Insurance Coverage for Vehicular Accidents

INSURANCE COVERAGE FOR VEHICULAR ACCIDENTS

By David A. Gauntlett*

INTRODUCTION

Plaintiff’s lawyers often seek damages beyond those available under Defendant’s individual automobile policies. Where Defendants are working for an employer at the time of an accident, separate coverage under the Commercial General Liability (“CGL”) policy of the Defendant’s employer, which include Commercial Automotive coverage may be implicated.

ASSISTING PERSONAL INJURY LAWYERS TO MAXIMIZE RECOVERY  

Plaintiff’s Business Insurance May Be Potentially Implicated in an Auto Accident

Coverage counsel working with Plaintiff’s lawyer can develop facts and legal theories to reach additional coverages that are often overlooked by providing in depth insurance coverage analysis of pertinent policy language and provisions. Many insurance coverage claim disputes do not require lawsuits. Indeed, coverage counsel often assist Plaintiff’s counsel in recovering these policy benefits in a vigorous exchange of correspondence.

Coverage Counsel Can Enhance Recovery in a Biking “Wrongful Death” Action

In a recurring fact scenario, a bicyclist who was killed by a non-business vehicle driven by the business owners. may implicate their Commercial Auto insurance. The complaint was amended and discovery was launched, as advised by coverage counsel, to include the business owners as distinct Defendants in the lawsuit to facilitate an insurer funded settlement. The CGL policy’s automobile coverage excluded all claims arising out of the use of an individual’s vehicle. But, a work around was available as the term “individual” was narrowly defined so that business auto use, even when it included the use of an individual owner’s private automobile, fell outside its scope. Following a mediation highlighting the CGL business owner policy’s exposure, early settlement was secured, before significant discovery had occurred, for the “wrongful death” action for 80% of the maximum recovery estimated by the plaintiff’s attorney had it proceeded to trial.

SECURING COVERAGE FOR DEFENDANT “WRONGFUL DEATH” CLAIMS

 Homeowner’s Umbrella Policy

A Homeowner’s Umbrella policy issued by Mercury revealed potential exposure for “wrongful death” claims arose where an auto accident resulting in the death of a passenger in an SUV. The Homeowner’s Umbrella policy was secured by the Defendant’s stepfather. It provided coverage for the necessary medical expenses arising from “activities of the insured” outside the insured’s location for the benefit of the insured as well as “resident relatives”. [1]    

The term “resident” [2] was determined by particular facts within the case.[3] The policyholder relied on  Allstate Ins. Co. v. Gassman, [4] where the court analyzed whether the term “relative resident” applied to a person related to the insured that was also temporarily residing in the home of the insured at the time of the accident. There, Gassman was an “insured person” under the policy reasoning that the home was “where Gassmann had his own room and where he kept his toiletries and many other personal items that he valued… [and] just weeks before the April 28, 2007 accident, Gassmann used [the insured’s household’s] address as his home address on the paperwork he completed in connection with commencing employment.”[5] Notably, under the court’s analysis, Gassman did not have to establish that the insured home was his primary residence, as Allstate asserted, in order to be considered an “insured person” under the policy.

Applying applicable case authority defining the term “resident” to encompass the defendant as residing, even if temporarily, in the home, the Defendant demonstrated residency as he had a bedroom at the insured home where he kept many of his belongings, his voter registration referenced to the insured’s home address, and his home address was used as the defendant’s billing address for banking and credit card statements. As a “relative resident” under Mercury’s Homeowner’s umbrella policy, the Defendant secured potential coverage for the “wrongful death” claims against him.

Independent Contractor Status Did Not Preclude Insurance Coverage

Individual Business Auto Policy Triggered

 An insured business owner with business automobile coverage loaned one of his business’ tractor trailers to a friend to perform work without a formal partnership or employment relationship agreement. The friend, while standing next to the tractor trailer which was parked in a staging area for trucks, was hit by a drunk driver in a freak car accident where the drunk driver ploughed through a fence and hit the friend and the tractor trailer resulting in injuries to the friend and damage to the tractor trailer. Potential coverage may be available under the business’ automobile policy for the accident if the insured could demonstrate that the friend was using the insured tractor trailer in connection with the insured’s business operations.

Pertinent case authority include Menard, Inc. v. Country Preferred Insurance Company[6], where the court held that Menards was entitled to coverage under its customer’s personal automobile policy for that claims the customer suffered while her car was being loaded at the Menards loading dock. The customer bought bricks. Looking for good bricks from a stack, she placed them within reach of the Menards employee to load into her car. While her car was being loaded, customer’s foot became tangled in debris on the loading dock and she fell.

She sued Menards for negligence in maintaining safe premises. All auto policies include coverage for accidents “resulting from the ownership, maintenance or use of an insured vehicle, including loading and unloading”, and include omnibus insured coverage for “anyone using an insured vehicle with permission.”[7] Menards tendered its defense of the customer’s suit to the customer’s auto insurer. The accident was causally connected to the use of the Defendant’s vehicle so that Menards secured a defense from the customer’s own auto policy.

 Additional Insured Provision Under Commercial Auto Coverage

Coverage under the CGL policy of a business that had employed the driver, whose truck directly caused an accident which lead to death and serious injuries, arose while the driver at fault was an independent contractor. Although the business’ Commercial Auto policy appeared to limit vehicle related claims to identified employees and vehicles and the insurer initially refused to discuss settlement, an endorsement within the policy, unmentioned by the insurer, extended coverage for claims cause by the “use” of a “non-owned autos” regardless of whether the driver of the vehicle was an employee of the business or not as long as “such ‘autos’ are used in ‘your’ ‘business.’” Since the independent contractor was driving his own truck when exiting the business site following his delivering of business material to a customer worksite, the claim fell within the scope of the endorsement.

Underinsured/Uninsured Coverage May Be Triggered Despite “Hit and Run” Driver

The fact that the drunk driving accident that lead to the death of the independent contractor standing next to the tractor trailer does not avoid coverage. In Reynolds v Allstate Ins. Co.[8], the court analyzed the exclusion which barred coverage for “bodily injury to an insured person…whenever the ultimate benefits of that indemnification accrue directly or indirectly to an insured person… [as it applies to] you and resident relative”. The facts at issue addressed coverage for the medical expenses that arose after an insured motorcyclist and his uninsured passenger crashed suffering severe injuries. The term “you” does not apply to the insured motorcyclist’s passenger stating that “A reasonable lay person reading Exclusion 6, the definition of "You," the definition of "Insured Person," and the Declarations page would not necessarily understand that Exclusion 6, as Allstate asserts, did not apply to permissive users.”[9] Thus, the insurance could extend to this claim.

 CONCLUSION

Coverage for “personal injury” claims resulting from automotive accidents under an auto policies implicate coverage in various fact scenarios. Plaintiff’s and Defendant’s counsel should explore all avenues for coverage or seek counsel that is skilled in developing and evaluating theories of liability to secure coverage for their clients.

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* David A. Gauntlett is a principal of Gauntlett & Associates. For more information, visit Gauntlett & Associates at www.gauntlettlaw.com. 

[1] Mercury Casualty Company, Personal Liability Umbrella Policy. Policy No. PK 0102834

[2] Mercury Casualty Co. v. Chu, 229 Cal. App. 4th 1432, 1434 (2014) (“Most courts appear to agree that the term "residence" connotes any factual place of abode of some permanency, more than a mere temporary sojourn.”)

[3] See, Safeco Ins. Co. v. Gibson, 211 Cal App. 3d 176, 181 (1989) (“[T]he common thread that runs through [cases interpreting 'resident' and 'household'] is…whether, under the particular facts of each of those cases, insurance coverage was extended or excluded under the terms of the policy in question.")

[4] See, Allstate Ins. Co. v. Gassmann, 2010 U.S. Dist. LEXIS 40567, *19-20 (C.D. Cal. (Apr. 24, 2010)

[5] Id. at *19-20

[6] Menard, Inc. v. Country Preferred Ins. Co., 992 N.E. 2d 643 (2013)

[7] Id. at 646

[8] Reynolds v. Allstate Ins. Co., 855 F. Supp. 2d 989, 993 (N.D. Cal. Jan. 19, 2012)

[9] Id. at 1000-1001