PADI getting sued over Insurance Program

[theduckguru]

PADI could easily meet the insurance goals you list by simply requiring liability insurance, which a pro may opt to do rather than purchasing the PADI plan. Of course PADI does not enrich themselves when a pro opts independant insurance and that's why PADI offers their own program. The suit alledges PADI's desire of self enrichment has resuled in an illegal promotion and/or product. PADI may have knowing accepted additional risk in this arrangement after careful evalution of profitability. The suit also is questioning if PADI can accept that risk since they are not a licensed insurer.

 

[Peter Guy]

I'm a PADI instructor and don't buy my insurance through PADI or V & B. There is NO requirement to buy liability insurance through the "PADI system."

 

[KY_BOB]

I've been without internet access, but my comments are as follows:

1.The most important aspect of liability insurance is that it covers the cost of the defense of a lawsuit. This is often as much as or more than the liability itself. It is particularly important if there ultimately is no liability. Who wants to pay a lawyer tens of thousands of dollars for proving they did nothing wrong?

2. Liability insurance does not indemnify one for punitive damages. However, the threat of punitive damages may drive a settlement.

3. Everyone up the "food chain" wants to protect themselves, so they require insurance for those below them. General contractors require subs to have insurance. There are many other examples. PADI, which will get sued whenever a DM or instructor gets sued, wants to protect itself, to the extent possible, so it requires DMs and instructors, etc. to have insurance. It puts a layer of protection between the professional and the organization.

As an insurance agent, I would like to strongly agree with these 3 points.

 

[ItsBruce]

Having liability insurance is not enough to protect oneself (or one higher on the "food chain") from an adverse judgment. We often tend to forget that there are all sorts of limits on what is covered in any given policy. Most policies cover only damages that an insured becomes legally obligated to pay because of "bodily injury" or "property damage." These have very precise definitions and liability for damage because of things that are not "bodily injury" or "property damage" is not covered. Additionally, there are numerous exclusions. Then, there are assorted limitations as to those higher up on the "food chain." The net result is that to protect itself, one that is higher on the "food chain" is best able to do so by specifying a particular policy that those below it must have. If that means getting an insurer to create a specific policy, then so be it. (Recall that Lexington, a "real" insurer, is the one whose name is on the policy.)

 

[ItsBruce]

ALERT!!!


I just looked at the Court’s website (Pacer) and saw that it ruled on the various motions to dismiss. As I previously predicted, it granted the motions and dismissed the case with prejudice. Game over. In large part, the Court based its decision on the facts that the plaintiff could not show actual damages and its conclusion that the policies were really issued by Lexington. The fact that they included a self-insured retention (SIR) did not impress the Court. The following are some excerpts from the Court’s opinion:

Plaintiff’s damages theory cannot be saved by Kwikset because a review of the policies demonstrates that coverage was provided by Lexington, not PADI.3(Hornsby Decl. Exs. A-J.) Plaintiff fails to allege how the inclusion of a self-insured retention (“SIR&#8221 provision in certain group policies between PADI Americas and Lexington renders PADI Americas an unlicensed “insurer.” …

Plaintiff does not allege a contract whereby PADI undertook to indemnify dive shop owners against loss. Rather, Plaintiff alleges that it was promised such a contract from Lexington. By all accounts, this is what Plaintiff received. Insurance coverage was provided by Lexington under PADI’s group policies, with Plaintiff named as an additional insured, and with PADI responsible for a $300,000 annual deductible under certain of the past policies. That PADI paid the deductible does not make PADI an “insurer.”

Accordingly, Plaintiff’s alleged injury in fact, based on the theory that PADI was acting as an unlicensed insurer is untenable. … [N]ot only did Plaintiff receive licensed insurance from Lexington, as evidenced by the policies, this is exactly what Plaintiff admittedly wanted, and what Plaintiff relied on to have its claim paid.

 

[theduckguru]

Anothet victory for white collar crime.

 

[ItsBruce]

Anothet victory for white collar crime.

Not to worry; there is a motion to sanction the plaintiff and plaintiff's counsel for bringing a lawsuit that was frivolous and in bad faith. The Court could very likely grant it and impose the costs on the plaintiff and counsel. How bogus was it to sue all these defendants saying that PADI was selling insurance and collecting money for an illusory policy when the policy itself made it irrefutable that it was issued by Lexington, a "real" insurance company? And, that's not to mention that no claim went unpaid.

 

[Thalassamania]

While no damage may have been actually done, that was a matter of chance. I still think that is was illegal and immoral and it will be interesting to see what happens if and when it gets to the California Insurance Commissioner.

 

[The Chairman]

I still think that is was illegal and immoral

:homealone: What a surprise! I would never have thought I would ever hear a negative word from you about PADI. Not in a million/trillion years [/sarcasm]

 

[Thalassamania]

The insurance scam is played, one way or another, I'd guess, by all the privately held agencies (heck, even DAN did it), PADI was just the most recent to be exposed with their hand in the cookie jar, in this case to the tune of a few million a year.