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"Skull" is mandatory and "May" is allowed and they are different



An Illinois regulation allows an insurance company to agree to pay license fees, sales taxes and title fees, but does not require it to do so unless the costs and fees are actually incurred by the insurer. The plaintiff, who was trying to make a lot of money by creating a group action, sought more coverage from his insurance company than it promised.

I Nathan Sigler v. GEICO Casualty Company and GEICO Corporation No. 19-2272, United States Court of Appeals for the Seventh Circuit (July 24, 2020) Nathan Sigler compiled his Dodge Ram in 2001 and filed an application with GEICO, his car insurance company, for the loss. GEICO paid him for the value of the car, adjusted for depreciation minus his deductible. Sigler claimed that he was entitled to more ̵

1; namely sales tax and transfer fees for the title and tags for a replacement vehicle, even if he did not incur those costs. He filed a proposed class action lawsuit against GEICO seeking damages for breach of contract.

The district court dismissed the action and held that neither the GEICO policy nor the Illinois Insurance Act requires payment of these costs when the insured does not incur them. [19659004] ARGUMENT

The condition for Sigler's suit was that VAT and transfer fees for title and tag are always part of the "compensation cost" in a claim for total loss – regardless of whether the insured has these costs.

On the other hand, the Seventh Circuit noted that the Illinois Administrative Code requires a car insurance company to pay these costs only if the insured actually incurs and substantiates them with appropriate documentation.

BACKGROUND

An adjuster determined that the vehicle was a total loss and calculated a base value of $ 3,151,955. GEICO paid Sigler that amount minus his deductible $ 500.

Sigler sued GEICO before the federal court in Central Illinois, claiming that the insurer owed him additional money as part of the compensation cost for his vehicle – specifically a $ 95 title transfer fee, a $ 25.50 tag transfer fee and VAT "in minimum amount of $ 196.99." He did not claim that he bought or rented a replacement vehicle and actually had these costs. Rather, he argued that GEICO's insurance policy promises to pay the equivalent of these costs in each claim for damages regardless of whether the insured receives a replacement vehicle and actually incurs these costs. Sigler, with an alleged loss of about $ 300 that was proposed to represent a group of policyholders in a breach of contract with GEICO to "systematically pay out their insured."

GEICO moved to dismiss for failure to state a claim claiming that nothing in the coverage of the insurance policy could provisions reasonably be construed as a promise to reimburse Sigler for compensation costs for vehicles he had not had. GEICO also argued that an Illinois insurance ordinance, incorporated into the police as a matter of law, requires reimbursement of these costs only if the insured has purchased or rented a replacement vehicle and can document that he paid taxes and transfer fees. The referee went with GEICO.

DISCUSSION

The interpretation of an insurance is a matter of law. In Illinois, as elsewhere, insurance disputes are governed by general contract principles, but because an insurance policy is a distinct type of contract, issues of interpretation of insurance are subject to specific rules that take into account the type of coverage purchased, the type of risks involved. , and the overall objectives of the policy.

In a section entitled "Limitation of Liability", the policy sets a ceiling on GEICO's liability to pay: "The limit of our liability for loss … [i] actual cash value of the property at the time of loss." "Actual cash value" is defined as "the cost of compensation for auto or property minus depreciation or improvements." Sigler's claim is in this language. He claims that GEICO in any claim for total loss is contractually liable to pay "fair cash value", defined as "the cost of compensation for the vehicle or property minus depreciation or Although "replacement cost" is not further defined, Sigler argues that it must always include amounts equal to the applicable VAT and title and tag transfer fees because Illinois collects these taxes and fees when purchasing or renting vehicles. And GEICO must pay , he continued, regardless of whether the insured buys or rents a replacement vehicle or is actually incurring these costs.

The Seventh Circuit concluded that Sigler's argument misunderstood a limitation of liability as a promise to pay. To put it another way, Sigler fails with a ceiling for a floor. The limit of liability in the policy does not promise to pay these costs regardless of whether the insured incurs them; it simply describes the most that GEICO will pay in the event of a covered loss.

An Illinois insurance ordinance specifically addresses when a car insurer must pay VAT and title transfer fees total loss claims, and the ordinance is incorporated into the policy as a standard designation as a matter of law.

The Illinois Administrative Code provides that when a car insurer determines that an insured vehicle is a total loss due to a collision, the insurer CAN choose to either replace the insured vehicle or pay a cash settlement. If the insurer chooses to pay a cash settlement, the regulation requires payment of applicable VAT and title and transfer fees only when the insured buys or rents a new vehicle within a certain time and confirms that he has incurred these costs. The Regulation provides for the payment of these costs if and only if the insured has (1) bought or rented a vehicle within 30 days of receipt of a cash settlement and incurred applicable sales taxes and fees and (2) substantiates the purchase and payment of these taxes and fees by submitting appropriate documentation to the insurer within 33 days of receipt of the settlement.

To be sure, an insurer can contractually undertake to pay these costs. But "May" is a permissible expression, and permissible statutory or regulatory language by definition does not command anyone to do anything. The traditional, usually repetitive rule is that should be mandatory and may is permissible.

A simple reading of GEICO's policy and the incorporated ordinance defeats Sigler's assertion. Consequently, his claim for breach of contract necessarily fails.

People who believe they had been deprived of insurance benefits, even an amount like Sigler's about $ 300, see stars and millions if they can get a court to certify a class action. He failed because he and his lawyers, unlike the court, failed to read the entire policy that required the actual replacement of the vehicle within a limited time to recover his $ 300. If he had RTFP, he would not have wasted his time, from his lawyers, GEICO and the court to bring an action and appeal.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance coverage, insurance claims handling, bad faith and insurance fraud almost equally for insurers and policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and attorney handling attorney and more than 52 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

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