Here’s some basic information for insurance lawyers.
“Collision” is defined in the standard policy as “the upset, or collision with another object, of your covered auto.”
As an example, in the 1984, Amarillo Court of Appeals opinion, Nutchey v. Three R’s Trucking Company, Inc., a three-inch depression in a road, which caused damage to a trailer fell under this definition of “collision.”
The terms of coverage for damage to the auto are fairly straightforward: “named-peril” coverage is provided on “covered autos.” Specifically, the Texas Personal Auto Policy provides that the carrier will pay for “direct and accidental loss to your covered auto.” The coverage is divided into “collision” coverage and “coverage other than collision.” The “other than collision” coverage insures against more causes of loss than collision coverage. If both collision coverage and the “other” peril coverage are purchased then the insured is said to have “comprehensive” coverage. Different deductibles are charged for each coverage because insureds elect not to carry one of the two available coverages.
The most common type of loss is “accidental loss,” however the definition of “accidental loss” loss is not in most policies. In 1997, the Austin Court of Appeals issued an opinion in State Farm Mutual Automobile Insurance Co. v. Kelly, which held that an “accidental loss” is a loss that does not ordinarily follow and cannot reasonably be anticipated from the producing act, that is, one that the actor did not intend to produce. In Kelly when an insured made a good faith purchase of a stolen vehicle and insured it, only to have the police confiscate it and return it to its true owner, such an act is not the natural and probable result of the insured’s good faith purchase. Accordingly, the loss of the vehicle was “accidental.” Even though the insured intentionally purchased the vehicle, the ensuing confiscation by the police was unexpected, unanticipated, and unintentional on the insured’s part. The court went on to say that a stolen vehicle, newly acquired by an insured was a “covered auto” even if the insured did not have good title. The insured had an insurable interest that was enough to make it a covered auto.
In the 1955, Fort Worth Court of Appeals opinion, Farmers Insurance Exchange v. Wallace, an auto upset by a strong gust of wind while being driven on a public road was an accidental loss.
As it relates to uninsured motorist (UM) coverage, there are three important exclusions.
Auto policies do not provide UM coverage for any person for bodily injury sustained while occupying or when struck by any motor vehicle owned by the insured or any family member who is not insured for UM coverage under the policy. This is known as the family member exclusion. The Courts of Appeals in Houston, Dallas, and Corpus Christi have well written opinions dealing with and upholding this exclusion. The Dallas Court of Appeals has written that: “It is not the function of UIM coverage to operate as liability insurance and protect family members from their own negligence in owning and operating an underinsured automobile.”
Another exclusion is “settlement without consent” exclusion. To preserve the carrier’s right to subrogation against the at-fault party, the policy states that it will not provide UM coverage to an insured who settles with the at-fault party, without the carrier’s consent. The Texas Supreme Court has limited the impact of this rule inasmuch as an insurer has to prove that it was prejudiced by its insured’s breach of this provision in order to void UM coverage. This is discussed in their 1994, opinion styled, Hernandez v. Gulf Group Lloyds. After the Hernandez case the carrier must prove that the tortfeasor would have been able to pay the carrier’s subrogation interest. This standard was applied in the 1997, Houston Court of Appeals [1st Dist.] opinion styled, Davis v. Allstate Insurance Co. where the issue of whether the tortfeasor was judgment-proof presented a question of fact precluding summary judgment on the issue of whether the insured had materially breached the policy by settling without the insurer’s consent. Because the carrier had not presented sufficient summary judgment evidence to establish the viability of the subrogation right it lost by the insured’s settlement, summary judgment for the carrier was not proper.
Insurance lawyers in the Dallas and Fort Worth area need an understanding as to what Personal Injury Protection (PIP) benefits cover and do not cover.
PIP consists of reasonable expenses incurred for necessary medical and funeral services as well as replacement of 80% of income lost during the period of disability up to the amount of PIP policy limits. To receive the lost income benefits, the covered person must have been an income producer in an occupational status at the time of the accident. When an insured had not yet reported to a summer job that was to start two days after the accident and had not yet earned any wages, the court upheld a jury verdict that the insured was not an income producer. This was the result in the Houston Court of Appeals [1st Dist.] 1981, opinion styled, Slocum v. United Pacific Insurance Co. The court did point out that “one does not have to be at work at the time of the accident to be in an occupational status.” Thus, one simply needs to commence earning income before the accident to be considered an income producer in an occupational status.
If the covered person was not employed, PIP benefits include expenses incurred for obtaining services that the covered person would have performed had they not been injured. If should be noted that the covered person must make an election as to whether he or she wishes to recover for lost income or the costs incurred in obtaining substitute services. He or she cannot recover both.
Personal Injury Protection (PIP) coverage is different than other types of injury coverage.
PIP coverage exists if the insured or their family member is struck by a “motor vehicle” designed for use mainly on public roads or a trailer of any type according to the 1984, Houston Court of Appeals [1st Dist.] opinion styled, National County Mutual Fire Insurance Co. v. Wallace. In Wallace, the court upheld a jury verdict that a forklift was a “motor vehicle” for purposes of PIP. This holding was based mainly on the fact that the particular forklift in question had been used on a public road, as specifically required in the PIP language.
PIP benefits consist of reasonable expenses incurred for necessary medical and funeral services as well as replacement of 80% of income lost during the period of disability up to the amount of PIP policy limits. To receive the lost income benefits, the covered person must have been an income producer in an occupational status at the time of the accident. When an insured had not yer reported to a summer job that was to start two days after the accident and had not yet earned any wages, the court upheld a jury verdict that the insured was not an income producer. This occurred in the 1981, Houston Court of Appeals [1st Dist.] opinion styled, Slocum v. United Pacific Insurance Company. The court did point out that “one does not have to be at work at the time of the accident to be in an occupational status.” Thus, one simply needs to commence earning income before the accident to be considered an income producer in an occupational status.
To be covered under most auto insurance Personal Injury Protection (PIP) provisions, a person needs to be “occupying” a vehicle.
“Covered person” as used in PIP coverage means the named insured or any family member while occupying or when struck by a motor vehicle designed for use maily on public roads or a trailer of any type. “Covered person” also includes any person occupying the covered auto with the named insured’s permission.
Most PIP claims arise out of accidents when an insured, a family member, and/or a friend of the insured are “occupying” an insured vehicle. The policy contains a very broad definition of “occupying.” For example, when an insured injured himself in the act of getting out of the car, the Fort Worth Court of Appeals held that the insured was “occupying” the vehicle. This was decided in 1976, and the case was styled, Berry v. Dairyland County Mutual Insurance Co.
Insurance lawyers can tell prospective clients that most pages in an insurance policy are pages explaining exclusions and limitations to what a policy will pay. This is no different when it comes to auto insurance.
The standard auto policy does not provide med pay coverage for any person for bodily injury occurring during the course of employment if worker’s compensation benefits are available for the bodily injury. This exclusion is discussed in the 1963, San Antonio Court of Appeals opinion styled, Williams v. Employers Mutual Casualty Co. Thus, med pay coverage will apply only if the insured does not have worker’s compensation benefits available to him or her.
Like the liability coverage, med pay coverage does not extend to the named insured while he or she is occupying a vehicle, other than his or her covered auto, which is owned by him or her or furnished or available for his or her regular use. This was discussed in the 1965, Tyler Court of Appeals opinion styled, Vaughn v. Atlantic Insurance Company. To extend such coverage would force the carrier to accept a greater risk without receiving a corresponding premium.
Medical Payments Coverage in an automobile policy is also known as Med-Pay coverage. Med-Pay is an optional coverage. Under this coverage, the insurance company agrees to pay “reasonable expenses incurred for necessary medical and funeral services because of bodily injury caused by accident and sustained by a covered person.” This insuring agreement uses the term “caused by accident” as opposed to the more specific phrase “auto accident” used in liability in the liability insuring agreement. This coverage defines “covered person” as the named insured or any family member while occupying or being struck by a motor vehicle. Also, any person occupying the named insured’s covered auto is entitled to med pay coverage. The coverage for those persons other than family members, however, is limited to occupancy in a covered auto.
According to the 1973, Waco Court of Appeals opinion, Dhane v. Trinity Univers. Ins. Co., med pay coverage is generally broader than PIP coverage.
Unlike any other provision in the Texas Auto Policy, Texas courts have ruled that med pay benefits can be “stacked.” These courts include the Austin Court of Appeals in the 1969, opinion styled, Harlow v. Southern Farm Bureau Cas. Ins. Co. and the Houston Court of Appeals in the 1961, opinion styled, Southwestern Fire & Cas. Co. v. Atkins. In other words, an insured may receive med pay benefits as if the benefits were being paid on two separate policies when a single policy covers two automobiles and the premium charged on the policy has been paid separately on each automobile. Stacking is only allowed with med pay benefits according to the 1978, Texas Supreme Court opinion styled, Holyfield v. Members Mut. Ins. Co.
Dallas and Fort Worth area insurance lawyers need to read this November, 2017, opinion from the San Antonio Court of Appeals. It is styled, Farmers Texas County Mutual Insurance Company v. Zuniga.
Zuniga was walking to school and struck by a car driven by Christopher Medina. Zuniga sued Medina for negligence and gross negligence. A jury awarded Zuniga $93,244.91 in actual damages and $75,000.00 in punitive damages. Farmers insured Medina and paid the actual damages but then filed a declaratory judgment action seeking a declaration that the policy did not cover punitive damages.
Zuniga filed a motion for summary judgment on the punitive damages issue. Farmers prevailed in this case.
Lawyers handling car wreck cases would be especially interested in this 2017 opinion from the Texas Supreme Court. It is styled, Farmers Texas County Mutual Insurance Company v. Jennifer L. Zuniga et al.
This is an appeal from the granting of a summary judgment in favor of Zuniga wherein Farmers had asked the court to rule that there is no coverage under the policy at issue for punitive damages. This Court reversed that summary judgment.
Determining whether exemplary damages for gross negligence are insurable requires a two-step analysis. First, the Court decides whether the plain language of the policy covers exemplary damages sought in the underlying suit against the insured. Second, if the Court concludes that the policy provides coverage, it determines whether the public policy of Texas allows or prohibits coverage in the circumstances of the underlying suit.
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