Articles Posted in Insurance

 An over-the-road truck driver parked his truck on the shoulder of a road, got out, walked across a five-lane highway to a convenience store, purchased a soft drink and chewing tobacco, walked back across the highway towards his truck, but in the lane second-nearest the truck was struck by a vehicle which fled the scene.  The truck driver was injured and sough coverage under his employer’s uninsured motorist policy.  The UM carrier denied coverage and moved for summary judgment arguing that the truck driver was not entitled to coverage because he was not “occupying” a covered auto at the time of the accident.  The policy defined “occupying” as “in, upon, getting in, on, out or off” a covered auto.  The trial court granted summary judgment and the truck driver appealed.  The case is Beech v. John Doe, No. M2013-02496-COA-R2-CV (June 11, 2014).

            The issue on appeal was whether the truck driver was “upon” the truck at the time of the accident for purposes of uninsured motorist coverage.  The court of appeals found he was not and upheld the trial court’s grant of summary judgment.  The court of appeals looked at a number of other cases interpreting “upon.”  Most notably, the court looked to Tata v. Nichols, 848 S.W.2d 649 (Tenn. 1993) in which the Tennessee Supreme Court found that the term “upon” when used to define “occupying” for purposes of UM coverage is ambiguous.  The Supreme Court adopted four criteria for determining whether a person is “upon” a vehicle so as to “occupy” it:

(1) there is a causal relation or connection between the injury and use of the insured vehicle;

 In Cleveland Custom Stone v. Acuity Mutual Insurance Company, No. E2013-02132-COA-R3-CV (June 10, 2014), the Tennessee Court of Appeals considered a myriad of issues in a case concerning an insurance company’s failure to pay insurance proceeds to the Plaintiffs for a building destroyed by fire. 

The business that owned the building sought to add insurance coverage for the building to the business’s existing insurance policy with Acuity when it purchased the building in 2007.  The business used USIG, an agent of Acuity, to procure the coverage.  USIG provided a certificate of insurance form at the closing of the sale of the building to the business.

Following the fire, Acuity denied payment and notified the business that it never had successfully added coverage for the building.  Acuity also alleged that the business owners intentionally set the fire. 

The California Court of Appeals explored the issue of the responsibility of an insurance agent is the case of Williams v. Hilb, Rogal & Hobbs Ins. Services of California, Inc., 177 Cal.App.4th 624, 98 Cal.Rptr.3d 910 (2nd Dist. 2009).

Insurance agents like to argue that they do not have a duty to advise a client that it should procure additional or different insurance coverage. However, the Williams case makes it clear that  when an agent assumes additional duties by holding  himself out as an expert he can be held liable for not procuring appropriate coverage.

This just makes sense.  Most folks rely on their agent to tell them what coverage they need, particularly in the commercial insurance field, but also in the consumer area.   Agents are in a far better position than potential insureds to know what types and amounts of insurance coverage should be in place.  To be sure, the agent cannot force a client to buy any type of coverage (just like a lawyer cannot force a client to follow his or her advice or a doctor cannot force a patient to stick to a diet) but the notion that insurance agent’s are nothing but salespeople is an outrage.

In most states the duty to defend an insured in litigation is broader than the duty to indemnify that insured. 

Here is a 50-state survey prepared by the highly regarded Chicago-based firm of Hinshaw & Culbertson on the duty to defend.  Here is how they describe the 105-page publication:

Duty To Defend contains a survey of the law of the 50 United States and the District of Columbia on an insurer’s duty to defend a lawsuit against its insured and related topics. Each state entry includes a discussion of the scope of the duty to defend in that state and of the test employed by the state to determine whether the insurer owes such a duty. The state entries also include discussions of whether the insurer may defend pursuant to a reservation of rights and the implications of doing the same, including conflicts of interest which may be created; whether a declaratory judgment action may be brought to determine the insurer’s rights and obligations under the policy; and the consequences of the insurer’s failure to defend where it has an obligation to do so.

The United States Court of Appeals for the Fourth Circuit has ruled that a drunk driver’s death was not "accidental" and therefore his surviving spouse could not collect accidental death benefits under an insurance policy.

The decedent’s blood alcohol level was fifty percent higher than the legal limit when he ran into the rear of a tractor trailer parked eight feet off a West Virginia road.  It was, of course, 3:49 a.m.

His wife sought "accidental death benefits" from an insurance policy provided by the decedent’s employer.  The policy provided coverage "if the insured dies ‘due to an accident.’  The Plan defined ‘accident’ as ‘an unexpected and sudden event which the insured does not  foresee.’ The Plan also provided that "ReliaStar Life has final discretionary  authority to determine all questions of eligibility and status and to interpret and construe the terms of this policy(ies) of insurance."  ERISA governed this case.

The Tennessee Supreme Court has issued an extremely important decision in the field of bad faith law.

In Johnson v. Tennessee Farmers Mutual Insurance Company, No. E2004-00250-SC-R11-CV  (August 28, 2006), Justice Holder, writing for an unanimous court, reversed the Court of Appeals and upheld a bad faith verdict against Tennessee Farmers.

Johnson sued his own insurer after he got hit for an excess judgment in an auto case.  A 2-1 decision of the Court of Appeals took away a plaintiff’s verdict of $279,430.92 against Tennessee Farmers, saying that the trial judge had not charged the jury correctly on the law of bad faith.  Judge Lee dissented, saying the trial judge had gotten it right. 

The Illinois Appellate Court has ruled that Illinois courts have jurisdiction over a Japanese parent corporation in a case alleging negligent design.

Plaintiff alleged that her daughter died as a result of a fire started with a Aim ‘n Flame II lighting rod. The lighting rod was designed by Tokai Corporatin in Japan and distributed by its wholly-owned subsidiary, Scripto-Tokai. The subsidiary admitted that Illinois courts had personal jurisdiction over it but the parent contested jurisdiction.

The Court put the issue and holding this way: “This case presents the question of whether a foreign corporation that designs a product can immunize itself from liability for negligent design by marketing the product through a subsidiary. We hold that it cannot. We find that the use of a subsidiary to introduce the product it designed to Illinois markets suffices for the exercise of personal jurisdiction over the foreign corporation for an action for negligent design.”

This doctor got hit for an excess verdict in a medical malpractice case. He assigned the patient his bad faith claim against his insurer, alleging that it refused to settle the case within the policy limits and assigned him a lawyer with a conflict. The patient won compensatory and punitive damages. The case is Jurinko v. The Medical Protective Company, No. 03-CV-4053 (E.D. Pa. March 29, 2006).

The trial judge affirmed entry of judgment and issued the opinion including the following remarks:

“[Defendant] Medical Protective employee James Alff admitted that he knew that [the original defendant] Dr. Marcincin’s exposure was in excess of $50,000, and yet he never offered more than $50,000.9 The jury also heard testimony that the [excess] CAT/MCARE fund had informed Medical Protective that their failure to tender was in bad faith and was undermining the settlement of the case. Alff admitted that Dr. Marcincin could not negotiate with funds from his $1 million secondary line of coverage (the CAT/MCARE fund) without tender of the full policy limits. Alff also admitted to unfair gamesmanship in his negotiating tactics, and attempting to get the CAT/MCARE fund to cover Dr. Marcincin’s liability from Dr. Edelman’s line of coverage in order to save Medical Protective money. The evidence demonstrated that both Alff and Jacqueline Busterna, who was negotiating for the CAT/MCARE fund, believed the case would settle for around $1 million. From the evidence presented, it was also possible for the jury to conclude that the Jurinkos would have been offered approximately $1 million had Medical Protective tendered its policy, even if the CAT/MCARE fund had not offered any money from Dr. Marcincin’s $1 million line of secondary insurance. Overall, the Court finds sufficient evidence for the jury to find bad faith.

The Tennessee Supreme Court has granted a Rule 11 application in Johnson v. Tennessee Farmers Mutual Ins. Co. With this case, the Tennessee Supreme Court will decide whether the tort of “bad faith” exists is Tennessee.

Judge Inman’s decision in this case renders the tort virtually meaningless. It requires almost intentional conduct to give rise to liability.

Judge Lee’s dissent says that the law of Tennessee is (and should be) that bad faith may be found if the jury determines from a consideration of all relevant factors that good faith was absent. She would not require proof of fraud or dishonesty.

Contact Information