Gibson Insurance Agency Inc

Initial Business Response /* (1000, 10, 2017/11/17) */
Response to Description of Case
Gibson is a retail insurance brokerage firm. The company gathers basic information from its clients, prepares applications based on the information the client provides, and submits those applications to...

multiple insurance companies to get offers or quotes from them for coverage. If a client's circumstances change, Gibson relies on the client to notify Gibson so that Gibson can seek to have the client's insurance policy amended to the appropriate coverage for the client's circumstances. Otherwise, once a policy is in place, the insurance company often renews the policy automatically without requiring Gibsonas the brokerto resubmit the information.
In November 2001, upon the description [redacted] ([redacted]) provided about the property at issue (3421 Northside Blvd, South Bend, IN) as being a rental home, Gibson went to the insurance market and secured a tenant-occupied policy of insurance issued by Auto-Owners Insurance for [redacted]. On December 27, 2001, Gibson sent [redacted] a letter outlining the coverage and obligations, including the following instruction: "If your rental home ever becomes vacant such as tenants moving out for any period of time, contact our office immediately so that we may amend the policy with a vacancy provision. Otherwise, you may be jeopardizing coverage." (Letter attached, Exhibit 1.) Gibson provided the proper type of insurance for the property [redacted] described.
Gibson's file does not support [redacted]'s assertion that she notified Gibson "at least twice" during the past sixteen (16) years that the house at issue was vacant. Gibson has one notation in [redacted]'s file that refers to her report of the house being vacant, and it coincides with the vandalism claim she mentioned in her complaint. [redacted] incorrectly estimates she reported the vandalism claim between XXXX - XXXX. [redacted] made the report on May 16, 2011. [redacted] did not call Gibson to report the property was vacant. To the contrary, she mentioned the vacancy in passing during a call to report a vandalism claim. Gibson's staff member's note states, "Called Linda who stated that when she went to cut the grass at the vacant property, she noticed that someone had kicked in the back door. Reviewed policy in AMS and advised Linda that the policy does have a $500 deductible. Linda stated that they damaged two doors and the frame." [redacted] did not immediately contact Gibson when the property at issue became vacant. To the contrary, she notified Gibson of a vandalism claim and mentioned that she became aware of the vandalism when she went to mow the grass at the "vacant property." The vacant status of the property was not the focal point of the call [redacted] placed to Gibson - the objective of the call was to make a vandalism claim. Gibson submitted the vandalism claim to Auto-Owners, and the insurance company paid the claim.
Between 2001 and 2017, [redacted]'s insurance policy auto-renewed directly with Auto-Owners. Gibson's file during this period contains several notations of communications regarding non-payment of premiums; however, there is no reference to a 2015 discussion regarding the property being unoccupied. The only vacancy discussion in Gibson's file pertains to the 2011 vandalism claim. [redacted] did not contact Gibson at any other time for the purpose of notifying Gibson that the property was vacant.
On September 26, 2017, Gibson spoke with a claim manager from Auto-Owners regarding [redacted]'s disputed July 26, 2017, claim (the disputed claim). The claim manager reported that during her recorded statement, [redacted] informed Auto-Owners that her last tenant moved out of the property in 2014 and the home had been vacant since 2014. Auto-Owners also reported that [redacted] stated she was planning to begin renovations of the building in January 2017, but she did not receive construction bids until May 2017. Auto-Owners' reason or denying the disputed claim was because the dwelling was "not being used principally as a private residence before and at the time of the loss." (October 3, 2017, letter from Auto-Owners to [redacted] Attached, Exhibit 2).
[redacted] notified Auto-Owners the insured property was vacant between 2014 and 2017. Had [redacted] followed the instructions Gibson provided to her on December 27, 2001, and informed Gibson of the vacant status, Gibson could have issued an amendment with a vacancy provision; however, [redacted] divested Gibson of the ability to do that by failing to notify it of the extended three (3) year vacancy. As a result, and as Gibson cautioned in the December 27, 2001, letter, [redacted] jeopardized her coverage. [redacted], not Gibson, is responsible for the circumstances and consequences of the disputed claim.
Response to Desired Resolution
Gibson is not in a position to "provide [redacted] with insurance"; however, Gibson is willing to confer with Ms. [redacted] and based on her description of the property, go the market and find policy options for her and communicate with her about those options and premiums. Gibson will do so with the mutual understanding and agreement that [redacted] will at all times remain responsible for abiding by all terms and conditions of policies, complying with all notice requirements regarding any and all changes or modifications to the property at issue, and timely paying any and all premiums.
Gibson will advocate that Auto-Owners reconsider the denial of the disputed claim. Gibson cannot be responsible for the outcome of its efforts in this regard, but it will appeal to Auto-Owners to accept the claim.
Gibson declines the demand that it pay for any portion of the repairs to the property at issue. As stated above, Gibson arranged for proper coverage of the property. [redacted] failed to abide by the requirements outlined in the original terms of the insurance agreement by failing to notify Gibson of extended vacancies of the property. Gibson's tangential knowledge of the vacancy of the property in 2011 due to [redacted]'s report of vandalism was the only instance that Gibson was remotely aware of the property being vacant. [redacted] made no other accounts of non-occupancy to Gibson. As a result, [redacted] divested Gibson of the ability to amend the policy beyond the tenant-occupied coverage [redacted] purchased and continued to re-purchase every year since 2001. Consequently, [redacted] is responsible for the damages she sustained arising from the disputed claim and Gibson declines to pay half of such costs.