Here is one for people in Grand Prairie, Arlington, Irving, Mansfield, Fort Worth, Dallas, Mesquite, Garland, Richardson, Farmers Branch, and other places in Texas to think about.
What if you get sued but do not tell your insurance company but the person who sued you does tell the insurance company, does the insurance company have to defend you in the lawsuit?
In 2008, the Texas Supreme Court in the case styled, National Union Fire Insurance Company of Pittsburg, PA. v. Beatrice Crocker, issued an opinion dealing with this issue. Here is some background and a discussion.
Beatrice Crocker was a resident of Redwood Springs Nursing Home, which is owned by Emeritus Corporation. She filed suit in state court against Emeritus and Richard Morris, a nursing home employee, seeking compensation for injuries suffered when she was hit by a door swung open by Morris. Crocker’s claim against Emeritus were covered under a commercial general liability policy issued by National Union Fire Insurance Company of Pittsburg, PA. Because Morris was acting within the course and scope of his employment when the accident occurred, he qualified as an additional insured under the policy. National Union defended Emeritus, the named insured, but did not defend Morris even though the claims against him were covered by the policy and National Union knew he was a named defendant that had been served. Morris was not aware he was an additional insured under the policy. National Union did not inform Morris he was an insured, nor did it offer to defend him. Morris was served with the lawsuit papers but he did not forward them to National Union or Emeritus. Morris did not answer the suit nor appear at trial to defend himself. National Union did attempt to contact Morris but to no avail. Repeated phone messages were not returned.
A judgment was taken against Morris for $1,000,000.
Crocker then sued National Union asserting she was a third party beneficiary to the policy. National Union argued that Morris never triggered the duty to defend because he failed to forward the suit papers or otherwise notify National Union that he had been sued and he did not ask National Union to provide a defense. The policy provides:
“Before coverage will apply, you must notify us as soon as possible of an occurrence or offense which may result in a claim or suit against you.
Notice should include:
*How, when and where the occurrence or offense took place;
*Names and addresses of any witnesses and injured people;
*Nature and location of any injury or damage.
Before coverage will apply, you must notify us in writing of any claim or suit against you as soon as possible. You must:
*immediately record the specifics of the claim and the date you received it;
*send us copies of all demands, suit papers or other legal documents you receive, as soon as possible.”
The relevant question before the court was, “Where an additional insured does not and cannot be presumed to know of coverage under an insurer’s liability policy, does an insurer that has knowledge that a suit implicating policy coverage has been filed against its additional insured have a duty to inform the additional insured of the available coverage? The court answered, no.
In explaining its answer the court stated, “Insurance policies are written contracts, and, as with other contracts, we interpret and enforce them according to settled rules of construction. Most importantly, we must give the policy’s words their plain meaning, without inserting additional provisions into the contract.”
The case used several paragraphs of it’s opinion clarifying this point. What is important to realize is that this is not a real unusual situation and an experienced Insurance Law Attorney needs to be consulted when it does happen. There are ways of handling these types of cases to make sure coverage is provided.
Updated: