nation’s largest investment houses, observes, “What made annuity contracts attractive were guaranteed increases, where, for example, your payments might increase yearly by a certain percent, or the value of the annuity would go up. Let’s say 5 percent a year — possibly more if you had an annuity which invested some of your money in the stock market.
“But in our almost zero interest rate environment, those increases have shrunk dramatically with newer policies, and some insurance companies are no longer even selling annuities,” he points out.

“Annuity ads splash around the word ‘guaranteed’ — a direct appeal to people who lost money in the 2008 crash. The impression created is that your money is just as safe as in a bank. The need for safety and a desire to protect remaining money led to a dramatic increase in annuity sales starting in 2008,” he explains.

Rarely a good investment, terrible for many people

“If you might need access to your money — possibly for health care issues, especially for those over 65 — annuities are horrible. Money is typically locked up for years, and cashing out often means enormous penalties on top of the huge commissions charged.

“What’s worse is that deferred annuities — which start paying years down the road — are being pushed to seniors. Often, these are completely inappropriate because of the age of senior citizens, many who will never be able to take advantage of the various features sold them,” Evans notes.

“Annuities are not like a bank CD. They have no FDIC protection. There is a real risk of loss. While other insurance companies may take over some assets of a failed insurer, they are not obligated to. Finally, state guarantee associations do not provide complete protection for all policyholders,” the elder abuse attorney stressed.

She is completely right.

In April of this year, even with $700 million contributed from state guarantee associations across America, thousands of Executive Life Insurance Co. policyholders lost hundreds of millions of dollars from its failure — many having their monthly payments slashed by more than half.

“Hold on a moment,” you might be thinking. “Can an annuity ever be a good investment?”

“Yes, indeed, and they do serve a purpose. That’s why it is so important to obtain objective financial advice from a fee-only financial advisor who isn’t going to be influenced by the enormous commissions annuity sales generate,” our friend, Stockbroker X told us, and we absolutely agree.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

The post Annuities — not as safe as you think appeared first on Dennis Beaver.

A recent article dealt with the consequences of rejecting advice from professional tree trimmers to eliminate the chance of a giant, 75-foot tall eucalyptus tree causing significant property damage or death when it falls.

Fall it did in early September 2017, crashing onto a neighbor’s corral and injuring their horse. The tree owners turned the incident over to Farmers Insurance and another reason why claims adjusters have a reputation for unethical behavior would soon be evident.

Even when presented with multiple examples of their insured’s dishonesty, evasive behavior and being aware of the danger, adjuster Lindsay McCarty and supervisor Richard Osbun incredibly stated, “Our insured denied ever being told the tree was dangerous. We have to believe them. Claim denied.”

Among the many comments readers submitted, one was stunning. “Richard,” a retired Farmers adjuster stated, “When you have credible evidence that your insured are dishonest, you can’t believe them! This claim obviously should have been paid. Management is responsible for such disturbing, unethical behavior.”

Pay claims and you’ll never get ahead

Salt Lake City attorney Randall K. Edwards writes extensively on this topic and as a young lawyer worked in insurance defense, seeing first hand “how morally low claims adjusters can sink.” We asked him, “Do insurance companies seek out dishonest people to work for them?”

“I don’t think so,” he replied. “After all, who wants someone who is dishonest working for you? It’s more subtle than that. In my experience, dishonest, unethical adjusters are made, not born. Most new employees are simply trying to figure out how best to do their jobs and then move up in the company,” he stated.
The term “grooming” came to mind, and Edwards sees it that way also.

“Adjusters are groomed to make ethical compromises, which come gradually. This is how to hang onto your job and move ahead. Your goal is to protect the assets of your multi-billion dollar employer and cheating the insured or an injured party out of compensation is expected and rewarded.

“Soon, new adjusters realize that by paying claims they will never get ahead. As an adjuster’s supervisor got into that position by the same process, it becomes the corporate culture. Excuses to deny payment are manufactured, often by:

(1) Intentionally misreading the insured’s policy so that coverage is denied;

(2) Arguing that certain statutes do not apply;

(3) Dragging a case out until the insured or claimant simply gives up and accepts an unreasonable, low offer because they need the money and are stressed out.

(4) Just like your tree example with Farmers, adjusters will often reject clear evidence of fault, saving the company money, and their insured then winds up being sued by the injured party.

Adjuster and insurance company lawyers are caught in the middle

Despite all the comforting slogans; Allstate’s “You’re in good hands,” Farmers, “We know a thing or two because we’ve seen a thing or two,” or State Farm’s, “Like a good neighbor, State Farm is there,” Edwards says:

“The corporate culture of non-payment, fighting with policyholders over coverage and rewarding adjusters for trying to find loopholes is self-defeating. The public doesn’t trust their own insurance company to do right by them, and certainly doesn’t trust the insurance company of someone who has injured them to step up and do the right thing. Meanwhile, the adjuster gets caught in the middle.

“You can’t get ahead in the company without trying your best to pay out as little as possible, while at the same time trying to hang onto your sense of decency and self-worth,” he observes and has harsh words for defense attorneys.

“It’s nasty. In order to keep the insurance company sending them cases, insurance defense attorneys are often in a direct conflict of interest with the insured policyholders who have been sued and to whom they owe their primary duty of loyalty. This often results in poor legal representation for the insured policyholder.”

“I am aware of many lawyers and adjusters who finally had to decide between selling their souls and dignity and getting out of the insurance game,” he underscores.

“A necessary evil”

So, are there any “good” companies out there? Edwards isn’t optimistic: “Unethical behavior as a vital part of the insurance industry’s culture, the fact of the matter is that exceptions to this rule are few and far between, in my experience.

Even the best insurance companies can be thrown into the category of ‘the best of a bad lot,’ in my view. As things stand right now, insurance is a necessary Evil. And Evil, necessary or not is still Evil.”

And the takeaway from our story? No matter how friendly, adjusters aren’t your friend.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

The post Are unethical claims adjusters born that way or made? appeared first on Dennis Beaver.

What are your legal rights, and a car dealer’s obligation concerning vehicle registration?

Learning some of the possible legal consequences of driving a car that lacks current registration wasn’t what Joe had in mind when he purchased a 3 year-old Toyota 4-Runner for his nephew, Abe, who drove it for a local chauffeur service.

But there was a problem, as Joe explained:

“I bought in February from one of the largest Toyota dealers in our town. We were told that it was a trade-in from a customer who was unable to locate the vehicle’s registration or title, but not to worry, because if she didn’t bring it to them, they would apply to DMV for a replacement.

“They issued a temporary registration which was taped on the passenger inside windshield.”

The car had no license plates, “as they were personal to the customer, and were transferred to the new car she purchased.”

Abe immediately went to work and, as his employer had a contract with the two country clubs in town, “I earned a very good income, both as an hourly employee and from healthy tips,” he said.

Time Limits to Legally Drive with Temporary Registration

While time limits vary state-to-state, in general, buyers are able to drive the vehicle for a limited time on a dealer-issued temporary registration.

Joe’s credit union financed the purchase and required full-coverage insurance with them listed on the insurance policy as lienholder.

Despite repeated calls to the dealership, asking “Where is the car’s registration?” Joe was assured by the used car sales manager, “We are working on it, but our customer isn’t very cooperative, and in fact, the new car we sold her had to be repossessed due to checks bouncing and a failure to keep monthly insurance premiums current.”

What Abe and Joe are facing

Not having valid, current registration on a vehicle is nothing to sneeze at because:

(1) Police can stop and ticket the driver as unregistered vehicles may not be driven legally on public roads.

(2) An owner faces parking violations, towing and impounding if the vehicle is found on or operated on public roads.

(3) Fines can range from $250 to $3,000 or more, depending on the state and any prior violations.

(4) Penalties can include being arrested, doing time in jail and possible impounding the vehicle, points on a driver’s license, and suspension of the license.

(5) If auto insurance was issued under a temporary registration, coverage could lapse, depending upon the carrier. Driving a car without insurance is its own violation of law.

Be Patient

In their state, 90 days is the limit of validity for a dealer-issued registration.

Abe had been driving the 4-Runner since February. “But I just received notices from my employer and auto insurance, that unless the vehicle was registered in my name before the expiration of the temporary registration, insurance would be cancelled and I could not drive for the company. Every time I call, the used car sales manager just says, ‘Be patient, we are working on it.’

“But my family depends on that income. Can you help us?”

Not Who You Know But Who Knows You

It would have been easy to just send Abe and Joe down to their local DMV investigations office and file a complaint against the dealer who had the legal duty of providing them the registration.

But that would take time and Abe would be out of a job.

Instead, I set up a conference call with Joe, Abe, and the dealership, asking to be connected with the general manager but was transferred to his assistant.

When “Sheri” came on the line, I just said, “My name is Dennis Beaver and I am not representing your customers, but as a journalist, trying to help them,” and outlined the problem.

My next call was to the manager of Joe’s credit union.

“Joe, your customer, really needs your help. The Toyota dealer appears unable to produce registration on the 4-Runner you financed, and he will likely stop making any more payments. Would you please call the dealership and do what you can to help Joe?”

A Little Patience Was Called for Now

“So, what do we do now?” Both Abe and Joe asked.

“We wait for our phone to ring, and my prediction is no more than 5 minutes. You are about to see what is meant by the power of the press.

Three minutes later the Toyota general manager called:

“Mr. Beaver, please tell them to bring the car right over to us, now if possible. We will unwind the sale, refund all of their payments and insurance premiums they paid. And thanks for handling this the way you did.”

Dennis Beaver Practices law in Bakersfield and welcomes comments and questions from readers,
which may be faxed to (661) 323-7993,
or e-mailed to Lagombeaver1 – at – Gmail.com.

The post Auto dealer failed to provide registration appeared first on Dennis Beaver.

Driving home, on the same road you’ve driven thousands of times, doing about 25 mph, suddenly, with no warning, a car pulls a U-turn right in front of you.

Attempting to avoid the accident, you veer to the right, but still collide, and next crash into a parked car.

The police come out, take statements and file a report which assigns 100 percent fault to the driver who made the illegal U-turn, as one would expect.

Sustaining “soft tissue,” whiplash injuries, a short course of physical therapy is prescribed. Your car is deemed a total by your insurance company.

“OK, Beaver, so where’s the meat? I don’t see a story,” you might be thinking right now, and if the insurance company for the at-fault driver were ethical and acted in a fair manner, there would be no story.

But that’s not what was to happen, for even with no evidence that you had done anything wrong, the insurance adjuster claimed that you were (1) speeding; (2) failed to take evasive action; and (3) “failed to maintain a proper lookout.”

If you ever thought that insurance companies were a big brotherhood and watched out for each other, playing nice among themselves, guess again.

Rather, it’s “no honor among thieves,” as this company refused to accept liability, forcing the matter to “Inter-Company Claims Arbitration,” which, just like the police, found 100 percent fault. Later an accident re-construction expert and police officers from two different cities would find you completely fault-free.

Still, they maintained that you were 50 percent at fault!

We’ve seen their funny ads

Without naming the company, you have seen their funny ads — at a cost of over 500 million dollars a year, close to 5 percent of premiums.

But what the cute commercials don’t reveal is a return to some of the worst claims practices seen since California had third party bad faith — meaning you could sue an insurance company for acting in bad faith when handling a claim.

That amazing window of time was David and Goliath, with insurance companies running scared, often over-paying claims out of fear, and it lasted from 1979 until 1988. Then, under great political pressure, the California courts took that right away from us all, and the cockroaches crawled out of the cupboards, insurance settlements becoming a fraction of what was fair.

“Your client should have anticipated the accident”

The most maddening justification for making a low-ball settlement offer was this comment from the adjuster:

“Your client failed to maintain proper lookout and should have anticipated the accident.”

“You mean, my client is required to be a mind-reader??” the lawyer replied. “How can you know someone is going to make an illegal U-turn???”

“If they maintained lookout, there would not have been an accident,” the charming adjuster repeated.” (At that time, your lawyer opened his desk drawer and removed a Voodoo doll, grabbing a handful of pins. He also reached for his emergency bottle of scotch.)

“But the courts define lookout as observing things in plain view, which are easily seen. It means being diligent, such as keeping a safe distance from other cars. If you don’t look, are fiddling with the radio or texting, sure, then you are not maintaining a proper lookout.

“And they don’t even remotely suggest that you have to anticipate someone making an illegal U-turn. How can you blame my client when your driver suddenly pulled right out in front and made the U-turn?  Tell me that, please,” begged the attorney.

It was a conversation that went nowhere, and so, your lawyer asked to be connected with her supervisor who promised to have the entire matter “round tabled” with new adjusters. And their findings?  Identical. Speed, failure to maintain lookout, and so on.

Get you and the law involved

“Beav, I need your help — Have I got a story for you,” was the call from your lawyer.

We contacted the Media Relations department of this insurance company and asked if they now have a “mind reading” requirement for anyone involved in an accident with their insured.

“We will have the matter looked at by a regional supervisor,” was the reply.  And that’s exactly what took place, but did it change anything?

You bet your crystal ball! Without addressing the mind reading issue, an acceptable settlement offer was made.  Nothing extravagant, just a fair offer.

The voodoo doll was put back in your lawyer’s drawer and the bottle of Johnny Walker remains unopened to this day.

Moral to our story: Even if you are handling your own auto accident case, when the adjuster is a colossal jerk, escalate the matter, speak with a supervisor and, if need be, the supervisor’s supervisor.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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If you have any type of insurance policy from MetLife – in fact from any insurance or annuity company – our story should cause you to take certain steps to protect future payments, and we begin with this question:

“Does the insurance company know where you live? Can they contact you or your family members?”

MetLife is one of the world’s largest insurance companies. Stand on any street corner from Hong Kong to cities in South America and in no time a bus will come by with an ad for MetLife.

While “big” may have advantages, it can also have considerable drawbacks, such as “too big” to know who they insure, and who is supposed to receive monthly annuity payments.

Last December, this mammoth insurance company announced that it had a little problem. MetLife admitted “Internal failures resulting in not making payments to tens of thousands of pensioners stretched back a quarter of a century.”

Downplaying the significance of this event, the company “Believed the group missing out on the payments represented less than 5 percent of about 600,000 people who receive a type of annuity payment with average benefits of less than $150 a month.”

“But that’s 30,000 workers harmed by this failure!” outraged New York attorney Edward Stone tells You and the Law. “Metlife does not even know how many years back these unpaid pension obligations go, but retirees were owed a defined amount of monthly income when MetLife took on responsibility for the pensions from their employers, which is known as pension risk-transfer or pension de-risking.”

While Stone is one of a handful of attorneys in the nation who deal with the consequence of life insurance companies getting in financial hot water, he was quick to point out that “No one is concerned about MetLife’s immediate financial viability, and policyholders shouldn’t panic and jump to another insurance company without careful thought, but these events are highly disturbing.”

Stone points out retiring workers with pensions were promised a defined amount of money from their employer, designed to last a lifetime. “Pensions are a very different animal today than in the past, and it is something that people working or retired need to be aware of.”

That’s because, in large part, over the past few years “It became apparent to companies that retirees were living much longer and costs were ballooning from having to write years of additional pension checks,” he notes, adding, “And the major life and annuity companies saw this fear as a huge source of new money, billions of dollars in new money and so they did something about it.”

And what they did was highly attractive to huge corporations with substantial pension obligations. “Some of the world’s largest life insurance and annuity companies approached industry and said, ‘We will take over paying benefits to your retired employees. Just give us the billions of dollars you are now managing, and we will assume responsibility for their monthly payments. We know what we’re doing, as we’ve been at it for years. We’ll invest the money and keep your retirees happy – and in the dark!”

The term “pension-risk transfer” means that, “The risk to the employers’ bottom line in being able to earn enough money to pay retirees gets transferred to an insurance company. This phenomenon has grown at a worrisome rate over the past few years. When this happens, pension benefits are no longer governed under ERISA and retirees become subject to non-uniform state law.”

An annuity is a promise by a life insurance company to pay out a certain amount of money to a policyholder for their lifetime or a set number of years. If you spoke with insurance company executives before the Great Recession they would have told you that funding an annuity is pretty simple.

As Stone explains: “Traditionally insurance companies would simply match fund liabilities with government or high-grade corporate bonds that paid out enough interest to satisfy what its payment obligations were to annuitants or certificate holders But with rates at virtually nothing these past few years companies are scrambling to earn more on their assets with things that are far less safe than highly rated corporate or municipal bonds.”

Edward Stone has this advice for all policyholders and their family members:

“Keep the company aware of where you are. Check in at least once a year. Prevent them from losing you by being pro-active.”

Edwardstonelaw.com is a website we recommend for anyone who can see themselves or their family affected by these issues.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

The post Be on top of insurance and annuities appeared first on Dennis Beaver.

E.J. and his wife Anna loved Hawaii, having traveled there many times during their 56 years together. In January, at 74 and 73 years of age, respectively, they planned another trip to the islands for May to celebrate E.J.’s 75th birthday.

When we hear of people that age who look like they are in their 50’s and act as if they are in their 30’s, this couple matched the definition perfectly. After E.J. retired from the beverage business, they “still maintained a highly active, mobile lifestyle,” he explained, adding that “travel was an important part of our business and personal lives, taking us all over the world. We both really loved flying, even after one frightening experience returning to California from the East Coast, when our plane went through the most severe turbulence we had ever experienced.

“It felt as if the plane was being shaken apart. Both I and my wife were literally trembling. In glancing around the cabin, everyone we saw were visibly terrified. It was simply a nightmare. But that was not going to stop us from returning to Hawaii.”

You’ve got travel insurance

Using an online reservation service, E.J. purchased two non-refundable, first-class tickets from Los Angeles International Airport to Honolulu for $3,500. When his American Express credit card bill arrived, he realized that in addition to the tickets, he had also purchased a travel insurance policy for $170 from Travel Guard, one of the largest sellers of these products in the United States.

“I do not recall checking the box for this insurance, but, especially at our age, we figured that the trip cancellation and medical coverages might be useful if something were to happen,” he reasoned.

“One of the problems in booking flights online is that unless you opt out, without knowing it, you might have bought a policy. It is so important to carefully study the website, and deselect what you do not want,” San Francisco attorney Alexander Anolik commented when we discussed E.J.’s situation. Anolik is considered the nation’s most highly regarded travel attorney and wrote the first comprehensive text on travel law – now in its fourth edition – “The Law and the Travel Industry.”

At times, life will hurl bad things at us, often in rapid succession. Between January and their May departure date, E.J. lost seven of his lifelong friends, “just due to old age,” he told us, eyes beginning to water and a profound sadness overcoming our Southern California reader. The seeds of depression had been sown.

And then, two weeks before the flight, while the couple were talking about where they would go, what they would visit, “Suddenly I began to tremble. I was afraid, so afraid, thinking of that horrible flight. I just couldn’t shake it. This has never happened to me before, never! Then I knew that I could not fly, not now, perhaps not ever again, or at least, not for a long time,” he told us.

His wife immediately scheduled an appointment with their family doctor, who wrote a very detailed letter to Travel Guard, concluding, “Due to this severe panic attack, my patient is unable to fly.”

“But, of course, we had travel insurance, therefore, no problem in getting a refund. I filed our claim, enclosed my doctor’s letter, and waited for a check,” E.J. told us.

“You are not covered for this event”

Several weeks later, Travel Guard send the couple a denial letter, quoting the following exclusion language: “The policy does not cover any loss caused by or resulting from mental, nervous or psychological disorder.”

There would be no compensation, not one cent. In fact, most travel insurance policies have similar language.

With non-refundable tickets, most airlines have a “use it or lose it” policy, allowing a non-refundable ticket to be re-issued within a year’s time for the passenger. They also might refund a ticket if a passenger or spouse dies or is hospitalized. As our readers would not likely be flying for a long time, if ever, they now faced the complete loss of all the money paid for those tickets.

No is an invitation to try by other means

With E.J. in our office, we spoke with a reservation supervisor. “Could you folks reissue the tickets for the couple’s adult children, so they could travel to Hawaii?”

“No! We just don’t do that, and I wish we could,” was the polite response.

“Will you give me the name and number of your media relations person?”

Given that information, we placed a call, left a detailed voice mail message and waited for a response.

Next week, we’ll tell you the outcome as well as provide money-saving tips from travel attorney Anolik on how to shop for travel insurance – if you need it at all.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

The post Before buying travel insurance, read the exclusions appeared first on Dennis Beaver.

I was contacted by a life insurance salesman – a friend of a friend – who has a money making proposal that seems extremely interesting. Basically, I apply for a life insurance policy – a really large life insurance policy – go through a physical, and once the policy is issued, I am loaned 5% of the death benefit by a group of investors and sign over ownership of the policy as security. The investors pay the premiums and if I die, they collect the proceeds. It is called a Non-Recourse Loan, and the insurance salesman told me that it is a new and perfectly legal way making money out of life insurance while you are living. Have you have heard of this kind of a thing, or is it a scam? Thanks, Ben in Lemoore.

Meet My New Friends – The Mob

Ben sent me copies of all the documents the “friend of a friend” wanted filled out, which required him providing all his personal financial information, tax records, vehicles he owned – everything. The name of an insurance broker in the Marina Del Rey area of Southern California appeared on these forms, and I phoned the broker, who I will just call “David” and spoke with an ever-so-helpful assistant.

“Hi, my name is Dennis and I heard that you have a really super insurance program that I can get into and actually be paid for obtaining a large life insurance policy. My understanding is that I don’t ever have to make a payment, because when the policy is issued, I sign it over to someone else. Is that right?” I asked.

“That’s correct,” the sexy voice replied, “and for people who have or state that they have high net worth, we usually do this two or three times, over a two year or more period of time, and with what we pay – 5% of the life insurance death benefit – our clients can go out and buy a really nice sized, fully paid life insurance policy if they want to, or just spend the money. It is called a Non-Recourse Loan, as we are basically loaning you money that is secured by the life insurance policy and never ask you to repay it. It is perfectly legal,” she was quick to point out.

But was it? Or was this a scam? It sounded like a “something for nothing” sales pitch, and all sorts of warning bells went off. First on my list of, “No, I don’t think so,” was the obvious effort to get around state insurable interest laws.

Insurable Interest Requirement

The chances are pretty good that unless you work in the area of insurance, tax or law, you’ve never heard of the term Insurable Interest. It simply means that before you can insure something – a car, house, boat or a life – you must have an ownership interest in that property or connection to that person, such as husband, wife, child, employer/key employee.

Insurance is based on the idea of injury or loss of some type – unless you can personally suffer a financial loss then you have nothing to insure. If you house is damaged by fire, you have suffered a loss – it’s going to cost something to repair it, or if you sell it in its damaged condition, it will be at a loss – but if your neighbor’s house burns to the ground, you have lost nothing and could not buy an insurance policy on his home. The same thing is true for your neighbor’s life.

I or my immediate family members can of course buy life insurance on my life, as I obviously have an interest in living and supporting my family, and they have a financial interest in my living and need for my support.

Hanford, California Attorney John Ohnstad puts it this way: “In a family setting, there is obviously an insurable interest, as life insurance is meant to partly replace what the family might lose if a breadwinner dies. One of the reasons a young family starting out can buy a very large life insurance policy is because it is impossible to put a dollar value on the continued life of that family member.”

Attorney Ohnstad told me that the Insurable Interest requirement, “has a past that would make for an exciting TV documentary. It goes way back to 18th century England. At that time, there were groups of investors who bought life insurance on well known people, especially those with serious health problems or whose lifestyle flirted with early death. At times, these investors would target certain individuals – who knew nothing at all of the insurance policy on their lives – with parties, booze, you name it, anything to speed up the process of cashing in that policy. It was a gruesome form of gambling on the lives of total strangers, and in 1774 the English Parliament passed laws to stop this practice, and similar laws were adopted against these ‘wagering policies’ in the United States.”

What’s Wrong With This Picture?

There are a number of potentially dangerous aspects to the scheme my reader has described.

“What you have here appears to be a scheme for investors to obtain wagering policies on people’s lives in whom they have no insurable interest. I doubt that they are disclosing the details to the insurance companies underwriting the risk. They are gambling against the insurance company, which wants you to live a long time, paying premiums, while it delays or avoids paying a death benefit. Taking out the policy and immediately assigning it to a third party for a quick payoff could be seen as participating in fraud. So what if they pay you $50,000, do you want to run the risk of criminal prosecution or even a civil suit by an insurance company if and when they discover that the whole scheme was to let a total stranger insure your life, rather than a bona fide insurance policy purchase? And just who are these investors anyway? Do they really want you to live to a ripe old age, or would they instead profit by your early departure?” Mr. Ohnstad asks.

“And let’s not forget the case of the two elderly women in Los Angeles who were arrested and charged with murder in the deaths of several homeless men whom they befriended – and on whom they took out life insurance policies as beneficiaries. This illustrates the risks of someone owning an insurance policy on your life who does not have a strong incentive to keep you around, he added.

So, if approached with this kind of a scheme, what should you do?

“Don’t do it. Simple as that. Understand that life insurance is not to be used for profit, but is a risk spreading tool for the benefit of society. If you are so approached, run the other way,” John Ohnstad recommends. I agree.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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