News Briefs

ARKANSAS

Water Damaged Vehicles Must be ID’d

In the wake of the catastrophic pro-perty damage occurring during the 2005 and 2004 hurricane seasons, the Arkansas Insurance Depart-ment believes owners may be selling cars and other vehicles without disclosing the fact that the vehicle has been damaged by water.

The department issued a reminder to insurers that state law requires “water-damaged” insured motor vehicles to be identified as “damaged” on the certificate of title. Arkansas Code Annotated Section 27-14-2301 et seq., which defines a “water-damaged” insured motor vehicle for purposes of requiring a “damaged” certificate of title, states:

“When a motor vehicle is water-damaged or sustains damage in an amount equal to or exceeding seventy percent (70%) of its average retail value, the owner, or insurance company if it obtains ownership of the vehicle through transfer of title as the result of a settlement of an insurance claim, shall forward the properly endorsed certificate of title to the office [Office of Motor Vehicles Division of the Arkansas Department of Finance and Administration] together with a fee in the amount now or hereafter prescribed by law for the registration and issuance of a certificate of title.”

Proper notification by insurers allows a vehicle title to be identified properly and puts the end purchaser on notice of past vehicle use, defects, damages, and restrictions regarding sale and transferability. The owner or insurance company, as the case may be, may not dispose of a motor vehicle that is water-damaged before it has obtained a damage certificate from the Office of Motor Vehicles. Willful violations of these provisions of Arkansas law are punishable as misdemeanors. The department also may take administrative action, if it deems necessary, against licensed insurers violating these requirements.

LOUISIANA

Suit Filed Over Excess Flood Coverage

A pair of plastic surgeons in New Orleans, La., who are facing more than $1 million in uninsured home losses from Hurricane Katrina, are suing State Farm Insurance, claiming the company did not tell them they could have bought additional coverage from other carriers, the Associated Press and New Orleans Times-Picayune reported.

Though their home was worth $1.4 million, Scott Sullivan and Michelle Cooper had just $250,000 in flood insurance on the property and another $100,000 in contents coverage, attorney Robert Manard said.

The flood coverage, which comes from the federal government, was at the maximum available level. The government relies on State Farm and other private companies to sell the policies. However, a handful of private insurers in Louisiana sell excess flood coverage.

Manard said Sullivan and Cooper didn’t discover such coverage was available until after Katrina sent 4 feet of water through their home, destroying 80 percent of the house and about $500,000 in furnishings and other personal property.

“They were told that’s all they could buy,” Manard said.

State Farm representatives declined comment, saying the company’s policy is to not comment on pending litigation.

Companies began selling the coverage about four or five years ago, according to the Insurance Information Institute. Some insurers won’t sell the coverage unless a client also buys a homeowners policy. Limits range from $250,000 in additional dwelling coverage to $75 million. State Farm does not sell the extra coverage.

The suit was filed in civil district court in Orleans Parish and asks for class-action status. Manard said that if a judge rules the suit a class ation, it could include about 1,000 people facing about $500 million in uninsured losses.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

OKLAHOMA

Former Bartlesville Employee Pleads Guilty to Fraud

A former City of Bartlesville employee was ordered to pay almost $4,000 in restitution after pleading guilty to one count of workers’ compensation fraud, according to Attorney General Drew Edmondson.

David Wayne Lindley, a former Bartlesville Sanit-ation Department employee, pleaded guilty in Tulsa County District Court. He allegedly told his doctor he did not have employment outside his job with the city at the time he injured his back, when, in fact, he also ran a landscaping business.

He was sentenced to a three-year deferred sentence, and ordered to pay $3,859.60 in restitution, a $125 victims’ compensation assessment, a $125 fine and court costs.

The AG’s Workers’ Compensation Fraud Unit, which has statewide jurisdiction to investigate and prosecute workers’ compensation fraud, investigated the case.

To report information regarding suspeted workers’ comp fraud, contact the AG’s Workers’ Compensation Fraud hotline toll-free at (877) 800-8764.

TEXAS

Hallmark Financial to Acquire TGA

Hallmark Financial Services Inc. recently reported that it plans to acquire Texas General Agency Inc. and certain affiliates.

TGA is a managing general agency that markets and services property and casualty insurance products, with an emphasis on commercial automobile and general liability risks. The acquisition includes TGA’s insurance subsidiary, Gulf States Insurance Company, which reinsures a portion of the business written by TGA, as well as TGA Special Risk Inc., which brokers mobile home insurance.

Closing conditions include, among other things, execution of employment agreements between TGA and the three individual sellers, obtaining consent to the transaction from the Oklahoma Commissioner of Insurance, and Hallmark’s prior or contemporaneous acquisition of an affiliated entity, Pan American Acceptance Corporation. The transaction is expected to be effective as of Jan. 1, 2006. Philo Smith & Co. served as advisor to TGA on the transaction.

“We believe that TGA’s experienced management team and established network of general and retail agents will be complementary to Hallmark’s existing Commercial Lines Group,” stated Mark E. Schwarz, Hallmark’s president and CEO.

Based in Fort Worth, Hallmark Financial’s business involves marketing and underwriting of non-standard personal automobile insurance primarily in Texas, Arizona and New Mexico; marketing and underwriting commercial insurance primarily in Texas, New Mexico, Idaho, Oregon, Montana and Washington; third party claims administration; and other insurance related services.