Insured Municipalities--Why It Matters to You
Today, a front page article in the Chicago Tribune highlights why insurance coverage law, while arcane, often boring, and seemingly not effecting our daily lives, actually can have a very direct effect on our bottom lines.
The specific situation is that of Jerry Hobbs, who was imprisoned for five years on charges of murdering two young girls, and how his suit againt Zion, Waukegan, and Lake County governments for malicious prosecution. Mr. Hobbs was freed and cleared when DNA proved he could not have been the murderer. Later, another suspect was prosecuted for the murders of the girls.
So it seems fairly obvious that Mr. Hobbs has a beef for being wrongly accused, spending time in jail for a crime he didn't commit, and having his reputation impugned, among other things.
Fortunately, there is a legal remedy in civil court for this and he is pursuing it under the guise of malicious prosecution. Essentially, he says the police and other investigative and prosecutorial bodies screwed up. Seems simple. Someone should pay for the five years he was in jail!
Not so fast. Sta. Paul Fire and Marine Insurance Company, whic insures the local municipal entities involved, filed what is called a Declaratory Judgment Action. A "Dec Action" is nothing more than a lawsuit saying "our policy does not cover these types of things." The carrier claims the types of conduct alleged by Hobbs in his lawsuit are not covered under their policy.
The decision will be laborious, not very interesting, filled with all kinds of arcane insurance and legal terminology. Pretty boring to be honest.
So why does all this concern you? And me?
Because, it is pointed out in the story that there are more and more cases for this type of thing against police units, cities and the like. Apparently, either the police are getting sloppier or lawyers representing the wrongly accused are getting more creative. Either way, the problem pointed out by various experts is that with insurance carriers refusing to pay for the mistakes, it raises the insurance rates on the rest of us and it may also force the municipalities to pay settlements or verdicts out of their own coffers, meaning our tax dollars.
Most of us probably agree that if the cops mess up, it shouldn't be fair for the poor guy accused wrongfully to just have no options so the existence of these cases seems logical and fair.
What we don't want is to have to pay for it out of our own pockets, either in the form of higher insurance premiums absorbed by higher taxes, or by tax increases caused by cities paying settlements or verdicts themselves. Seems logical that if an insurance company has an obligation to pay, it should pay.
And there is the complete story of civil litigation. If there isn't insurance available to go after, other than finding only incredibly wealthy people to sue, there really is no justice available.
My take on this is that it is another example of insurance companies trying to cheap out and not honor their obligations. It happens all the time in civil cases, including auto crash cases. All the time.
Don't let the argument that these cases are to blame for the increased costs. The cities involved got insurance that was to protect them if, heaven forbid, something like this happened. Now that it's time to pay up, the carriers are nickel and diming them!
You hear an awful lot about insurance fraud committed by people trying (wrongly) to make claims that are false. And this is horrible for all of us that cheaters exist and should be punished to the fullest extent.
But what about when the insurance company receives and accepts premiums from YOU, the taxpayer, promises to protect you and then...files a lawsuit to avoid paying!
This is just the tip of the iceberg, folks, but read the story and let me know what you think, in spite of the very pro-business spin given by the Tribune.
