Coverage Outside The United States

Arlington insurance law lawyers will have clients who travel to foreign countries and as a result will get asked questions about coverage outside the United States. The simple answer to this question would be to read the policy. The Houston Court of Appeals [14th Dist.] issued an opinion in 1986 that partially addressed this issue. The style of the case is McGalla v. State Farm.
Here is some relevant information from that case.
On March 3, 1984, McCalla was involved in an automobile accident on the island of Jamaica. He was hospitalized and treated. He has incurred expenses in excess of $2,500. Before the accident, McGallas was issued an insurance policy which was in effect at the time of the accident. This policy contained PIP coverage which was mandated by the Legislature in the Texas Insurance Code. State Farm denied benefits because the policy applied only to accidents and losses which occurred in the United States and its territories or possessions, Puerto Rico or Canada. Thus, State Farm argues, the policy was not in effect when McCalla was driving in Jamaica.
The insurance code provides in part as follows:
(a) No automobile liability insurance policy, … covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state unless personal injury protection coverage is provided therein or supplemental thereto ….
(e) An insurer shall exclude benefits to any insured, or his personal representative, under a policy required by Section 1, when the insured’s conduct contributed to the injury he sustained in any of the following ways:
(1) Causing injury to himself intentionally.
(2) While in the commission of a felony, or while seeking to elude lawful apprehension or arrest by a law enforcement official.
McCalla argued the only exclusions allowed are those contained in the insurance code and that State Farm cannot exclude coverage based on territorial limitation since it does not fall within the exclusions mandated by the Legislature. When the Legislature specifies a particular extent of insurance coverage, any attempt to void or narrow such coverage is improper and ineffective. When specific exclusions or exceptions to a statute are stated by the Legislature, the intent is usually clear that no other shall apply.
In another case, the Texas Supreme Court held, in what could be termed firm language, that the insurance code sets forth the only exclusions of PIP benefits authorized by statute. Any attempt to add additional exclusions is repugnant to the statute.
McGalla cites to the court additional authority which holds that the only exclusions allowed for denying PIP are those found in another section of the code. These authorities are very persuasive as to the public policy intent of the Legislature in enacting the statute however, the court did not find them controlling in this case.
Unlike other decisions which concerned the validity of written waivers and other cases which dealt with the interpretation of accident in the policy, this question is one of basic policy coverage. No exclusion is involved.
The policy issued to McCalla covered accidents which occurred in the United States, its territories and possessions, Puerto Rico or Canada. It did not apply to Jamaica. While the code dictates the type of coverage which must be provided, it does not dictate where the policy is effective. When McCalla purchased his insurance he knew or should have known that it did not cover accidents which occurred outside the jurisdictional limits stated in the policy. If he wanted a policy with coverage beyond the jurisdictional limits stated then he could have negotiated with the insurer for this extended coverage. An insurance policy is a contract entered into between the parties whereby each party becomes bound by the terms of the agreement.
Other decisions have used the distinction between basic coverage and exclusion. A policy was not in effect when the insured had an accident in a vehicle not covered by the policy. The court noted the decision in U.S. Trust & Guaranty Co. v. West Texas State Bank, an Eastland Court of Appeals case, which was decided before the specific statutes in the insurance code were promulgated by the Legislature, but held that a mortgagee was not entitled to recover damages sustained while the owner was driving a vehicle in Mexico, which was outside the territorial limits of the policy.
When Michael McCalla had his accident in Jamaica, he was outside the territorial limits of his policy, therefore, he was outside the basic coverage of his policy.
This case is relevant in making people aware of the coverage limitations in policies they purchase.