Now you see it, now you don’t

Insurer advertisements and website marketing claims vs. their policies and performance

2016 September

Insurers have long marketed their insurance products and their services through advertisements and on websites. However, as one reporter observed nearly 30 years ago: “An insurance policy is only a promise; when you buy, it’s what you see. What happens when you make a claim is what you get.” (S.J. Diamond, Insurance Test: How Helpful Is Claims Unit?, Los Angeles Times, May 27, 1988, pt. IV, at 1.)

What insurers say – nay, promise – about their policies and services in such advertisements may have substantial evidentiary value in a lawsuit against an insurer, whether that lawsuit asserts a claim of bad faith, unfair competition, unfair business practices, or misrepresentation and fraud. As one court has explained:

Although the insurers have described the . . . policies as “all-risk” property insurance policies, the scope of the risk underwritten by such policies bears little resemblance to the marketing label placed on them. In fact, these policies exclude numerous risks. . . . We have previously cautioned against misleading insurance marketing descriptions of policies. . . . “Insureds are not purchasing ‘almost comprehensive’ coverage. CGL Policies are marketed by insurers as comprehensive in their scope”) . . . .

. . . [I]n the appropriate case, we may hold insurers to the coverage described by their marketers, as opposed to the coverage provided by their underwriters.

(Aluminum Co. of Am. v. Aetna Cas. & Sur. Co. (2000) 140 Wash.2d 517, 526 n.4 [998 P.2d 856].)

”Like a good neighbor…”

Of course, most of us are familiar with time-honored slogans and statements, such as “Like a good neighbor, State Farm is there,” or “You’re in good hands with Allstate.” Most insurers place advertisements or make proclamations on their websites extolling their virtues and attempting to lead potential customers to buy insurance from them because of what they say.

AIG, for example, has an “infographic” on its website entitled “Why AIG.” It answers that question in various ways, including by saying: “While you’re busy dealing with challenges today, we’re focused on your tomorrow – and thinking about how we’ll get you from here to there, safely.” (www.aig.com/content/dam/ aig/america-canada/us/documents/brochures/whyaig-infographic.pdf (visited May 17, 2016)). AIG also says: “WE HEAR YOU: Listening to client issues (strategic, financial and regulatory) to anticipate needs/concerns and effectively collaborating across AIG to provide creative solutions.” (Ibid.) To top it off, AIG also answers the “Why AIG” question by stating: “Helping clients stay ahead of risk and serving as their partner in times of need is why AIG is here.” (www.aig.com/why-aig (visited May 17, 2016)).

Here is one more, this time from Travelers. Travelers’ website describes its services regarding homeowners insurance as follows:

Home. It’s your safe haven. It’s where you raise your family and create memories that last a lifetime. Whether you are buying insurance for your first home, or the high-value home of your dreams, Travelers can help you protect this prized possession with homeowners insurance that fits your priorities and your budget.

. . . .

We’ve been providing trusted service for more than 100 years, and will be there for you.

(https://www.travelers.com/personal-insurance/home-insurance/index.aspx (visited May 17, 2016)).

Can support causes of action

Courts have recognized that advertisements can be admissible in support of causes of action ranging from unfair competition to fraud. For example, in Committee on Children’s Television, Inc. v. General Foods Corp., (1983) 35 Cal.3d 197, the court considered a complaint that two companies had engaged in fraudulent, misleading and deceptive advertising in the marketing of sugared breakfast cereals. Some of the alleged misrepresentations were that “‘children . . . who regularly eat candy breakfasts are bigger, stronger, more energetic, happier, more invulnerable, and braver . . . ,’ that eating such products is a ‘“fun” thing . . . to do,’ [and] that the products possess or impart ‘magical powers,’ etc.” (Id. at 205.)

The Supreme Court reversed a trial court order sustaining demurrers, noting that the plaintiffs did not need to provide an explanation for every advertisement, because that “would be obviously impractical.” (Id. at 218.) It recognized that the plaintiffs could be required “to set out or attach a representative selection of advertisements, to state the misrepresentations made by those advertisements, and to indicate the language or images upon which any implied misrepresentations are based.” (Ibid.) The court also noted, “A long-term advertising campaign may seek to persuade by cumulative impact, not by a particular representation on a particular date. . . . Plaintiffs should be able to base their cause of action upon an allegation that they acted in response to an advertising campaign even if they cannot recall the specific advertisements.” (Id. at 219.)

Because of the special relationship between insurers and their insureds, an insurer may be liable for negligent misrepresentation when information is inaccurately conveyed “‘in a commercial setting for a business purpose.’” (Bock v. Hansen (2014) 225 Cal.App.4th 215, 229.)

For example, in Sharp v. Automobile Club (1964) 225 Cal.App.2d 648, the insured sought recovery for breach of contract and for fraud. The Court of Appeal recognized that the insurer could be found liable for fraud and for punitive damages based on the amount awarded under the policy. The court upheld the propriety of a punitive damages award, noting that at the time of policy renewal, the insurer had represented that a particular provision in the policy applied in a certain way when its practice was to the contrary. (Id. at 652-53; see also Kenevan v. Empire Blue Cross & Blue Shield (S.D.N.Y. 1992) 791 F.Supp. 75, 80 [claim of misrepresentation based on language in insurer’s promotional brochure was independent of claim based on failure to provide policy benefits and thus could support claim for fraud distinct from claim for breach of contract]; Sparks v. Republic Nat’l Life Ins. Co. (1982) 132 Ariz. 529, 647 P.2d 1127, 1139 [brochure that was only document reviewed by insured served as both insurance contract and evidence of carrier’s misrepresentation affirming award of punitive damages based on representations in brochure describing master policy; “Tort liability . . . was a separate and distinct issue from the contractual issue.”], cert. denied, (1982) 459 U.S. 1070; Guarantee Trust Life Ins. Co. v. Palsce (Ind. Ct. App. 1994) 641 N.E.2d 1266, 1268 [affirming award of punitive damages based on representations in brochure describing master policy].)

Setting reasonable consumer expectations

Furthermore, California courts have recognized that the utility of insurer marketing materials is not limited to supporting claims of fraud, negligent misrepresentation, breach of contract, and unfair business practices. Instead, such materials may be used for showing an insured’s reasonable expectations.

An insured’s reasonable expectations are a factor to be considered in interpreting insurance policies, at least when there is ambiguity. As the California Supreme Court has held, “we generally interpret the coverage clauses of insurance policies broadly, protecting the objectively reasonable expectations of the insured. (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 822; see Buss v. Superior Court (1997) 16 Cal.4th 35, 45 [when a policy provision is not clear, “it must be read in conformity with what the insurer believed the insured understood thereby at the time of formation . . . . and, if it remains problematic, in the sense that satisfies the insured’s objectively reasonable expectations”].)

In Haynes v. Farmers Insurance Exchange (2004) 32 Cal.4th 1198, the court considered a policy provision that purported to limit coverage for permissive users of an automobile. The court stated, “‘It is not our role to speculate on the policyholder’s abstract expectations, but rather to consider reasonable expectations defined by the insurer’s policy language.’” (Id. at 1214.) The court noted that prior decisions recognized that, “‘even if an insured does not specifically seek out high limits of coverage for permissive users,’ he generally expects that any increases in liability limits will apply to everyone covered.” (Ibid.) In so observing, the court cited insurance advertisements and websites:

At least some of those who market insurance today would appear to agree (See, e.g., Billboards at Interstate 880 (South) Near 23d Avenue exit, Alameda, and at 10th and Folsom Streets, San Francisco (as of Dec. 30, 2003) [automobile liability insurer advertises that, under its policies, “We Cover Your Friends Like We Cover You”]; “Get More,” Internet Web site http://www.21st.com/company/GetMore/coverage/coverage.jsp (as of May 17, 2004) [advertising five insurers that will “[e]xtend[] your policy coverage and limits − at no additional charge − to any licensed driver given permission to drive your car”].)

(Id. at 1214 n.13.) Therefore, insurer advertisements may be useful in a wide range of settings, from establishing how policy provision is to be interpreted to show that an insurer negligently or intentionally misrepresented the services and coverage it would provide, or engaged in unfair practices.

In Kavruck v. Blue Cross of California (2003) 108 Cal.App.4th 773, the insured disputed the insurer’s right to charge premiums based on their ages at the time of policy renewals rather than their initial enrollment ages. The court concluded that the policy language was ambiguous. It considered testimony about the insurer’s advertising brochures and what they said. (Id. at 782-83.) Based on those brochures and other evidence, the court held, “It was objectively reasonable for the parties to understand that (the insurer’s) contractual right to modify the terms of the contract was limited with regard to this [entry age] provision.” (Id. at 783.)

One leading practice guide summarizes the governing principles as follows:

The insurance company’s advertising copy and brochures may shed light on the insured’s reasonable expectations. Indeed, since few insureds read their policies before purchasing them, the insurer’s advertising may be a better gauge of the insured’s expectations than the terms of the policy.

Website advertising may be admissible

(Croskey, et al., Cal.Practice Guide: Insurance Litigation (The Rutter Group 2015) ¶ 4:345; see also Suarez v. Life Ins. Co. of N. Am. (1988) 206 Cal.App.3d 1396, 1405-06 [provisionally considering advertisement in determining whether policy language is ambiguous, noting “‘insurer should be bound by the expectations it has created [and] . . . may be required to provide coverage according to its advertising, despite more restrictive provisions in the insurance contract itself’” (quoting earlier version of the Practice Guide)].)

Given these facts, insurers may attempt to object to the consideration or admissibility of advertisements and website print-outs on a variety of grounds. One possible objection is authenticity.

The authentication of materials printed from a website has been addressed in only a few California cases. In Ampex Corp. v. Cargle (2005) 128 Cal.App.4th 1569, a company and its chairman brought a defamation action against an anonymous poster on an Internet message board. The poster responded with a motion to strike the complaint under the anti-SLAPP statute. The trial court denied the poster’s motion for attorney’s fees and the poster appealed.

In considering the appeal, the court took judicial notice of the facts that the company maintained a website, that the company posted its Securities and Exchange Commission filings on the site, and that press releases and letters from the chairman were also available on the site. In a footnote, the court noted that the trial court had erred in ruling that records from the website were inadmissible on hearsay and authentication grounds:

The various computer printouts from [the company’s] Web site and the Yahoo! message board were offered to show that they existed in the public eye: They were not offered for the truth of the matter asserted and thus were not hearsay statements. Moreover, the records were self-authenticating as computer printouts.

(Id. at 1573 n.2 (citations omitted).)

In People v. Valdez (2011) 201 Cal.App.4th 1429, a criminal defendant who had been found guilty of crimes with a street gang enhancement appealed. Among other arguments, the defendant claimed that the trial court had erroneously admitted into evidence printouts that a detective had made from the defendant’s MySpace page a year before the alleged crime. The defendant claimed that the printouts were not properly authenticated.

The appellate court disagreed. It noted that the MySpace page icon identifying the owner of the page displayed a photograph of the defendant. Further, greetings addressed to the defendant by name were left on the site and the page owner’s stated interests matched what police knew of the defendant’s interests. “Although [the defendant] was free to argue otherwise to the jury, a reasonable trier of fact could conclude from the posting of personal photographs, communications, and other details that the MySpace page belonged to him” (Id. at 1435.)

”But we were hacked…”

The court also explained why a concern about hacking would not preclude use of the printouts:

We recognize, of course, that hacking may occur and that documents and other material on the Internet may not be what they seem. But the proponent’s threshold authentication burden for admissibility is not to establish validity or negate falsity in a categorical fashion, but rather to make a showing on which the trier of fact reasonably could conclude the proffered writing is authentic. The prosecution met that burden here, as the trial court properly concluded.

(Id. at 1436-37; cf. Kohler v. Kindred Nursing Centers West, LLC (2010) (2010 Cal.App. Unpub. LEXIS 1490, at *16-17 [“We agree that the person who created a website is not the only person who can establish the authenticity of the website information. But . . . Counsel’s conclusory statement that the printouts were ‘from [the holding company’s] website’ was insufficient to show that he had any personal knowledge to support the counsel’s assertion.”].)

In considering internet print-outs, courts have considered the ‘distinctive characteristics’ of the website in determining whether a document is sufficiently authenticated.” (Ciampi v. City of Palo Alto (N.D. Cal. 2011) 790 F.Supp.2d 1077, 1091-92 [“In this case, most of the articles submitted by Plaintiff contain sufficient indicia of authenticity, including distinctive newspaper and website designs, dates of publication, page numbers, and web addresses. . . . Only the internet print-outs . . . . which do not contain a web address and lack other identifying characteristics, appear to be insufficiently authenticated.”]; see Cal. Evid. Code, § 645.1 [“Printed materials, purporting to be a particular newspaper or periodical, are presumed to be that newspaper or periodical if regularly issued at average intervals not exceeding three months.”].)

Not surprisingly, courts have reached varying conclusions on the admissibility of website printouts. (Compare Perfect 10, Inc. v. Cybernet Ventures, Inc. (C.D. Cal. 2002) 213 F.Supp.2d 1146, 1154 [“the foundational requirement of authentication is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims,” such as information in declarations regarding how documents were obtained, combined with the “circumstantial indicia of authenticity (such as the dates and web addresses)”]; Florida Conference Ass’n of Seventh-Day Adventists v. Kyriakides (C.D. Cal. 2001) 151 F.Supp.2d 1223, 1225 n.3 [reports from SEC website that plaintiff had printed from Lexis-Nexis website admissible; “The court concludes based on the context in which Plaintiff obtained the documents as well as the content and appearance of the documents that they are authentic.”] with In re Homestore.com, Inc. Securities Litig. (C.D. Cal. 2004) 347 F.Supp.2d 769, 782-83 (“Although the documents bear the URL address and date stamp, they are improperly authenticated by Plaintiffs’ declaration. Printouts from a web site do not bear the indicia of reliability demanded for other self-authenticating documents . . . . To be authenticated, some statement or affidavit from someone with knowledge is required; for example, [the retailer’s] web master or someone else with personal knowledge would be sufficient.”].)

A federal court held that a court can take judicial notice of information on a party’s website. In O’Toole v. Northrop Grumman Corp. (10th Cir. 2007) 499 F.3d 1218, an employee brought an action against his employer for breach of a contract to pay his relocation expenses. Among other items of damages, the employee claimed he had lost earnings on funds that he had been forced to withdraw from his retirement account as a result of the breach.

The trial court found that the employee had not proved the amount of this loss because he had no evidence of the fund’s earnings. The employee had asked the district court to take judicial notice of the actual earnings history on the employer’s website and gave the court the complete address for the page where this information could be found. The district court refused to do so. The Tenth Circuit found that the district court should have taken judicial notice of historical retirement fund earnings as reported on the employer’s website. It agreed with the employee that the employer should not be able to dispute information on its website because the employer created it. It also stated that the employer did not explain why its own website’s posting of historical retirement fund earnings was unreliable and that the employer’s failure to dispute its own information contributed to its indisputability. (Id. at 1225.)

Therefore, an insured can argue that a court should take judicial notice of the statements made by an insurer on its website because the fact of those statements can be confirmed by a visit to the website. (Id.) In order to oppose this argument, an insurer would have to claim that its own website is not a source of “reasonably indisputable accuracy.”

Your word is your bond

There is an old saying that “your word is your bond.” It means that “they always keep a promise . . . .” (Dictionary.cambridge.org/us/dictionary/english/your-word-is-your-bond (visited May 17, 2016).) A more contemporary version is “word is bond.” It has essentially the same meaning – “you’re saying that what you’re saying is true and without reproach.” (www.urbandictionary.com/ define.php?term=Wordisbond (visited May 17, 2016).) Whether one uses the older phrase or the newer phrase, the results should be the same. Insurers should be held to their bond and should honor the representations and statements made in their advertisements and on their websites.