Grand Prairie lawyers and those in Irving, Fort Worth, Dallas, and the surrounding areas need to know what auto insurance policies pay on claims. If you sue someone for a wrong they have committed and the wrong is so bad as to allow for the recovery of punitive damages, will an auto insurance policy pay the punitive damages?
A 1989, El Paso Court of Appeals case gives some guidance regarding the payment of punitive damages and is still good law. The style of the case is, Emigdia C. Manriquez et al. v. Mid-Century Insurance Company of Texas.
Here is some background:
Manriquez as representative of the estate of Ramon Manriquez was appealing the granting of a summary judgment in favor of Mid-Century. Mid-Century had intervened in a case by Manriquez and filed a declaratory judgment request with the court limiting its liability under the policy to $50,000.
Pertinent parts of the policy in question provided:
PART A–LIABILITY COVERAGE Insuring Agreement We will pay damages for bodily injury or property damage for which any covered person becomes legally responsible because of an auto accident.
. . . . .
Limit of Liability If separate limits of liability for bodily injury and property damage liability are shown in the Declarations for this coverage the limit of liability for “each person” for bodily injury liability is our maximum limit of liability for all damages for bodily injury sustained by any one person in any one auto accident. Subject to this limit for “each person,” the limit of liability shown in the Declarations for “each accident” for bodily injury liability is our maximum limit of liability for all damages for bodily injury resulting from any one auto accident. The limit of liability shown in the Declarations for “each accident” for property damage liability is our maximum limit of liability for all damages to all property resulting from any one auto accident.
If the limit of liability shown in the Declarations for this coverrage [sic] is for combined bodily injury and property damage liability, it is our maximum limit of liability for all damages resulting from any one auto accident.
This is the most we will pay regardless of the number of:
(1) Covered persons;
(2) Claims made;
(3) Vehicles or premiums shown in the Declarations; or (4) Vehicles involved in the auto accident.
The policy provided separate limits of liability for bodily injury and property damage liability in the following amounts: bodily injury–$50,000.00 for each person/$100,000.00 for each accident; property damage–$25,000.00.
In the case at hand, the insurer agreed to pay damages for bodily injury … for which any covered person becomes legally responsible because of an auto accident. There is absence of the words “all sums.” The agreement expressly excludes coverage for any person who intentionally causes bodily injury. Nonetheless, an average insured would assume the term damages would include all damages except those intentionally caused. The insurer drafted the policy and could have made it clear that no punitive damages would be covered. Punitive damages arise out of or are due to the legal responsibility created because of the auto accident.
Manriquez pleaded for exemplary damages because of heedless and reckless conduct on the part of the insured. Gross negligence, to be the ground for exemplary damages, should be that entire want of care which would raise the belief that the act or omission complained of was the result of a conscious indifference to the right or welfare of the person or persons to be affected by it. The term “accident” as used in an insurance policy was construed to include negligent acts of the insured causing damage which is undesigned and unexpected.
It could be argued that one who acts with conscious indifference and causes an accident, does so with some expectation. The Court rejected this, however, and conclude that punitive damages, excepting those for any intentional conduct, were within the coverage and the coverage limitation.
Manriquez next contended that the fact that there are three plaintiffs and two defendants would expand the expressed $50,000.00 liability limitation for “each person” for bodily injury to the $100,000.00 limitation coverage for “each accident”.
The mother was a “covered person” under the policy as an owner of the vehicle, and the son was a “covered person” by using the vehicle. The policy expressly limited the liability to the liability for each person injured in any one accident, regardless of the number of covered persons. The fact that two defendants were being sued would not enlarge this limitation.
The liability for “each person” was limited to damages for bodily injury sustained by any one person in any one auto accident. In the case, Cradoct v. Employers Casualty Company, this Court held that an “each person” limitation for damages because of bodily injury sustained by one person as the result of any one occurrence limited all damage claims, directly or consequential, resulting from the death of an injured person. In the Cradoct case, the policy expressly limited all damages, “including damages for care and loss of services….” Manriquez argued the absence of these words in the agreement before the Court indicates the intention of the parties to include these types of damages. The Court did not agree.
In the case, McGovern v. Williams, the Court interpreted a “per person” limitation policy and the language of Texas Safety Responsibility Law, requiring liability policies to contain a minimum of $10,000.00 limit because of bodily injury in death of one person in any one accident to refer to the person who is actually involved and physically or emotionally injured in the accident. In the McGovern case, the Court pointed out that the loss of consortium was not a bodily injury, and that the plaintiff did not allege physical harm or mental anguish. The Manriquezs argue that this digression implies that, had the plaintiff pleaded for these matters, she would have been entitled to them in excess of the per person limitation. However, in the subsequent paragraph, the Court analyzed other consistent decisions construing the Texas Safety Responsibility Law, which concluded that the term “per person” referred only to the person or persons sustaining injury and not to persons who suffer a loss as a result of any injury to someone else, and therefore, the per person limitation requirement limited any and all claims. The case stands for the opposite of the Manriquezs’ contention. Thus the Court upheld the grant of summary judgment.
This issue regarding whether an insurance policy will pay for punitive damages is not well settled in Texas law. The general rule is that the policy covers it unless it is specifically excluded. The best advise needs to be sought from an experienced Insurance Law Attorney.