In Global Liberty Ins. Co. v. Ubini, 18 Misc.
3d 1141A, 859 N.Y.S.2d 894 (Sup. Ct. Nassau Cty. 2008), a cabbie was involved
in an accident in which another driver was injured. He notified his broker,
who notified the insurer within a couple of days. At some point, the cabbie
sought coverage under his business auto policy.
Thirteen months later, the adjuster sent a special investigator (a retired
police officer) to the cabbie's residence to get additional information. Arriving
unannounced, the investigator knocked on the front door. When the cabbie answered,
the investigator told him he needed to speak with him about the accident. The
cabbie was reluctant to talk because he did not know who the investigator represented.
In response, the investigator called the cabbie "stupid" and told him if he
didn't cooperate he would be sued. He demanded to take a statement right there.
At this point, their accounts differed as to what happened. According to
the investigator, the cabbie got angry and began throwing punches at him. He
testified that he drew his gun, aimed it at the cabbie in self-defense, and
backed down the stairs. According to the cabbie, the investigator put a gun
to his ribs and said, "I will shoot you, and you will spend your life in a nursing
home." Later, the cabbie called the police, but the investigator was apparently
not arrested.
Following the altercation, the cabbie called his broker and found out that
the investigator had been sent by the adjuster. He called the adjuster and left
a very angry voicemail, claiming the adjuster sent someone to "assassinate"
him. The call concluded by the cabbie saying the adjuster should "go #### himself."
Even though his investigator filed a report stating that he pulled a gun
on the cabbie, and even though the cabbie left an angry voicemail about the
incident, the adjuster did not do anything to defuse the situation. He sent
a standard reservation of rights letter, which did not mention the altercation.
The letter instructed the cabbie to contact the adjuster to provide details
of the accident. When the cabbie ignored the letter, the adjuster denied coverage
for lack of cooperation, then filed this action seeking a declaration that the
insurer had no duty to defend the cabbie in the underlying liability case.
But the court held that it was the insurance company that breached its duties
under the policy, not the cabbie. Under New York law, an insurer claiming that
a policyholder breached his contractual obligation to cooperate must first prove
that it acted diligently in seeking such cooperation, and that its efforts were
reasonably calculated to secure it.
Here, it was readily apparent that the procedures employed by the investigator
"were not of the kind designed to secure the cooperation of anyone." He acted
in an "erratic, unusual, and shocking [manner]." After becoming aware of the
incident, the adjuster's failure to address the situation demonstrated that
the insurer did not act diligently in seeking the cabbie's cooperation. Therefore,
court held that the claim denial was "improper and unfounded," and it ordered
the insurer to assume the defense.
Conclusion
Chances are that an investigator will probably not go so far as to pull a
gun on the insured. Still, less serious disputes can lead to anger and outraged
feelings that impede the working relationship between the insured and the adjuster.
Before denying coverage for lack of cooperation, an adjuster should address
the problem, assuage the insured, if necessary, and make a diligent effort to
regain the insured's cooperation.