As lawyers who specialize in the wrongful denial of life insurance claims, we know that life insurers often rely on policy exclusions to justify the denial of a claim for death benefits. We’ve seen insurers claim accidental deaths were suicide to justify invocation of the suicide exclusion. We’ve seen them rely on a policyholder’s legal use of prescription drugs to justify their use of the drug exclusion. And, more times than we can count, we’ve seen them claim that some innocuous behavior was “inherently dangerous” in an effort to invoke the “inherently dangerous activity” exclusion.
This is actually an interesting policy exclusion. It tends to vary from insurer to insurer and, at times, from policy to policy. A typical policy will relieve the insurer from making a death payout if the insured dies while engaging in an “inherently dangerous activity.” Most policies then make some attempt to define that term. Some do so by providing a list of activities the insurance company deems undeniably dangerous. Things like SCUBA diving, skydiving, and motorcycle racing are among the popular activities listed in these policies.
Other times, the policy language will loosely define an “inherently dangerous activity” as “an activity that greatly increases the insured’s chances of getting injured or killed while participating in said activity.” Insurance companies love when they can sneak in this latter type of policy provision. The reason for that, of course, is because if they leave the definition vague, they can declare almost anything to be “inherently dangerous” after their policyholder passes away.
This article examines a case where the insurance company completely misused one of those loose policy provisions. Fortunately, a lawyer specializing in the wrongful denial of life insurance claims didn’t let them get away with it.
An idyllic life not hidden from the insurance company
Nancy was a lawyer living outside a major metropolitan area in the Northwestern United States. Nancy was an accomplished lawyer and was a partner in a large firm. As such, she made a lot of money and her firm offered her outstanding benefits, including a life insurance policy worth $2,000,000. Nancy named her husband Paul as her sole beneficiary under the policy.
When Nancy was given the opportunity to participate in the firm’s group life insurance plan, she still had to fill out a policy application before a policy could be issued to her. As a contract lawyer, she knew how important it was that she tell the truth in that policy application. Accordingly, she probably gave more care to the truthfulness of her answers than most people ever do.
One of the more harmless requirements of the policy application was that Nancy list her home address. Of course, Nancy filled out the appropriate address for the home she shared with Paul. When she turned in her application, the insurance company never asked any follow up questions about any of the answers she had provided. It simply issued her the policy and collected premiums from her law firm.
The thing that was unique about Nancy’s home address was that it was the address for her floating home. While many Americans remain unfamiliar with this type of living, it is actually quite popular in the Pacific Northwest. Nancy’s home, like so many others, looked like a regular house. Rather than sitting on land, however, it floated on a river via a series of huge logs that served as the home’s foundation. The entire structure was securely moored to a large marina that was connected to land by a series of docks. To the extent people outside the NW are familiar with the concept at all, it is because a home like this was featured in the popular film, “Sleepless in Seattle.”
A sad death followed by a surprising claim denial
Regrettably, Nancy died of a brain aneurism several years after obtaining her policy. Paul dutifully filed a claim for benefits under her life insurance policy. The written denial letter he received a few weeks later shocked him. According to the claims adjuster, Nancy died while engaging in an “inherently dangerous activity,” which, due to a policy exclusion, relieved the insurer from its duty to pay.
The “inherently dangerous activity” Nancy was purportedly involved in? Living in a floating home. According to the letter, the insurer had looked up the couple’s home address when it received Paul’s claim form and discovered how “dangerous” their living condition was.
Paul had been married to a lawyer long enough to know this claim denial was completely bogus. He called one of Nancy’s former colleagues who he knew specialized in the wrongful denial of life insurance claims. The lawyer told Paul to sit tight while he got copies of all relevant policy documents from the insurance company. As he suspected, Nancy had fully revealed her address – at the floating home – when she applied for the policy.
If the insurance company thought living on a floating home was dangerous, it should have denied Nancy’s application or charged her a higher premium based on that alleged danger. It did neither. It was clear the insurance company was just hoping Paul would accept its initial claim denial and walk away.
The lawyer took the life insurer to court on Paul’s behalf. Before the case ever got to trial, the insurance company settled the case for the full policy amount. The company clearly realized that had the case gone to trial, there was a risk the court would also impose punitive damages against the company for its bad behavior.Unfortunately, bogus claim denials like this happen all the time. If you’ve had a life insurance claim denied on a similarly phony basis, please call our firm today. We’ll evaluate your case free of charge. If we believe you can successfully contest the claim denial, we won’t charge you a dime for our representation unless and until you recover from the insurance company. Call us today. We’re here to help.