Insurer Not Required to Disclose How it Selects Limits and Premium
Barry Zalma
Oct 11, 2023
Read the full article at https://lnkd.in/gVuFh5c9 and see the full video at https://lnkd.in/gQD7REKj and at https://lnkd.in/gCKbavTF and at https://zalma.com/blog plus more than 4600 posts.
Ira Trocki sued Pennsylvania National Mutual Casualty Insurance Company (“Penn National”) for fraud related to certain insurance policies. The District Court granted summary judgment for Penn National.
In Ira Trocki, trading as Jack Trocki Development, LLC v. Penn National Mutual Casualty Insurance Company, No. 22-1483, United States Court of Appeals, Third Circuit (September 13, 2023) the Third Circuit explained what is needed to prove fraud.
FACTS
Trocki, the owner of a real estate development and management company, purchased and renewed commercial insurance policies with Penn National through an insurance broker from 2006 to 2014. Prior to each annual renewal, Penn National provided Trocki’s agent and Trocki with the renewal policy limit and premium to review.
Trocki sued Penn National in federal court, bringing two claims for fraud, one for common law fraud and one for consumer fraud under the New Jersey Consumer Fraud Act (“NJCFA”). Trocki alleged that Penn National annually increased its coverage limits and insurance premiums without notice and that it was doing so to account for inflation. Trocki initially referred to this practice as “Inflation Guard,” but now contends that he meant to refer to the practice of applying an automatic inflationary increase. The parties agree that “Inflation Guard,” an optional coverage benefit that an insured must purchase separately, was not applied to Trocki’s policies.
The District Court concluded that Trocki fell short of making a prima facie case for either fraud claim.
DISCUSSION
Summary judgment is appropriate only if the movant shows that there is no genuine dispute as to any material fact. There is a genuine factual dispute if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. All facts are to be viewed in the light most favorable to the nonmoving party.
Trocki argued that the District Court improperly granted judgment for Penn National on his claims under the NJCFA and for common law fraud. The NJCFA prohibits certain deceptive commercial behavior.
For a claim under the NJCFA, a plaintiff must demonstrate:
1. unlawful conduct by a defendant,
2. an ascertainable loss, and
3. a causal relationship between the defendant’s unlawful conduct and the plaintiff’s loss.
A cause of action for common law fraud in New Jersey has five elements:
1. a material misrepresentation of a presently existing or past fact;
2. knowledge or belief by the defendant of its falsity;
3. an intention that the other person rely on it;
4. reasonable reliance thereon by the other person; and
5. resulting damages.
Trocki’s argument was that Penn National applied some undisclosed inflation factor to increase the values of the properties covered by the Penn National policies. Trocki argued that the increase in building limit due to an automatic inflation increase is misleading and unclear in that it does not apprise the insured of why the building limit (and the premium) is being increased.
The Third Circuit concluded that the District Court correctly found Trocki could not make a prima facie claim of common law fraud or consumer fraud under the NJCFA. To start, prior to the renewal of each policy, Penn National presented Trocki with what the new policy limit and premium would be, and Trocki had the opportunity to review, and then paid the new premium.
Under New Jersey law there is no “duty to disclose” in a business transaction. Trocki was fully informed of the price and policy limits, and Penn National is not required to disclose precisely how it reached those numbers. Trocki failed to show, at a minimum, either a material misrepresentation, as required for a claim of common law fraud, or unlawful conduct, as required by the NJCFA. Judgment was affirmed.
ZALMA OPINION
Some people appear to believe that suing an insurance company is a perfect way to profit. Mr. Trocki renewed his policies annually, accepted the policy limits and premiums charged him, paid the premium and then after a few years decided to sue his insurers because Penn National failed to explain the methods it used to set the policy limits and premium. If he had a loss I doubt he would complain about the higher limits. The Third Circuit should have applied Rule 11 to this suit.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808
Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01
Follow me on LinkedIn: http://www.linkedin.com/comm/mynetwork/discovery-see-all...
Daily articles are published at https://zalma.substack.com.
Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library/
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to Excellence in Claims Handling at locals.com at https://lnkd.in/gfFKUaTf or at substack at https://lnkd.in/gcZKhG6g
Go to Barry Zalma videos at Rumble.com at https://lnkd.in/gV9QJYH; Go to the Insurance Claims Library – https://lnkd.in/gYq44VM
Insurance Expert May Not Testify to Speculative and Contains Unsupported Conclusions.
Posted on September 18, 2026 by Barry Zalma
See the full video at and at https://rumble.com/v7fmifw-expert-may-only-testify-to-what-experience-supports.html
In Michele A. Over, and The Estate Of Paul R. Over v. State Farm Mutual Automobile Insurance Company, and State Farm Fire And Casualty Company, Civil Action No. 23-cv-02243-PAB-STV, United States District Court, D. Colorado (September 14, 2026) Michele and Paul Over sued State Farm Fire and State Farm Auto over hail-damage and stolen-vehicle claims.
The operative dispute concerned State Farm Auto’s motion to exclude or limit opinions from plaintiffs’ insurance-industry expert, Aaron Castillo. Castillo.
Law
The proponent of expert testimony must establish by a preponderance of the evidence that an expert is qualified and that the opinions are helpful, sufficiently grounded, and reliably derived and applied. Experience-based opinions must explain how the...
150 Months in Prison for Tax Fraud
Post 4846
Posted on September 17, 2026 by Barry Zalma
See the full video at https://lnkd.in/g8rh3JBX and https://lnkd.in/gmkdy-9C, In United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
In United States Of America v. Thomas Addaquay, United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
Thomas Addaquay controlled United Consolidated Accounting and Business Services (UC), nominally a check-cashing business.
The government proved a three-stage tax-refund scheme that converted the resulting refund checks into usable funds through ...
Major Fraud Perpetrator Asserts Fifth Amendment Privilege to Avoid Prosecution
Post 5489
Posted on September 14, 2026 by Barry Zalma
Fraudster Refuses to Answer Questions About His Alleged Fraud
See the full video at https://lnkd.in/gvicAMDr and at https://lnkd.in/gvicAMDr
In Great American Insurance Co. v. Gemstone Property Management, LLC, et al., No. 23-cv-9100 (LJL), United States District Court, S.D. New York (September 8, 2026) Great American Insurance Company alleged that it was defrauded through a scheme in which Subin Associates, LLP recruited individuals to stage construction-site injuries, arranged unnecessary medical treatment and litigation funding, and pursued fraudulent personal-injury claims.
Luis Manuel Garcia Salcedo, resulted in a $6 million settlement. Non-party Jose Hernandez allegedly worked as an assistant manager at Subin, operated Hernandez Associates, and owned litigation-funding companies that shared office space with Subin and provided services to its clients.
After Great American ...
Theft of Confidential Information
Post 4581
Posted on November 12, 2026 by Barry Zalma
In People Center, Inc. v. Deel, Inc., et al., No. 25-cv-02576-CRB (LJC), United States District Court, N.D. California (November 7, 2026) People Center, doing business as Rippling, and Deel compete in payroll and human-resource management software. Rippling alleges that Deel and its executives recruited Rippling employee Keith O’Brien, based in Ireland, to disclose confidential information and trade secrets.
THE IRISH SUIT
Rippling sued O’Brien in Ireland and Deel in the United States. O’Brien subsequently retained separate counsel, supplied an affidavit describing the alleged espionage, and entered into a Cooperation Agreement with Rippling. In exchange for his cooperation, Rippling agreed to provide financial assistance, indemnification, and conditional dismissal of the Irish proceedings. The agreement also permitted renewed proceedings or a monetary judgment upon a material breach.
The Irish proceedings against O’Brien were dismissed...
A Proposed Amended Complaint That Includes New Factual Allegations to Remedy Pleading Deficiencies
Posted on November 11, 2026 by Barry Zalma
After Dismissal Fraud Victim May Amend Complaint After Dismissal
Post 4580
If A Proposed Amendment Is Not Clearly Futile, Then Denial Of Leave To Amend Is Improper
In John Hancock Life & Health Insurance Company v. Caring Connections LLC, Arthur Feldheim, and Blime a/k/a Vera Feldheim, Civ. No. 25-7574 (MAS)(JBD), United States District Court, D. New Jersey (November 6, 2026) John Hancock sued Caring Connections LLC, Arthur Feldheim, and Blime a/k/a Vera Feldheim on June 5, 2025, asserting thirteen claims, including fraud, breach of contract, and aiding and abetting fraud.
On March 26, 2026, this Court entered an order granting Caring Connections’ motion to dismiss and granting in part and denying in part the Feldheims’ motion to dismiss. The dismissed claims were dismissed without prejudice, and John Hancock timely sought leave to amend.
They also argued that the New ...
Is Exhaustion Required to Seek Declaratory Relief From an Excess Insurer?
Post 4578
Posted on November 9, 2026 by Barry Zalma
In Fox Paine & Company, LLC, et al. v. Twin City Fire Insurance Company et al., S287404, 593 P.3d 832, 593 P.3d 838, 346 Cal.Rptr.3d 541, Supreme Court of California, (July 27, 2026) the Supreme Court noted that Insurance is sometimes procured in a series of layers, with an insured acquiring a primary insurance policy that provides an initial layer of coverage for loss or liability and an excess insurance policy or policies that provide additional coverage in the event the underlying coverage is exhausted. Usually, the first layer of coverage must be exhausted before the excess layers are available to the insured.
Exhaustion
Fox and Paine’s investment-firm dispute generated extensive litigation and competing insurance claims. Their insurance tower consisted of a $10 million primary policy and four $10 million excess layers.
The Fox Parties alleged that insurers paid their rivals, withheld information,...
