PADI getting sued over Insurance Program

[PuMpUi]

According to what I read in the insurance policies, if one enters into a written agreement with PADI for which PADI will provide a "certificate," Lexington will treat one as an insured under the policy it issued to PADI.


What type of treatment could an Insured expect to receive from Lexington?

What "rights" would the Insured have to look forward to?



I expect that the written agreement with PADI calls for some sort of payment of money. Whether that amounts to an "insurance premium" is for the Court to decide.

A "finder's fee" by any other name is still ...



I expect that the written agreement requires more than just the payment of money to PADI and gives something more than the certificate. Moreover, PADI is not actually agreeing to indemnify anyone even if the net effect is that Lexington is. Therefore, I don't think the court will call it a "premium."

A "finder's fee" by any other name still requires proper licensing in many industries in order to receive any such ...



In any event, the payments made in conjunction with the written agreement provide PADI with the funds with which to pay the $300,000 deductible.

As I recall, prior to 2010, PADI's Deductible was the first $300,000 PER (each and every) OCCURANCE ... (please refer to DiveNewswire ) for details ... )

Attachment 1 is the Lexington Insurance Company property conditions sheet of the policy issued on June 30, 2009 to PADI Worldwide Corp. stating “Each claim for loss or damage separately occurring shall be adjusted separately and from each such adjusted claim, the amount of $300,000 shall be deducted.”

Attachment 2 is the property policy page from the June 30, 2008, property insurance containing the exact same $300,000 deductible relating to “each such adjusted claim.”​

then in 2010 it was changed to read "aggregate" (total pay-out per year) ...






The insurance policy that Lexington issued to PADI calls for PADI to pay up to $300,000 per year toward the payment of property damage claims.


If an Insured suffers a loss, and the loss is "recognized" as legitimate by the Insurance Company, does the Insurance Company pay the claim "minus" the deductible or do they wait for the Insured to come up with the deductible "first" before they pay the remainder of the claim?

In other words, if a dive shop suffers a $301,000.00 loss, and there is a $300,000 deductible on the Policy, would the Insurance Company pay the $301,000 claim minus the $300,000 deductible or would they issue a check for $1,000 ONLY AFTER the Insured comes up with the $300,000 deductible?



So, presumably that is why PADI paid...to use up that $300,000.

I seem to recall reading that PADI collected more than $2,200,000 each year for their insurance endorsement.



I do not know whether Lexington defers to PADI or not. Lexington could be liable for the mishandling of a claim, e.g. improper investigation, undue delay, etc.


Sounds rather "illusionary" to me.



As a result, I would be surprised if Lexington farmed the task of handling claims out to PADI. Now, if PADI refused to pay the deductible, and as a result, Lexington did not pay an insured's claim (or if it was a big enough loss, paid for the damage less the $300,000 deductible), the insured would have a pretty good case against PADI for breach of contract.

Verrrry interesting ...


Of course, the Court could look at the entire program and say that it has the effect of PADI issuing insurance, in which case it might issue an injunction to stop PADI from doing so.

So ... just how do we un-ring the bell? I've gotten pretty good at un-scrambling the eggs, although, I must admit, I still cannot get orange juice out of an apple


However, if it did, it could throw the entire construction industry into turmoil because so much of the insurance that covers construction work is the result of certificates issued by general contractors to owners and subcontractors to general contractors, and all as part of contracts for which consideration is being paid.

This is "ScubaBoard", not "ConstructionBoard" ... let's be sure to stay on topic.

 

[SC_Hoaty]

This is "ScubaBoard", not "ConstructionBoard" ... let's be sure to stay on topic.

I wonder why Bruce spends ANY time replying when you pull this kind of crap.

 

[ItsBruce]

I wonder why Bruce spends ANY time replying when you pull this kind of crap.

Actually, PuMpUi's latest arguments have persuaded me that I was wrong about the case and that in view of his fine analysis, the plaintiff is sure to win. I take back everything I have posted.

 

[Divin'Papaw]

This is "ScubaBoard", not "ConstructionBoard" ... let's be sure to stay on topic.

Seriously?

Bruce ... Thank you for your expert analysis. Please keep it up.

PuMpUi ... You're not being helpful, at all.

 

[krbnlaw]

Seriously?

Bruce ... Thank you for your expert analysis. Please keep it up.

PuMpUi ... You're not being helpful, at all.

Agreed. Thanks Bruce for spending time on this and your thoughtful, informational commentary.

 

[theduckguru]

To clarify a question, for the $300k deductible that PADI is to satisfy, what are the written terms this arrangement?

While I agree that it would be in Lexington's interest not to have PADI adjusting claims, in this instance it appears this is exactly what was occurring.

With a $300k per occurrence deductible, the Lexington policy was effectively a stop loss with PADI self insuring a very substantial risk. I doubt the master policy explains this to the customer.

According to what I read in the insurance policies, if one enters into a written agreement with PADI for which PADI will provide a "certificate," Lexington will treat one as an insured under the policy it issued to PADI. I expect that the written agreement with PADI calls for some sort of payment of money. Whether that amounts to an "insurance premium" is for the Court to decide. I expect that the written agreement requires more than just the payment of money to PADI and gives something more than the certificate. Moreover, PADI is not actually agreeing to indemnify anyone even if the net effect is that Lexington is. Therefore, I don't think the court will call it a "premium."

In any event, the payments made in conjunction with the written agreement provide PADI with the funds with which to pay the $300,000 deductible. The insurance policy that Lexington issued to PADI calls for PADI to pay up to $300,000 per year toward the payment of property damage claims. So, presumably that is why PADI paid...to use up that $300,000.



Your question is not clear. If you mean where would you find the terms of the policy, the answer is you could ask PADI or Lexington.



I do not know whether Lexington defers to PADI or not. Lexington could be liable for the mishandling of a claim, e.g. improper investigation, undue delay, etc. As a result, I would be surprised if Lexington farmed the task of handling claims out to PADI. Now, if PADI refused to pay the deductible, and as a result, Lexington did not pay an insured's claim (or if it was a big enough loss, paid for the damage less the $300,000 deductible), the insured would have a pretty good case against PADI for breach of contract.

Of course, the Court could look at the entire program and say that it has the effect of PADI issuing insurance, in which case it might issue an injunction to stop PADI from doing so. However, if it did, it could throw the entire construction industry into turmoil because so much of the insurance that covers construction work is the result of certificates issued by general contractors to owners and subcontractors to general contractors, and all as part of contracts for which consideration is being paid.

 

[ItsBruce]

To clarify a question, for the $300k deductible that PADI is to satisfy, what are the written terms this arrangement?

I do not know. But, I am unaware of anyone who has ever said that their claim was not paid because there was a $300,000 deductible that PADI did not satisfy.

While I agree that it would be in Lexington's interest not to have PADI adjusting claims, in this instance it appears this is exactly what was occurring.

PuMpUi's arguments were so impassioned that they made me realize that PADI must be adjusting claims. Were you persuaded by the same thing or was there something else that made it appear that way to you? Was it the fact that the guy suing PADI for adjusting claims alleged it was adjusting claims? Or was there something more, such as an admission by PADI or documents discussing the adjustment of the claim on PADI letterhead? And, if so, why would you need those things when there were such impassioned arguments already?

With a $300k per occurrence deductible, the Lexington policy was effectively a stop loss with PADI self insuring a very substantial risk. I doubt the master policy explains this to the customer.

You are so right. Although the policy I read had an endorsement that I read as saying it changed the $300,000 per occurrence deductible to a $300,000 yearly aggregate, my reading of it must have been wrong. So, yes, the policy was so limited that it was not something that PADI actually needed to pay good money for.

I also agree with you that the policy did not explain it to the customer. Just the fact that when I read it, I read it as saying the deductible was a $300,000 yearly aggregate, makes it likely that others with less experience in reading and interpreting insurance policies would not have been able to tell what they were getting. And, don't be put off by the silly argument that, if in fact, the aggregate was $300,000 per year, it would make sense that the policy would not say that PADI was effectively self-insuring every loss -- we know that that is not the case.

 

[ItsBruce]

Now, for a slight diversion:

As you can probably tell, I am a licensed California attorney. If any shops or instructors, particularly those who have been so helpful in making me see the light, want to file their own suit against PADI, et al., I'd be glad to represent you. Nothing stops me from copying the existing complaint and filing a separate lawsuit and then petitioning that our lawsuit be deemed the lead and controlling one. And unlike the firm representing the current plaintiff, I would not want 1/3 of the total recovery off the top. I would work on an hourly basis so that you the client would get the whole recovery (less the measly sums you would have had to pay on an hourly basis).

For anyone who is interested, PM me. (Please note that I will require a small retainer, in the area of $25,000, to get started. But, just recall how small that is given how great a lawsuit it is.)

 

[theduckguru]

I believe the information indicating PADI was adjusting and paying claims was in the information releases by Rick Lesser where he attempts to illustrate documents showing the settlement and the adjustor were independent of Lexington.

I do not know. But, I am unaware of anyone who has ever said that their claim was not paid because there was a $300,000 deductible that PADI did not satisfy.



PuMpUi's arguments were so impassioned that they made me realize that PADI must be adjusting claims. Were you persuaded by the same thing or was there something else that made it appear that way to you? Was it the fact that the guy suing PADI for adjusting claims alleged it was adjusting claims? Or was there something more, such as an admission by PADI or documents discussing the adjustment of the claim on PADI letterhead? And, if so, why would you need those things when there were such impassioned arguments already?



You are so right. Although the policy I read had an endorsement that I read as saying it changed the $300,000 per occurrence deductible to a $300,000 yearly aggregate, my reading of it must have been wrong. So, yes, the policy was so limited that it was not something that PADI actually needed to pay good money for.

I also agree with you that the policy did not explain it to the customer. Just the fact that when I read it, I read it as saying the deductible was a $300,000 yearly aggregate, makes it likely that others with less experience in reading and interpreting insurance policies would not have been able to tell what they were getting. And, don't be put off by the silly argument that, if in fact, the aggregate was $300,000 per year, it would make sense that the policy would not say that PADI was effectively self-insuring every loss -- we know that that is not the case.

 

[ItsBruce]

I believe the information indicating PADI was adjusting and paying claims was in the information releases by Rick Lesser where he attempts to illustrate documents showing the settlement and the adjustor were independent of Lexington.

Well, if Rick Lesser said it it must be true. Even though he was one of the attorney for the plaintiff whose case relied in large part on the assertion that PADI was adjusting claims, I would not expect Rick to be biased in his view of the evidence. So, because Rick said it, that would surely make it appear that PADI was adjusting claims.

I suppose the existence of companies such as General Adjustment Bureau ("GAB") (see general adjustment bureau - Bing) is just a part of some sort of scam to let companies like PADI circumvent the law.

Edited to add:

I must confess that I am not as virtuous as Rick. When I represent a client, I just cannot seem to find it in me to be nearly so neutral and objective in my view of the evidence when explaining the case to the public.

I realize that doing so is stupid of me. If I make a case out to be great and then lose, I sure look like a fool. However, if I make the case out to be a tough one and I win, everyone thinks I'm great... and if I lose, well, I'm expected to lose because it is a tough case.

But, I just can't help myself. Oh that I could be more virtuous.