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.
In Texas automobile policies where the insured has opted to purchase uninsured motorist (UM) coverage, there is an offset for amounts paid under the PIP coverage.
The basis for the PIP offset can be found in the policy language of the uninsred/underinsured motorist policy provision, which provides:
In order to avoid insurance benefits payments in excess of actual damages sustained, subject only to the limits set out in the Declarations and other applicable provisions of this coverage, we will pay all covered damages not paid or payable under any workers compensation law, disability benefits law, any similar law, auto medical expense coverage or Personal Injury Protection Coverage.
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.
Sometimes figuring out what is an “accident” for uninsured motorist (UM) coverage is tricky.
In the 1999, Texas Supreme Court opinion styled, Mid-Century Insurance Company of Texas v. Lindsey, found coverage for the plaintiff, who was seated in the driver’s seat of a parked vehicle. In a truck next to Linsey’s parked vehicle, a child tried to enter the cab by climbing through the back window. In doing so, the child accidentally contacted a loaded shotgun, causing it to discharge and strike Lindsey in the head. Lindsey’s carrier denied coverage on the grounds the injury did not “arise out of the use” of the vehicle and because the event was not an “accident.” The court opined that an accident need not be an auto accident or collision; rather, it looked to the child’s intent and the reasonably foreseeable effect of his conduct to determine whether an accident had occurred. Because the child did not intend to discharge the gun or injure Lindsey, and because neither result was reasonably foreseeable, the court determined Lindsey’s injury was caused by an accident. Further, the court determined that Lindsey’s injury “arose out of the use” of the vehicle due to the fact that the accident was caused by the child’s attempt to enter the vehicle. In reaching its decision, the court relied more on the fact that the child’s acts were unexpected and unintentional than on the role of the vehicle in the accident.
In a 2000, El Paso Court of Appeals opinion styled, State & County Mutual Fire Insurance Co. v. Trinity Universal Insurance Cos., a woman had been hit by a car as she tried to escape from the insured’s van after the driver had attempted to sexually assault her. The court identified the following three-prong test under Lindsey for construing the “use” requirement of UM coverage: 1) did the accident arise out of the inherent nature of the automobile; 2) did the accident arise within the natural territorial limits of the automobile; and 3) did the automobile itself produce the injury (rather than merely contributing to the cause of the condition that produced the injury). Applying these factors, the court found that the accident arose out of the use of the vehicle as a vehicle because “but for the vehicle and its position on the highway,” the woman would dnot have died from being struck by traffic. Furthermore, she died on a roadway, which was “within the natural territory of the vehicle.” But under the third factor, the use of the van was merely incidental in producing the victim;s death; it did not itself produce the injury. The court noted that the victim was not struck by or pushed from the van; she did not fall from it; ans she was not injured by it. Therefore, the Lindsey test was not satisfied.
A Parker County or Palo Pinto County insurance lawyer handling uninsured motorist (UM) claims need to understand how the terms “accidents” and “arise out of use” are looked at by Texas courts.
Texas decisions suggest that if an incident is intentional or criminal in nature, there may not be an “accident” for UM purposes. If the incident is unexpected or unintended, Texas courts are more willing to find coverage. The somewhat varying interpretations of “accident” and “use” require close scrutiny of the facts of each claim to determine if UM coverage is triggered.
Here is an example from the Texas Supreme Court in 1999. The opinion is styled, State Farm Mutual Automobile Insurance Co. v. Whitehead. In this case, the court ruled a drive-by shooting does not trigger UM coverage. A passenger in a truck was injured when the truck in which she was riding hit a bridge stanchion after the driver lost control of the vehicle. The driver lost control after being shot by the passenger of another vehicle. The court determined the injury was purely incidental to the “use” of the vehicle because the shooting resulted from an independent and intentional act. The fact that the automobile is the situs of the accident is not sufficient to establish the necessary nexus between the use of the vehicle and the accident. As such, the court held the policy did not provide overage for the passenger’s injury.
Uninsured and Underinsured motorist coverage is required to be provided in automobile insurance policies according to the Texas Insurance Code, Section 1952.101(b). However, this coverage can be rejected as long as the rejection is in writing, according to 1952.101(c). This coverage is designed to compensate injured persons who are legally entitled to recover damages from persons who cause motor vehicle accidents who do not have coverage or do not have adequate coverage.
The auto policy insuring agreement provides that the carrier will pay damages “which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by a covered person, or property damage, caused by an accident.” This coverage applies if the person causing the accident is either uninsured or underinsured. Thus, legal liability or negligence must exist on the part of the uninsured or underinsured motorist in order to trigger this coverage. The auto policy goes on to say that the owner’s or operator’s liability for these damages must arise out of the “ownership, maintenance or use” of the uninsured motor vehicle.
The 2004, Texas Supreme Court opinion, Old American County Mutual Fire Insurance Company v. Sanchez, says uninsured motorist coverage essentially enables a victim of a motor vehicle accident to recover from his or her insurer the amount, up to policy limits, the victim would have been able to collect from the person who caused the accident had that person been insured.”
Attention life insurance lawyers. Here is one for you. Is dying from a mosquito bite grounds for recovering under an accidental death life insurance policy?
That was the issue in the March 2018, opinion from the United States Court of Appeals for the Fifth Circuit. The case is styled, Gloria Wells v. Minnesota Life Insurance Company.
Melton Wells died fro complications arising from being bitten by a mosquito carrying West Nile Virus. Melton’s wife, Gloria claimed accidental death benefits under the Minnesota Life policy and the claim was denied. The dispute is whether or not Melton’s death was accidental and an exclusion under the policy. The lower court dismissed the case by summary judgment. This court reversed the lower court dismissal and remanded the case for trial.
Too many homeowner claims resulting from a fire get denied by the insurance company because the insurance company believes they can prove the fire was the result of arson. The Insurance Journal ran a story in March 2018, that illustrates that sometimes the insurance company is right. The story is titled “Two Plead Guilty To Insurance Fraud By Arson In West Virginia.”
The story tells us that two men pled guilty in federal court for their respective roles in a scheme to commit insurance fraud by arson.
Dudley Bledsoe, age 63, of Hanover in Wyoming County, West Virginia, and Ricky Dwayne Gleason, age 54, of Peach Creek in Logan County, West Virginia, both pleaded guilty to a charge of unlawful monetary transactions before Senior District Court Judge David A. Faber in Bluefield, West Virginia.
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.
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