Most homeowners’ insurance policies offer at least three basic types of coverage: (1) Protection for the home such as damages caused by fire, hurricane, lightening, etc., if listed in the policy; (2) Personal property such as furniture, appliances, clothes, jewelry, etc., stolen or destroyed by fire, hurricane, lightening or other listed causes; (3) Protection (up to the limit of your policy) for accidental injuries to third parties caused by you, your spouse or your children (members of your household). This portion of the homeowners’ policy is often referred to as “liability protection.”

Liability protection covers you (and members of the household) against lawsuits for bodily injury or property damage that you or family members cause to others. It pays the costs of defending you or a family member and pays up to the limit of your policy for any damages for which you or a family member may be held liable. Liability protection also pays for the medical expenses of the injured third party. The obligation of your insurance company for liability protection is often referred to as the “duty to defend and indemnify.”

Most homeowners are required to purchase a homeowners’ insurance policy. However, many also purchase it for the peace of mind it offers when someone is injured in the home.

In a case tried before the Superior Court of New Jersey, our client, an 18 year-old student, was accidentally shot and killed by his 20 year-old cousin at the cousins’ house while the cousin was mishandling a loaded revolver. (It appeared that the cousin was sitting on his bed holding the revolver and examining it, and while doing so, the gun went off causing the bullet to strike our client in the back causing his death). The police later searched the cousin’s room and found three other revolvers as well as drugs. The cousin was later arrested and charged with reckless manslaughter and various other drug charges. However, he was acquitted of the reckless manslaughter charge but found guilty of “negligent assault.” weapon possession and the drug charges and was sentenced to 5 years imprisonment.

The estate of the 18-year old decedent retained our office to file a wrongful death and personal injury lawsuit against the cousin and his parents. Pursuant to the parents’ homeowners’ insurance policy, issued by High Point Insurance, the insurance carrier hired an attorney to represent the parents in the lawsuit. But they did not retain an attorney for the 20 year-old son (we’ll call him “H”) who accidentally shot and killed our client.

The High Point policy provides that the insurance company will defend the homeowners and “any member of the household related by blood” in any lawsuit brought by a third party for injuries sustained as a result of negligence (a careless act). Obviously, “any member of the household related by blood” includes sons and daughters of the homeowners living at home. Despite repeatedly informing the insurance company that H was a “household member” related to the homeowners “by blood” and “living in the “same household” at the time of our client’s death, High Point refused to defend H. Additionally, the father of H gave a sworn statement (made under penalties of criminal punishment) to the insurance company that H was his son who was living at home at the time of the accidental shooting. Despite this sworn statement, and clear and unmistakable language in the insurance policy, High Point continued its refusal to defend H, and made no attempts to retain an attorney to do so, even sat back and watched as a default judgment was entered against 20 year-old H for failing to answer the lawsuit.

As a result of its persistent refusal to follow the clear language of its own policy, High Point was added as a defendant in the lawsuit. After over 1 and 1/2 years of litigation, in which the insurer persisted in attempting to get itself out of the lawsuit by claiming an “intentional” shooting, the company was paid its entire policy to the estate of the young boy just 2 days before the jury was to decide the case. .

Insurance coverage is important where there is an injury, especially when the defendants have no other source of income or assets from which to compensate an injured party. Here, H is (and was at the time of accident) unemployed, has no assets or any source of income from which to compensate the estate of our 18-year old client for the loss of his life. In our system of civil justice, a victim of a wrong (or an injured person) has the right to seek reparation for damages suffered as a result of an injury caused by another person. A child who lost her parent due to the fault of another is entitled to reparation for (among other) loss of future income and support. Likewise, a parent who lost a child because of the fault of another has a right to seek reparation for her loss as well. Additionally, the estate of the deceased has the right to file a personal injury lawsuit. Thus, when the person who caused the injury (in this case, death) has no job, no income, no assets from which to pay any award of damages or reparations, the only resources then would be the insurance policy. And if the insurance company wrongfully refuses to pay a claim or even to acknowledge it, the person’s death is deemed to have no value.

Many insurance companies are responsible businesses and conduct their business with consumers with the utmost decency and in good faith. However, some are downright dishonest and engage in bad faith behaviors. Far too often these bad faith insurance companies refuse to even acknowledge an obligation under their own policy and will fight tooth and nail to save a buck. Their motto is often “deny, defend and delay.” We call this tactic the “3Ds.” That means, deny a claim and defend it by any means necessarily to forestall or delay payment of legitimate claims. Insurance companies often gain financially by delaying payment of legitimate claims. They invest the funds earmarked for payment of claims and often pay out claims with interests made on the invested funds. They also hope that by delaying payment and fighting the case, they will wear down the injured party and his lawyer, who may accept a lesser offer to resolve the case.

In refusing to cover a claim bought by an injured third party, if the homeowner or the injured third party sues the insurance company for coverage and wins, the homeowner or injured third party is entitled to the recovery of reasonable attorneys’ fees and costs. In addition, the homeowner may also be entitled to recover punitive damages as a result of the insurance company’s bad faith refusal to defend/indemnify, if the plaintiff can demonstrate egregious conduct.