INSURANCE-RELATED COURT CASES

COURT DECISIONS

Digested from case reports published in Westlaw, West Publishing Co.,
St. Paul, MN

Can passenger collect UM payment?

In December 2006, David Kasid was a passenger in a vehicle driven by Timothy Arlt and owned by Joyce Mancino. Mancino was also a passenger in the car. The car was hit from behind by another vehicle. All of the parties exited their vehicles. Mancino obtained the telephone number and license plate number of the other driver. Kasid was present and able to overhear the exchange between Mancino and the other driver. Kasid was also able to observe the other driver’s license plate number. None of the parties reported any injuries at the time, and there was only minor damage to the vehicles.

Kasid later claimed that he suffered injuries as a result of the accident. He asked Mancino for information regarding the other driver and vehicle involved in the accident, but Mancino no longer had the information. Kasid filed a claim with Mancino’s insurer, Country Mutual Insurance Company, for uninsured motorist benefits. Country Mutual denied coverage, and Kasid filed suit. The court concluded that under the policy, Kasid was an insured for the purpose of uninsured motorist coverage; however, the court found that there was no uninsured motorist coverage because there was no evidence that the other vehicle was an uninsured vehicle. Kasid appealed.

The Country Mutual policy defined an “uninsured motor vehicle” as a motor vehicle (1) “to which a bodily injury liability bond or policy does not apply at the time of the accident,” (2) a “hit-and-run vehicle whose operator cannot be identified and which hits or causes an accident,” or (3) when the bonding or insuring company is insolvent or denies coverage.

On appeal, Kasid argued that the other vehicle involved in the accident was a “hit-and-run vehicle” within the meaning of the policy. To support his argument, he claimed that Mancino had violated a Minnesota statute. According to Kasid, Mancino had a legal duty to obtain and retain the identifying information of the other driver.

The Court of Appeals of Minnesota disagreed. It noted that the statute only required the driver of a vehicle involved in an accident to provide information to the individual struck or the driver or occupant of any vehicle collided with. It did not require a driver or the owner of the vehicle to collect or preserve information. Refusing to create a duty where one did not exist, the court concluded that there was no violation of the statute.

Kasid also argued that because Mancino failed to report the accident, Country Mutual did not have enough information at the time Kasid filed his claim to determine that the accident was not a hit-and-run. The court found this argument to be irrelevant. The policy did require police notification within 24 hours of a hit-and-run accident and submission of a statement to the insurer within 30 days. However, because the other driver did stop and provide her information to Mancino, there was no “hit-and-run” to trigger the duty. The court also noted that Kasid himself was considered an insured under the policy, and as such he could have obtained information and reported the accident himself. The court concluded that when an individual is able to obtain åainformation after an accident but does not do so, the accident is not a hit-and-run accident for the purposes of uninsured motorist benefits.

The decision of the lower court was affirmed.

Kasid vs. Country Mutual Insurance Company-No. A09-591-Court of Appeals of Minnesota-December 22, 2009-776 North Western Reporter 2d 181.

Injured driver seeks higher UIM limits

In July 2004, Scott Ochs was driving a propane truck for his employer, Ramsey Oil Hutchinson, Inc., when he was seriously injured in a motor vehicle accident. The accident was allegedly caused by a third party, Loren Hayden, who was insured by State Farm Insurance. Ochs obtained a $50,000 settlement from State Farm and another $50,000 underinsured motorist settlement from his own insurer, Farm Bureau Insurance Company. He then sought additional underinsured motorist coverage from Federated Mutual Insurance Company, Ramsey Oil’s insurer.

The Federated Mutual policy had a liability limit of $1 million. However, Ramsey Oil’s president and sole stockholder, Loren Anderson, had signed a document limiting underinsured motorist benefits for “other persons qualifying as an insured” to $50,000. Ochs filed an action against Federated Mutual claiming that he was entitled to underinsured motorist benefits of $1 million. Federated argued that the $50,000 limit applied. The lower court found in favor of Federated, and Ochs appealed.

Kansas law requires an insurer to provide underinsured motorist cover­age equal to the amount of liability coverage provided in the policy unless the insured rejects in writing coverage in excess of the specific amounts set forth in the relevant statutes. Therefore Federated Mutual was required to provide Ramsey Oil with underinsured motorist coverage of $1 million unless Ramsey had effectively rejected coverage in that amount.

On appeal, Ochs argued that the document Loren Anderson had signed was not valid. The option form stated that the applicant or policyholder was “Ramsey Oil Hutchinson, Inc.,” and that the election applied to “All Covered Automobiles.” The form also noted a policy number consistent with the Ramsey Oil automobile liability policy in effect at the time. Anderson’s acknowledgement stated: “I have been given the opportunity to purchase Underinsured Motorists Coverage (including Underinsured Motorists Protection) equal to my limit of liability for bodily injury or death, and instead I select the lower $50,000 limit. I understand and agree that this rejection of higher limits of Uninsured Motorists and Underinsured Motorists Coverage shall be applicable unless I subsequently request such coverage in writing.”

Ochs first argued that Anderson’s rejection of the higher coverage limit was not valid because he did not indicate his corporate capacity and authority as agent on the document. The Court of Appeals of Kansas rejected this argument. It found that, considering the underlying insurance agreement and Ochs’s own acknowledgement of Anderson’s capacity and authority to act as agent, Anderson’s failure to indicate his authority and capacity on the form did not render the acknowledgement invalid.

Ochs next argued that even if Anderson’s rejection was found to be valid, the propane truck was not an automobile to which the signed rejection form applied. Again the court disagreed. It noted that Ochs incorrectly ignored the terms of the insurance policy and instead applied a statutory definition to conclude that the propane truck was not an automobile within the meaning of the option form. According to the court, the policy itself controlled, and the truck driven by Ochs was a covered automobile within the meaning of the insurance agreement.

Ochs’s third argument was that the rejection form did not apply to the insurance agreement in effect at the time of his accident. According to Ochs, the policy number on the rejection form was different from the policy number for the policy in effect at the time of the accident.

Once again, the court found Ochs’s arguments unpersuasive. The court noted that Kansas law provides that a written rejection applies to any subsequent policy issued by the same insurer for motor vehicles owned by the named insured. Federated Mutual had continuously provided automobile liability insurance to Ramsey Oil since April 1999. Furthermore, the parties did not change, and coverage under the policies was virtually the same. The change in the policy number did not matter; the new number merely replaced an old number for virtually the same coverage. Thus a new written rejection was not required.

The court concluded that a reasonably prudent insured would have understood the provisions of the option form to be an election to accept a lower limit and that Anderson’s rejection of higher coverage limits was valid. The decision of the lower court in favor of Federated Mutual was affirmed.

Ochs vs. Federated Mutual Insurance Company-No. 101562-Court of Appeals of Kansas-January 8, 2010-221 Pacific Reporter 3rd 622.

Conflict between states’ UM laws

Angelina Gray was driving in Hempstead, New York, when she was involved in an accident with another vehicle. The car she was driving was registered in North Carolina. The other vehicle was registered in New York. Gray was covered by a State Farm Mutual Automobile Insurance Company automobile insurance policy. The policy was issued in North Carolina and had bodily injury liability limits of $100,000 per person and $300,000 per occurrence. The policy’s declaration page indicated that the policy also included uninsured motorist coverage “U.”

The other party to the accident had an AIG National Insurance Company policy with limits of $25,000 per person and $50,000 per occurrence. Gray settled with that party for the full $25,000. She then turned to State Farm for additional coverage via arbitration, claiming that she had uninsured/underinsured motorist benefits under the policy. State Farm claimed that the policy contained only uninsured motorist coverage and that it had no duty to provide coverage for Gray because she had recovered under the other party’s insurance. State Farm then filed a petition asking that the court permanently stay the arbitration.

The State Farm policy defined an uninsured motor vehicle as one to which a “policy applies at the time of the accident; provided its limit of liability is less than the minimum limit specified by the financial responsibility law of North Carolina.” North Carolina’s financial responsibility statute defined an “uninsured motor vehicle” as one “for which there is no bodily injury liability insurance and property damage liability insurance in at least the amounts specified” by the law. The applicable limits at the time of the accident were $30,000 per person and $60,000 per accident. Thus, if North Carolina law was applicable, the New York driver with the AIG insurance policy with limits below $30,000 was considered uninsured.

The lower court granted State Farm’s request for a stay of arbitration; Gray appealed.

On appeal, State Farm argued that the vehicle that was registered in New York was not subject to the financial responsibility laws of North Carolina and that therefore the $30,000/$60,000 limits did not apply to the determination of whether the vehicle was uninsured.

The Appellate Division, Second Department, New York, disagreed. In reaching its decision, the court acknowledged that the North Carolina financial responsibility laws did not apply to the owner of the New York car. The court stated, however, that this did not mean that the law could not be analyzed to determine whether or not the vehicle itself was uninsured. According to the court, as applied to vehicles registered outside the state of North Carolina, the North Carolina Motor Vehicle Safety and Financial Responsibility Act was adopted “to protect North Carolina drivers involved in accidents with out-of-state vehicles which may not carry insurance coverage commensurate with the insurance coverage required of drivers in North Carolina.”

The court went on to state that because it was “remedial in nature,” the act must be liberally construed. The court then interpreted the policy as written and found that the AIG policy limit of $25,000 per person/$50,000 per accident was “less than the minimum limit specified by the North Carolina law.” Thus the vehicle was deemed to be uninsured.

The decision of the lower court staying the arbitration was reversed.

State Farm Mutual Automobile Insurance Company vs. Gray-Supreme Court, Appellate Division, Second Department, New York-December 15, 2009-68 Appellate Decisions 3d 1002.