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As an adjuster, I don’t talk to judges but I do “measure and document” the valuation of insurance claims and present those claims to insurers. I was recently asked by an attorney to present a claim that demanded coverage be applied outside of the policy.

We see demands all the time to “reform” the policy and sometimes we see insurers rolling over as well and paying those claims as well; although, this is not something that is common.

Sometimes insurers pay “reasonable expectation” claims that literally amaze me. After the Chediski Rodeo fire, I talked with many individuals who were under-insured and two asked me if I could get their policies “reformed.” Of these two, both were insured by State Farm.

I declined, referring them to attorneys who might help them if their agent had “failed to place the proper coverage”, which would be an extra-contractual claim. Both insureds declined and pursued their claims on their own. One was paid. The other was not. It amused me that the one that was paid was a destroyed second home of a famous football player. The one that was not paid was the claim of a “commoner”.

How Reliable is Your Insurance Coverage

Why some insurers so easily pay celebrity claims is beyond me but these insurers must want to take care of the famous or politically connected. You may recall that State Farm paid money to Paula Jones that laid her claim against Bill Clinton to rest. State Farm paid that claim under Bill Clinton’s Umbrella Policy despite State Farm’s own practice of denying claims where “a law may have been broken.”

Let’s face it, reasonable expectations can differ from individual-to-individual depending on that person’s sense of entitlement. However, some non-politically or famous insureds do have a causal base to pursue such “reasonable expectations” claims based upon many factors which include (1) the agents’ responsibility to place proper coverage (See Southwest Autobody v. Binson), (2) notices to the insured in policy renewal billings, (3) advertising brochures and other reasons which may create reasonable expectations.

The reasonable expectations doctrine applied in Arizona includes the theory that when the reasonably intelligent consumer cannot understand insurance terms, the court will interpret those terms in a manner that allows the benefit of those terms to inure to the consumer even when there is no coverage. (Hanks v. American Family Mutual, Gordinier v. Aetna Casualty).

I believe that the doctrine of reasonable expectations will gain momentum. For years, we have been involved in claims that involve “matching” issues only to see insurers hang onto their wallets and not pay such claims. However, things are changing and these claims are getting paid, even though I know that realistically, insurers cannot take the hit for all economic losses that an insured might encounter.

As a consequence of this, insurers are responding with pointed language in their policies that no matching losses will be considered. We’ll see where this issue goes from here. But … in the meantime, insureds will continue to make such claims if it makes sense knowing that insurers won’t roll over easy, unless they are making payments to Bill Clinton or football stars.