It’s a warm summer evening in mid-July. After an eventful Saturday, and with church meetings and grandchildren to attend to the following day, an elderly couple turn in early for the night. (I’ll call them Grandpa and Grandma.) Luckily, Grandpa and Grandma didn’t have to worry about their car being stolen because it had a transponder key, unlike the key pictured below.
However, Sunday morning, Grandma and Grandpa awake to discover their car is missing from their driveway. Upon calling the police, Grandma and Grandpa are informed that their vehicle was found a few hours earlier that morning, totaled on the highway several miles from their home. You might expect Grandma and Grandpa’s insurance company to see to it that their claim be taken care of right away, right? Wrong. Instead, the insurance company denied their claim alleging that Grandma and Grandpa were somehow responsible for stealing and destroying their own car.
As I write this, it seems outrageous, probably because it is. However, cases similar to this one have happened across the country. Insurance companies base their denial of such claims on the “unstealability” of a vehicle equipped with a transponder system, similar to the one installed in Grandma and Grandpa’s car. A transponder system consists of an ignition key embedded with a tiny computer chip that sends a unique radio signal to the vehicle’s onboard computer. Without the signal, the car won’t start. Because the only set of Grandma and Grandpa’s keys was accounted for, the insurance company concluded that Grandma and Grandpa must have stolen their own car.
It is true that insurance companies have good reason to be wary. They lose close to $14 billion to auto fraud every year in the U.S. However, the insurance industry’s faith in transponder systems is misplaced. Rob Painter, a Milwaukee-based forensic locksmith who has testified in dozens of auto insurance court cases for both sides, stated, “The carmakers are calling these passive antitheft systems, but they’re not…They are just theft deterrents. Tell me a car can’t be stolen and I’ll show you how to do it.”
Most forensic locksmiths seem to acknowledge that vehicles equipped with transponder systems can be stolen. However, the likelihood of such a possibility is often dismissed on the grounds that only professionals really have the time, trouble, and equipment to steal a vehicle by such methods.
In the state of Washington, insurers are required by law to act with reasonable justification in handling claims made by insureds. In Safeco Ins. Co. v. JMG Restaurants the Court found that an insurer does not have a reasonable basis for denying coverage and acts without reasonable justification when it denies coverage based upon suspicion and conjecture. By concluding that insureds are responsible for faking theft, without clear evidence, insurance companies are wrongfully basing denial of coverage on speculation and supposition.
Fortunately, we represent people like Grandpa and Grandma, and we have been able to recover the value of the car plus treble damages and attorneys fees and costs. Let me know if you or a loved one has been so accused.
Credit to Stephen B. Mickelsen, future esquire
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