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Read the policy or weep

Read the policy or weep

February 27
09:56 2017

Read the policy or weep

In 2006, John Amankwah purchased automobile insurance for his Mercury Sable from Liberty Mutual Insurance Company through agent Robert Walker. The policy included comprehensive and collision coverage. Amankwah later purchased a Kia and added it to the policy, also with full coverage. He renewed the policy in March 2011 and approximately one month later purchased a Volkswagen Passat to replace the Sable.

Amankwah called Walker’s office to request an exchange of car insurance. According to Amankwah’s deposition testimony, he spoke with a woman at that office about “roll[ing] over” the policy from the Sable to the Passat. Amankwah recalled that the woman had told him that his total premium for the two vehicles would be increasing because the Passat was a “foreign-made” car, and that the woman would take care of his request. At that time, Amankwah asserted that Liberty Mutual began to automatically deduct his premiums from his bank account on a monthly basis.

Amankwah testified that he “skimmed” through the April 2011 policy after he substituted the Passat but did not review the declarations page, which explained that Amankwah had no collision coverage on the Passat. The parties did not dispute that Amankwah received two more annual renewal policies, both of which also indicated the absence of collision coverage on the Passat.

In October 2013, Amankwah was involved in an accident, and his Passat was a total loss, valued at $14,000.Amankwah reported the loss to Liberty Mutual, which denied his claim. According to Aankwah, this was the first time he realized he did not have collision coverage on the Passat. Amankwah then filed suit against Liberty Mutual for negligence and contract reformation based on mutual or unilateral mistake.

Liberty Mutual filed a motion for summary judgment on both claims, relying on Amankwah’s deposition testimony and an affidavit from a senior branch manager at Liberty Mutual. The branch manager averred that he had reviewed the files and the contemporaneous notes made when Amankwah had called Liberty Mutual on April 18, 2011, to add the Passat to his policy. According to the notes, Amankwah had spoken to a man in Florida and had specifically declined collision coverage on the Passat, stating that the prior owner had collision coverage that would last until 2015.

Amankwah responded to the Liberty Mutual summary judgment motion with an affidavit addressing the contemporaneous note from his April 2011 call. Amankwah averred that when he had called Walker’s office to switch vehicle coverage, he had discussed with the agency rep-

resentative a transfer of the Passat’s warranty from the prior owner, and not the transfer of collision coverage. The trial court granted summary judgment in favor of Liberty Mutual. Amankwah appealed.

On appeal, the court noted that Ohio law recognizes a cause of action against an insurance agency for negligent procurement where the agency fails to act with reasonable diligence in providing an insured requested coverage.

Citing a previous court decision, Amankwah argued that an insured’s failure to review coverages presented an issue of comparative negligence for a factfinder in an action against an insurance agency for negligent procurement. Liberty Mutual argued that the case Amankwah cited represented a minority position; the court disagreed. Pointing to case law in negligence actions brought by insureds against insurance agencies, where the insureds had indisputably breached their duty to review the policies, the court asserted that courts have reached differing results, based not on any legal rule but on the unique facts of each case.

Although Amankwah expected his premiums to increase after he added the Passat to his policy, he did not notice that his premiums actually decreased. Amankwah attempted to downplay his oversight because, at the time he obtained insurance on the Passat, Liberty Mutual began withdrawing the premiums on a monthly basis from his bank account. Thus not only did Amankwah fail to read the policy declarations for two years, but he also failed to examine his bank account and notice that Liberty Mutual had decreased and not increased his premiums.

Amankwah argued that he had no duty to review the policy declarations with regard to his Passat because the policy was a renewal or replacement policy, and thus the change in collision coverage on the Passat should have been brought to his attention by boldface type and capital letters.

Based on these facts, the court determined that Amankwah’s loss of his vehicle was proximately caused by his own negligence, not the negligence of the agent or Liberty Mutual. The court also ruled against Amankwah with respect to his request that the policy contract be reformed, again pointing to Amankwah’s own negligence. The lower court’s judgment was affirmed.

Amankwah vs. Liberty Mutual Insurance Company-Ohio Court of Appeals-March 30, 2016-No. C–150360.

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