Opinion ID: 2607086
Heading Depth: 4
Heading Rank: 2

Heading: Windfall

Text: Maynard argues that allowing State Farm to seek reimbursement gives it a windfall due to the way in which insurance companies calculate their premiums. In Cooper v. Argonaut Insurance Cos., 556 P.2d 525, 527 (Alaska 1976), we acknowledged that in determining actuarial risk  and therefore insurance premiums  insurance companies do not consider the possibility of recovery of the loss from third parties because of the difficulty of determining the mathematical probability of such recovery. Thus, when an insurer does recover a loss from a liable third party it receives a windfall. Here, where the insurer insures both parties in a car accident, the windfall is certain. This is because the insurance company has collected premiums from both parties but only pays out once for the insured loss. Maynard concludes, Given the potential for abuses and the conflicts of interest when State Farm insures both parties to a claim, equity favors having the unanticipated windfall fall to the injured insured. Finally, Maynard argues that although he admittedly would receive a double recovery for his medical expenses, this court will countenance such a recovery where public policy warrants. As an example, he cites the collateral source rule, which states that a tort-feasor is not entitled to have his liability reduced merely because [the] plaintiff was fortunate to have received compensation for his injuries or expenses from a collateral source. [11] Tolan, 699 P.2d at 1267 (quoting Ridgeway v. North Star Terminal and Stevedoring Co., 378 P.2d 647, 650 (Alaska 1963)). The superior court below rejected this argument, and we reject it as well. The medical payments provision performs numerous important functions. It permits speedy reimbursement for medical expenses without regard to fault; it assures coverage when the insured is involved in an accident with an uninsured or underinsured driver; and in situations where both parties to an accident are insured by the same insurer it sometimes eliminates the need for costly litigation to determine fault. Although there may be some merit to the argument that insurance companies receive a small windfall, [12] as noted above, the language of the insurance policy unambiguously precludes double recovery. Further, both this court and courts from other states generally disfavor double recoveries unless strong policies warrant. See, e.g., Murray v. Feight, 741 P.2d 1148, 1159-60 (Alaska 1987); Cozzi v. Government Employees Ins. Co., 154 N.J. Super. 519, 381 A.2d 1235, 1240 (1977). We conclude that no such policies exist in this case because the windfall and any conflict of interest which arises out of the fact that State Farm insured both Maynard and Madison are minimal.