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Zalma on Insurance
Help! I’ve Fallen & Broken My Glasses. I Don't Need Your Stinkin' License! Miscarriage Manipulation for Money US Supreme Court Restrains Punitive Damages Barry Zalma, CFE, is an insurance coverage attorney. He is the founder of Barry Zalma, Inc., a California law firm whose practice emphasizes the representation of insurers and those in the business of insurance. Mr. Zalma is the author of Insurance Claims: A Comprehensive Guide, published by Specialty Technical Publishers, Vancouver, BC at http://www.stpub.com The Truth, The Whole Truth & Nothing But The Truth, Property Claims 2nd Edition and Liability Claims and all course books used by ClaimSchool, Inc. in its training programs. He is also the author of three books published by Thomas Investigative Publishing, and numerous articles for insurance trade publications and law journals. Mr. Zalma writes the monthly Zalma's Insurance Fraud Letter which is available, FREE, from ClaimSchool, Inc. and over the internet at http://www.zalma.com Specialty Technical Publishers has published "Mold: A Comprehensive Claims Guide" by Culver City lawyer Barry Zalma. The book is the only comprehensive guide to cover all issues relating to claims of damage by mold or fungal infestations. It is an essential tool for every person who owns real property, manages real property, for all risk managers, realtors, property inspection companies, insurance agents and brokers, insurance claims people, and lawyers who represent property owners or insurers. It is available at http://www.stpub.com or by calling 1800-251-0381 |
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The
Phantom Rolls Royce A "Heads I Win, Tails You Lose," Story by Barry Zalma, Esq., CFE
The
story that follows is based on fact but is fiction. The names, places
and descriptions have been changed to protect the guilty. This story was
written for the purpose of providing insurers, those in the insurance
business and the insurance buying public sufficient information to
recognize and join in the fight against insurance fraud. In
California and several other states, before a car can be insured, the
agent must photograph the car and its vehicle identification number.
This regulation is an effective weapon against fraudulent auto theft
claims. The insured managed to purchase material damage insurance on a
Rolls Royce before the regulation was fully effective. His technique was
flawless. His planning immaculate. He was only thwarted in his efforts
because of the actions of a dedicated and thorough investigator. To
start his plan, he went to a Beverly Hills classic automobile dealer and
took two Polaroid photographs (slightly out of focus) of a 1946 Rolls
Royce. Unlike modern cars, the vehicle identification number was not in
the windshield of the Rolls. It was, however, written on the
specification sheet provided to him by the dealer. The
insured began the effort to create an artificial 1946 Rolls Royce. First,
he visited the Department of Motor Vehicles. He obtained from the
department forms for the issuance of replacement title and registration
documents. He
filled the documents out using a vehicle identification number similar
to the one in the showroom, but 200 digits higher. He also filled out a
sworn declaration of lost title and signed it with the name John Jones,
vice-president, Lincoln Savings & Loan, the lender. The Department
of Motor Vehicles processed his application for lost title and
registration without inquiry. A new ownership certificate showing
ownership in Lincoln Savings & Loan was then issued and delivered to
the insured's post office box. The insured then filled out a Department
of Motor Vehicles bill of sale, reflecting that the Rolls Royce was sold
by Lincoln Savings & Loan to his neighbor for a total of $5,500.00.
The Department of Motor Vehicles billed the neighbor for license plates
and registration based on the value of the sale. The
insured then forged the neighbor's signature on the ownership
certificate transferring title to himself. A new bill of sale was again
recorded, reflecting a purchase price of $15,600.00 by the insured from
his neighbor. He then paid the license fees and requested plates and a
certificate claiming the old license plates had been lost or stolen. At
his local public library, the insured read through a classic car
magazine and found that 1946 Rolls Royces in fair condition were selling
for approximately $100,000. He also learned that the Classic Car
Insurance Company was willing to insure classic cars (with limited use)
by mail. He photocopied the application for insurance at the library
photocopy machine and applied for a $100,000 policy on his Phantom Rolls
Royce. The Insured attached to the application one of the Polaroid
photographs he had taken at the dealership. Classic Car Insurance
Company, taking his application on face value, issued the policy. Since
the car was only to be driven 1,000 or less miles a year, the premium on
the policy, including third party liability coverage, was less than
$1,000. The insured financed the premium with a local insurance
financing company and only had to make a $200 down payment. His first
payment was due thirty (30) days later. Two
days before the payment was due, the insured telephoned the Los Angeles
County Sheriff from a Denny's restaurant in Lakewood, California and
reported his Rolls Royce stolen. He told the police he had taken it to
the restaurant for lunch and when he returned it was gone. The police
dutifully took down the report and began looking for the Phantom Rolls
Royce. The insured made a report to Classic Car Insurance Company and
immediately, in response to its request, submitted a sworn declaration
of auto total theft making claim for $100,000. Classic
Car Insurance Company, as required by California law, maintains a
special investigation unit. When the report came in a computer search
was performed of Classic Car Insurance Company files of other claims
payments. A
a three-year-old theft loss of a classic Mercedes Benz was discovered by
a person with the same last name as the insured. The old file was taken
out of archives and it was determined that the vehicle was owned by the
insured's mother, but was being driven by him when it was stolen from a
restaurant parking lot. The Classic Car Insurance Company had paid the
insured's mother $75,000 for the loss of her Mercedes. The coincidence
was too great to ignore. The
investigator began to do the work he was trained to do. He first checked
the database maintained by the National Insurance Crime Prevention
Bureau and learned the following: 1.
The insured has been the reported victim of two automobile accidents and
a residential burglary not reported on the application for insurance. 2.
The insured had been convicted, at age 19, of four counts of forgery of
checks causing a bank to lose over a billion dollars. He had been
sentenced to ninety days in jail and five years of probation for this
offense. 3.
The Rolls Royce Motor Company publishes a book of all vehicles
manufactured by it with their vehicle identification numbers. The
number of the insured's Rolls Royce was not in the book. The
investigator then obtained by the Department of Motor Vehicles all of
the original sales documents and was surprised to learn that the vehicle
Classic Car Insurance Company had insured for $100,000 was reported by
the insured to have been purchased for $15,600. Counsel
was retained to represent Classic Car Insurance Company and to examine
the insured under oath. At examination under oath, the insured proved
himself to be a facile liar. His skill at lying under oath was no match
for the facts counsel had from the SIU investigator. Counsel lead the
insured down a path of lies. The insured claimed to have purchased the
vehicle for $100,000 cash which he obtained from his business, an escort
service. He explained he kept the cash at home because it was earnings
he did not wish recorded in a bank account. He produced a bill of sale
purportedly signed by the neighbor reflecting a $100,000 sale. The
insured produced the ownership certificate and the registration
establishing the vehicle existed. He claimed to have forgotten to bring
with him the keys to the vehicle. Counsel
then presented the true documents, item by item. The insured claimed
that the documents recorded at the Department of Motor Vehicles were
filed by the seller and he had no knowledge of the changes made by the
seller. In fact, he could not understand why the seller had filed such
strange documents. After
counsel had established, with certainly in counsel's mind, that the
insured had sworn falsely, the examination under oath was terminated. Counsel
met with the attorney for the insured, privately, and explained that the
insured's claim was in great peril. The attorney for the insured
responded: "The bad faith lawsuit I told you to expect will not be
filed by me." The
insured had made one serious error: he hired an honest lawyer. His
lawyer and counsel for the Classic Car Insurance Company discussed
possible resolution of the matter, including the withdrawal of the
claim, or a mutual rescission of the policy. Counsel
for the insured promised to speak with his client and communicate with
the insurer. The
next day, the insured's lawyer called counsel for the insurer and said:
"I have conferred with my client who recognizes that his title to
the Rolls is not clear. He had instructed me to advise you that he is
withdrawing his claim." "I
recognize that your client has a duty to report potential fraudulent
claims to the State Bureau of Fraudulent Claims. We request that you do
no more than you are required by law to do." Classic
Car Insurance Company saved a $100,000 claim. It spent $30,000
investigating the claim and defeating it. It was lucky. No
litigation followed. It reported the loss to the fraud bureau who now
has the insured's name on record. There has been no prosecution. No
prosecution if anticipated or expected. The fraud bureau is simply
inundated with fraudulent insurance claims and must limit its
prosecutorial efforts to major crimes exceed $1,000,000.
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