In the case of Mercury Insurance v. Markham, Mr. Markham filled out an insurance coverage application that asked if the vehicle was “rebuilt, salvaged, modified, altered or specifically customized.” Mr. Markham answered “No” even though he had put bigger tires and a “lift-kit” on his truck.

After Mr. Markham injured another person in an accident while driving the truck, Mercury rescinded his policy and refused to defend the claim. Mercury’s position was that Mr. Markham made a material misrepresentation in his application.

Florida Statute 627.409 allows an insurance company to deny coverage if a misrepresentation is: (1) fraudulent; (2) material to the risk being assumed; or (3) the insurer in good faith either would not have issued the policy or would have done so only on different terms had the insurer known the true facts.

The question in this case was what type of change or alteration of the truck amounted to a modification. Mr. Markham’s attorney argued before the court that the term “modify” was ambiguous and subject to more than one interpretation so that he could not tell from the application what he was required to disclose.

Mercury’s attorney responded that the bigger tires and lift kit should have been disclosed; that information would have affected the company’s decision to insure the truck.

The trial ended in favor of Mr. Markham, but a state appeals court reversed that decision. The higher court concluded that the bigger tires and lift-kit were significant enough modifications that Mr. Markham should have disclosed them to Mercury.

As I look at this case, I think a more prudent approach for Mr. Markham would have been to ask Mercury if the modifications to his truck required disclosure on the application. It’s risky not to disclose information to an insurance company when you are applying for coverage.

So what amounts to a modification? A trailer hitch? Running boards? Different headlights? I suggest anytime you do anything that changes your car or truck from its factory configuration, you should notify your insurance company, — in writing. That way, if something happens, you have written proof you informed your insurance company.

Have you ever rented a car and then let someone else drive?  Unless you inform the rental car company in advance, your automobile insurance may not cover damages to the car if that other driver is involved in a crash.

That’s what happened in the case of Geico vs. Shazier. Ms. Shazier’s insurance policy with Geico had what’s called a “temporary substitute auto” provision that insured Ms. Shazier if she rented a car.  When she rented the car, the rental company asked her if there would be any other drivers. She said “no”.

Ms. Shazier then loaned the rented car to a friend and did not obtain the car rental company’s permission to let her friend drive. Her friend got into an accident and damaged the rental car.

Ms. Shazier filed a repair claim with Geico. When the insurance company investigated the accident, it discovered that Ms. Shazier’s friend did not have the car rental company’s permission. Therefore, Geico denied the claim.

Ms. Shazier sued Geico to cover the claim and she lost. Why? Ms. Shazier was the renter, not the owner and she could not grant permission for someone else to drive.  She ended up having to pay for repairs out of her own pocket.

This was a very costly error.  If Ms. Shazier had told the car rental company there would be another driver, she would have been covered.  If she had carefully read her Geico policy, she would have known that in Florida, you can loan your car to someone else and the vehicle will be covered under your policy. But when you rent a car, you must obtain the rental car company’s permission for another person to drive in order for that same coverage to apply.

If you plan to loan a rented car to someone, make sure you first have the car rental company’s permission. Insurance policies have a lot of fine print and you may think you’re covered.  If you’re unsure, read your policy and call your insurance company or agent to address any concerns.

Office of the Investor Advocate and the Investor Advisory Committee

For example, the law establishes the Office of the Investor Advocate and the Investor Advisory Committee within the Securities and Exchange Commission (SEC). The mandate for these entities is to protect investor’s interests and assist investors but that will largely depend upon how they are funded and staffed. What voice will they have in decision and policy making at the SEC? What services will they provide to investors and how can they assist investors? We will have to watch and see how this unfolds.

Fiduciary Duty Standard of Care

Traditionally, stockbrokers do not owe their clients a fiduciary duty. A fiduciary duty is generally defined as a duty of loyalty, duty of care, a duty to avoid conflicts of interest and put the client’s interests first. Registered investment advisors have these fiduciary duties under federal law.

Stockbrokers generally have transactional duties such as duty to perform the customer’s orders promptly after receiving the customer’s approval. They also have the duty to recommend investments only after studying it, to inform the customer of the risks, and to not misrepresent any material facts to the transaction. Finally, they also have a duty to recommend investments that are suitable for the investor.

Under the new legislation, the SEC has the authority to impose the fiduciary duty standard on brokers. SEC must first study the issue and deliver a report to Congress. This will be a heavily lobbied report and review by Congress as brokers have historically fought hard to avoid the duties of being a fiduciary.

Also of note in the law is the power of the SEC to limit or prohibit mandatory predispute arbitration clauses in brokerage account agreements. Some advocates argue that mandatory arbitration is not fair for retail investors. They argue that biased industry arbitrators and unfair arbitration rules favor brokers and their firms. Conversely, the cost and efficiency of the arbitration process generally benefits retail investors over traditional state and federal courts. It will be interesting to whether the SEC will limit or give retail investors the choice to arbitrate or go to court.

Just because an account or an individual investment has decreased in value does not necessarily mean that a broker or financial adviser has acted inappropriately. At Crary Buchanan, we provide consultations concerning negligence arising from improper financial advice. If you have questions regarding your account or the duties owed by your broker, we invite you to call us to discuss your rights and remedies under the law.

Historically, lawyers have confined their law practices to geographic areas with which they were familiar. There was a reason for this: The lawyer knew the “landscape” of the area and could guide a client through the steps necessary to successfully pursue a claim for injuries. This local knowledge was beneficial in the acquisition of quality medical care and services. There were always a couple of lawyers who covered large areas such as an entire state, but this was rare.

Now, more and more sole practitioners and small law firms are advertising that they maintain multiple offices covering large geographic areas. This is a natural consequence of there being more lawyers, aggressive advertising and a limited number of cases.

But are there any disadvantages to an injured client hiring a lawyer who is “not really from here?” I think the answer is “yes”.

If the lawyer you hire isn’t familiar with the local community of medical providers, then the care you receive for your accident-related injuries may actually hurt your case. Believe it or not, there are actually providers out there who dislike accident cases, and if you happen to come under their care, the medical records they keep on you may minimize your injury.

The other problem is a lot of these out-of-town lawyers either have their clients travel long distances to receive medical care, or they “import” doctors from other counties to treat their clients.

Is there a problem with this? Yes, there is. Insurance companies know where doctors are from and how much of their practice involves traveling around to treat patients involved in accidents outside the provider’s region. This is a red flag for insurance companies.

So, what your best course of action? If you get injured in an automobile accident, hire a local law firm like ours and obtain treatment from local medical providers who are well known in the community. This will give you your best chance to make a full recovery in your case, both medically and financially.

Preferred stocks are a class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights. Technically, they are equity securities, but they share many characteristics with debt instruments. There are different types of preferred stocks such as preferred trusts, cumulative preferred stocks, callable preferred stocks, and others. As with any securities, there are advantages and disadvantages and differing types of risk associated with preferred stocks.

Many times preferred stocks are sold as a safe, stable fixed-income investment. For example, Fannie Mae and Freddie Mac preferred shares were touted as suitable for retired individuals who wanted an investment designed to generate income. However, the risks associated with preferred shares were not disclosed or understood by many retired investors.

Just because an account or an individual investment has decreased in value does not necessarily mean that a financial adviser has acted inappropriately. At Crary Buchanan, we provide consultations concerning negligence arising from improper financial advice. If you experienced substantial losses as a result of overconcentration in a preferred stock such as Fannie Mae or Freddie Mac or were not advised about the risks of investing in preferred shares, we invite you to call us to discuss your rights and remedies under the law.

Most investors think of risk in terms of what is the possibility that I will lose some of my money over time after purchasing an investment. Risk and return tend to work together. The higher the level of risk that greater potential return on the investment and the lower the level of risk generally equates with the lower rate of return.

An investor’s risk tolerance varies based upon age, investment experience, net worth, income, age, investment time frame, investment objective, liquidity needs, and other factors. Risk tolerance tends to be viewed in categories such as conservative, moderate, or aggressive. Generally, investors with a conservative risk tolerance are adverse to loss of principal and tend to have high need for liquidity in their investments. For example, many retirees have a conservative risk tolerance because they have limited resources for income, need to access funds for health care and other living expenses, and generally do not have time to recover from large losses sustained in their retirement account.

There are many risk tolerance questionnaires available from financial advisors and on the Internet. When establishing an investment or retirement account, you and your advisor should have a discussion about your risk tolerance and how to manage risk in your account.

Properly assessing risk tolerance can reduce the risks associated with investing in securities.  Just because an account or an individual investment has decreased in value does not necessarily mean that a financial adviser has acted inappropriately. At Crary Buchanan, we provide consultations concerning negligence arising from improper financial advice. We invite you to call us to discuss your rights and remedies under the law.

The National Highway Traffic Safety Administration (NHTSA) compiles car crash data every year. In 2007, more than 41,000 people died on our roads. In 2008, that number dropped to 25,351. That represents a 39 percent decrease in just one year.

The 2008 figure is the lowest since 1975 when NHTSA began collecting fatality data. You can have a look at the NHTSA numbers by visiting its website.

Even so, 25,351 is a HUGE number of lives lost. If that many people in the U.S. were dying each year from terrorist attacks or other grievous causes, the government would declare a national emergency and we’d probably be living under martial law. Traffic fatalities are devastating, but they a something that we as a society have come to accept as a natural consequence of driving. You get behind the wheel and you hope for the best.

It may not be possible to control the behavior of other drivers, but you can control yours and at least minimize the chance of you being the cause of an accident. One easy way to decrease that likelihood is to limit any distractions while you are driving.

The Florida Department of Highway Safety and Motor Vehicles publishes an annual report on distracted driving. In spite of all the attention given to cell phone use and texting, the report details numerous other causes of distracted driving including food, drink, and moving objects such as a pet or insect.

The report and the causes of distracted driving make you aware of how your own behavior can put you in danger. That’s why when you get behind the wheel, your sole task should be to drive the car. Many of us take driving for granted, but when you become aware of all the types of distractions, you can minimize your chances of being caught off guard.

That also means that there are drivers on the road who don’t have insurance in case they hurt you. You are only required to carry personal injury protection (PIP), which pays up to $10,000 in medical care or lost wages if you get hurt and $10,000 in property damage in case you damage someone’s property, usually another vehicle.

So what can you do to protect against someone who crashes a vehicle into you and injures you, but doesn’t have any insurance? You can write your state legislator and ask for the law to be changed, or you can purchase uninsured motorist coverage, known by the initials “UM.” It’s available to anyone who purchases bodily injury liability coverage, also called  “BI.”

BI is optional.  If you want UM, you have to buy BI. Insurance isn’t cheap, but is worth having if someone else injures you and doesn’t have coverage.  Even if the other person has coverage, it may not be enough to cover your injuries, so in that case, you can use your UM.

It doesn’t look like the state legislature is going to make BI mandatory. If you can afford them, BI and UM are valuable coverages you should have on your car or truck.  You should have them if you own a motorcycle too.  If you get into a motor vehicle crash, either way, you’re covered.

If you have any questions or comments about this, I’ll be glad to discuss them with you.

Once you have a lawyer on your side, you can go about your business and not worry about the insurance company trying to damage to your case, right? Wrong! Even though you have a lawyer, the insurance adjuster will still try to get information from you or your friends that can help the insurance company and hurt you.

How does the adjuster do this? He or she uses a computer to search the Internet to for information about you.  The most common searches are on social networking sites such as Facebook, MySpace, Twitter and the other sites where people share information about their lives.

You probably have registered and posted personal information on one or more websites as a way to keep in touch with your friends. Some sites allow anyone to view your information; others afford some privacy. Either way, any information you post on these types of social networking sites could end up in the hands of an insurance company and used against you.

Consider a simple photograph. If you have been injured and you post a picture of yourself at a party, laughing or dancing, and the  insurance adjuster obtains the image, it will be used to prove that your life hasn’t changed since your injury. A video of you having a good time is even more powerful in the hands of an insurance company fighting your claim.

If you want to share personal information with your friends, don’t do it online. And don’t discuss your case with your friends. The insurance adjuster can’t talk to you without me present, but this rule doesn’t apply to your friends.  An experienced adjuster knows how to get your friends to reveal what you told them in confidence. If your friends want to know about your case, politely tell them your lawyer told you not to talk about it.

What is a structured product?

Structure products are complex securities derived from or based on a single security, a basket of securities, an index, a commodity, a debt issuance, and/or a foreign currency. Structured products usually have two components – a note and a derivative. These products are often marketed as debt securities and sometimes recommended as a substitute for other traditional fixed income investments.

Structured products have the following traits:

• Structured products may offer full, limited, or no principal protection;
• Most structured products pay an interest or coupon rate substantially above prevailing market rates;
• Structured products frequently cap or limit the upside participation in the underlying asset;
• Structured products may have a fixed maturity, may be listed on a national exchange but may be thinly traded.

Are structured products suitable for my account?

Structured products may be appropriate for certain investors.  These are complex products with different types of risks such as loss of principal risk, liquidity risk, credit risk, and interest rate risk. There is a credible debate as to when and under what circumstances structured products are suitable for individual investors.  When considering a structured product, the financial advisor is required to:

• provide a balanced disclosure;
• deal fairly with customers;
• perform a suitability determination of the product; and
• perform a customer-specific suitability determination.

The risks and complexity of structured products has prompted regulators to issue guidance to financial advisors that offer these products. For example, when describing “reverse convertibles,” Finra stated “reverse convertibles are complex investments that often involve terms, features and risks that can be difficult for retail investors and registered representatives to evaluate.” Thus, when considering structured products – buyer beware.

Just because an account or an individual investment has decreased in value does not necessarily mean that a financial adviser has acted inappropriately. At Crary Buchanan, we provide consultations concerning negligence arising from improper financial advice. We invite you to call us to discuss your rights and remedies under the law.