The Car Collector
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The Desire for an Antique Vehicle
Albert Reiche had a passion for old cars. Since the trust fund set up by his maternal grandparents provided him income of $3,000,000 a year, Albert never took a job.
He began to collect cars when he turned twenty-one in 1960. He started with a 1924 Model A Ford. As the years passed, he purchased and restored for his collection an Auburn, two Duesenberg J’s, a 1928 Cadillac touring car, a 1918 Dailmer, a Willy’s J, a 1934 Packard limousine, a 1924 Bentley, and many other classic automobiles. He kept his cars in a climate-controlled warehouse.Albert Reiche had a passion for old cars. Since the trust fund set up by his maternal grandparents provided him income of $3,000,000 a year, Albert never took a job.
He began to collect cars when he turned twenty-one in 1960. He started with a 1924 Model A Ford. As the years passed, he purchased and restored for his collection an Auburn, two Duesenberg J’s, a 1928 Cadillac touring car, a 1918 Dailmer, a Willy’s J, a 1934 Packard limousine, a 1924 Bentley, and many other classic automobiles. He kept his cars in a climate-controlled warehouse.
By the time Albert turned fifty, he was the proud owner of seventy-five classic automobiles. Albert had restored all of the automobiles to a pristine, new car showroom, condition. To Albert they were priceless. Albert would never consider selling. Estimates by car buffs had valued his collection at $90,000,000 to $125,000,000. He insured the collection with a gaggle of British insurance companies with a limit of $80,000,000.
Everyday Albert would spend time with his cars. He dusted, waxed and caressed each car. He manufactured, in his own machine shop, the parts he could not buy for his cars to keep them in new-car condition.
Two months later Albert faced incurable temptation and frustration. One of his sources informed him that the third Dailmer motor car ever manufactured was for sale for $6,000,000. It would be the cap stone of his collection. Old man Harrah would roll over in his grave to know that Albert had an automobile that put in shadow all of Harrah’s collection.
Albert did not have $6,000,000 in ready cash. His trust fund was set up so that he could not tap into the capital, but only accept the income derived from that capital. He only had a million dollars in ready cash and needed to raise another five. The seller would never reduce his demand since he knew the Dailmer was unique. Albert could not bring himself to sell any of his collection. He was desperate. Then he remembered that his trustee had required him to purchase insurance to protect his collection.
Albert, had to have the Dailmer.
Albert had a brilliant plan. He had his two Duesenbergs, a Cord, an Auburn and three Packards moved to his farm in Connecticut. He then broke the lock on his storage facility with a tire iron from a 1957 Chevy and reported that he had been the victim of a burglary. The police officers, totally blinded by the beauty of the collection, took his report and expressed honest sympathy for his loss. Shortly after that, his insurance adjuster visited Albert who confirmed the forcible entry into the storage facility; that the value of the vehicles exceeded the amounts stated on the policy by at least $3,000,000, and recommended to the insurers that they immediately accept the proof of loss for $6,540,000 (the stated value of the vehicles). The insurer agreed, happily noting they could have lost much more if the burglars had taken more vehicles.
Albert bought the Dailmer, which is now the pride of his collection. Since Albert was never a criminal, as the years passed and the income from his trust funds allowed, he would move one vehicle at a time from the Connecticut farm and deposit them on the streets in various communities throughout the Northeast. The police would eventually be called, trace the vehicle back to Albert, who would gladly retake possession. Since Albert had transferred title to the vehicles to his insurers upon the payment of the claim, Albert paid the insurer back the exact sum the insurer had paid him for the vehicle. Eventually, Albert recovered all of the cars he reported stolen. The insurer received back all the monies they paid in settlement. Albert’s collection was complete. No one thought they were hurt by the crime.
Albert lived happily ever after.
ZALMA OPINION
Insurance is not a bucket of money for whatever the insured desires. It is a promise to indemnify another against the risk of loss of property from a contingent or unknown event, not a means to fund the purchase of an antique automobile.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com
and [email protected].
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Jury’s Findings Interpreting Insurance Contract Affirmed
Post 5105
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Madelaine Chocolate Novelties, Inc. (“Madelaine Chocolate”) appealed the district court’s judgment following a jury verdict in favor of Great Northern Insurance Company (“Great Northern”) concerning storm-surge damage caused by “Superstorm Sandy” to Madelaine Chocolate’s production facilities.
In Madelaine Chocolate Novelties, Inc., d.b.a. The Madelaine Chocolate Company v. Great Northern Insurance Company, No. 23-212, United States Court of Appeals, Second Circuit (June 20, 2025) affirmed the trial court ruling in favor of the insurer.
BACKGROUND
Great Northern refused to pay the full claim amount and paid Madelaine Chocolate only about $4 million. In disclaiming coverage, Great Northern invoked the Policy’s flood-exclusion provision, which excludes, in relevant part, “loss or damage caused by ....
Failure to Name a Party as an Additional Insured Defeats Claim
Post 5104
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Contract Interpretation is Based on the Clear and Unambiguous Language of the Policy
In Associated Industries Insurance Company, Inc. v. Sentinel Insurance Company, Ltd., No. 23-CV-10400 (MMG), United States District Court, S.D. New York (June 16, 2025) an insurance coverage dispute arising from a personal injury action in New York State Supreme Court.
The underlying action, Eduardo Molina v. Venchi 2, LLC, et al., concerned injuries allegedly resulting from a construction accident at premises owned by Central Area Equities Associates LLC (CAEA) and leased by Venchi 2 LLC with the USDC required to determine who was entitled to a defense from which insurer.
KEY POINTS
Parties Involved:
CAEA is insured by Associated Industries Insurance Company, Inc. ...
Exclusion Establishes that There is No Duty to Defend Off Site Injuries
Post 5103
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Attack by Vicious Dog Excluded
In Foremost Insurance Company, Grand Rapids, Michigan v. Michael B. Steele and Sarah Brown and Kevin Lee Price, Civil Action No. 3:24-CV-00684, United States District Court, M.D. Pennsylvania (June 16, 2025)
Foremost Insurance Company (“Foremost”) sued Michael B. Steele (“Steele”), Sarah Brown (“Brown”), and Kevin Lee Price (“Price”) (collectively, “Defendants”). Foremost sought declaratory relief in the form of a declaration that
1. it owes no insurance coverage to Steele and has no duty to defend or indemnify Steele in an underlying tort action and
2. defense counsel that Foremost has assigned to Steele in the underlying action may withdraw his appearance.
Presently before the Court are two ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
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Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
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Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...
