Great American Insurance takes the “Smoke and Mirrors” Award

The insurance industry never ceases to amaze me. Occasionally, the industry amazes me for something they have done to positively change the lives of individuals they touch. Unfortunately, the insurance industry usually amazes me by the greed they exhibit when dealing with their policy holders and the public at large. Recently, the Great American Insurance Company may have taken the prize — literally — for the extreme position they filed with the Houston Federal Court attempting to invoke an insurance policy exclusion to avoid paying a fire claim.

In the inaugural year, Great American Insurance Company is the winner of the 2008 “Smoke and Mirrors” Award. This award will be given annually to the insurance company that takes the greediest or most ridiculous position in a calendar year. In 2008, Great American may have done both.

This insurance company provided insurance to Boxer Property Management Company and 9343 North Loop L.P. for the building located at 9343 North Loop East. The six-story building had a fire in March 2007 in which 11 people were trapped as a result of the thick smoke that was a natural byproduct of the fire. Eight people were rescued by the valiant efforts of the Houston Fire Department, while three truly “great Americans” lost their lives as a result of smoke inhalation. Great American provided a $25 million excess insurance policy that would cover the wrongful death liability of Boxer and 9343 for these three deaths, but Great American has now denied their liability under a “pollution exclusion” provision of the insurance policy. They argue that because the word “smoke” is in the definition of pollution in the “pollution exclusion”, and these mothers and this father died from smoke inhalation (not burning to death), then Great American does not have to pay under the policy. I assume we should all recognize that if we are faced with a life ending scenario, we should jump in the flames to make sure the insurance company remains obligated to its insurance policy.

We should all be outraged by the conduct of insurance companies who take such ludicrous positions, such as this one take by Great American. But hey — it won them the inaugural “Smoke and Mirrors” Award. Maybe Great American Insurance will tout this award on their website the same as they tout their company as a “trusted” specialty insurance partner whose employees “are expected to conduct themselves with integrity in a legal, ethical and moral manner.” Great American states on its website that it focuses on insurance products and services in areas they have significant expertise and knowledge. I guess their expertise is really in collecting premiums while not paying out claims to the detriment of their customers and the public at large.