Originally published March 17 2013
eBay insurance scam exposed: You're often buying insurance that excludes the very items you're purchasing
by J. D. Heyes
(NaturalNews) Lawyers will tell you there is no such thing as an open-and-shut case, but when a company's insurance doesn't cover the very items the company is selling, it sure seems like open-and-shut to us. Unfortunately, so far, a court of law has not agreed.
A federal judge in the Northern District of California has tossed out a suit charging that eBay's ShipCover insurance is worthless because the coverage excludes the exact items that the online auction site ships.
Luke Knowles, lead plaintiff in the case, claimed that eBay knew its insurance "excludes entire categories of products from coverage, but intentionally conceals that information from sellers who want to buy insurance," Courthouse News Service reported.
The excuse? 'We told you the item you bought a policy for wasn't covered'
According to court documents, Knowles allegedly made a claim to ShipCover after he refunded a buyer who informed him that a package he sent arrived at a buyer's destination open with the coin he had purchased missing. He said eBay subsequently denied the claim because the "item insured is on the list of items that are ineligible for coverage," the suit said.
Knowles filed his federal complaint in October 2012 against eBay; eBay Insurance Services; Brown & Brown, a St. Louis law firm; and Fireman's Fund Insurance Co. - for illusory and unconscionable contract and other alleged wrongs.
The plaintiff said in his complaint that he had "been aware that the exact item he sought to insure was excluded from the policy, he never would have purchased ShipCover insurance because it was worthless. In fact, no person would purchase this insurance for any of the excluded categories if they were aware of the exclusions as it defeats the entire purpose of the insurance."
"These exclusions are not evident on the checkout page, even though that page offers the insurance, sets the insured value and ... determines the price of insurance," he said in his claim.
One insurance underwriter for the online auction site told the federal court that ShipCover clearly lists its exclusion of coins and other others from coverage, even though the company has no problem actually selling such policies to anyone who wants one.
A witness from Fireman's Fund said pretty much the same thing - and that Knowles knew the policy he purchased excluded coins, Courthouse News reported.
"Plaintiff admits he chose ShipCover insurance over the other options after he clicked a box affirming that he 'read and agreed to the terms and conditions of ShipCover insurance,'" the motion to dismiss stated. "Yet, the terms and conditions of ShipCover insurance, which plaintiff alleges Fireman's Fund Insurance Company ('FFIC') underwrites, clearly excluded coverage for coins and gift cards."
U.S. District Judge Phyllis Hamilton threw out the negligence claim March 7, giving Knowles an opportunity to re-file his claim in the future with better supporting facts as they pertain to the elements of his claim. That includes duty and breach as to eBay and Brown & Brown, the court news site said.
But...but...the insurer sold the policy anyway
The judge also dismissed the rest of Knowles claims pertaining to allegations that ShipCover was in breach of contract by dismissing his claim for reimbursement, asking plaintive to "state a single cause of action for breach of contract or other contract-related claim, as it is not clear whether plaintiff is asserting that there was or was not a contract to which he was a party or third-party beneficiary. Each defendant's role must be specifically identified."
The court said Knowles will also have to identify the law that eBay and its insurance firm allegedly violated, indicating they engaged in unfair business practices, and further explain why they are unfair before the court will once again consider his claims. Finally, Hamilton also said she was tossing Knowles' claim that the insurer was engaging in unjust enrichment.
eBay's insurer may "clearly state" what items are and are not covered, but where is the justification in selling a policy to a customer for an uncovered item, knowing you won't pay if the customer makes a claim? Apparently, federal courts don't recognize this scam for what it is.
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