Justia Insurance Law Opinion Summaries

Policyholder Robert Sparks was sued by victims and families of an automobile accident in which Sparks was involved. Sparks's insurance company, Benchmark, filed an interpleader action, seeking permission to deposit the $30,000 policy limits with the district court for dispersal to the plaintiffs. Benchmark then filed a motion for summary judgment, seeking a determination that once the court accepted the deposited funds, Benchmark would have no further obligation to defend Sparks in the underlying tort lawsuit. The district court granted Benchmark permission to deposit the policy liability limits but denied it's motion for summary judgment, determining that Benchmark's duty to defend Sparks extended beyond its tender of the policy limits. On appeal, the Supreme Court affirmed, holding (1) the policy did not unambiguously alert Sparks that Bench could terminate its duty to defend him by depositing the policy's limits with the district court; and (2) that a policyholder in Sparks' position would reasonably expect his insurer to procure a settlement on his behalf or defend him until the policy limits have been used to satisfy a judgment entered against him.

Appellees brought this declaratory judgment action seeking a determination that there was no coverage for an accident involving a company car driven by Daniel Brandt and injuring Donald Bunch. At issue was whether liability coverage extended to Brandt and whether Donald Bunch was entitled to uninsured and underinsured motorist coverage because the policy at issue was ambiguous. The court concluded that the Bunches conceded that Brandt did not have express or implied permission from his employer to drive the car and that Patricia Bunch lacked the authority to give Brandt permission to use the vehicle as either a named insured or as a second permitee. Therefore, the district court did not err in concluding that liability coverage did not extend to Brandt. The court also concluded that there was no indication that the term "vehicle" was ambiguous or that a person reading the policy would not understand that the vehicle referred to in the exclusion would have included the car involved in the accident. Therefore, the district court did not err in determining that Donald Bunch did not qualify for uninsured or underinsured motorist coverage.

Gulf Underwriters Insurance issued a general liability policy to United Foundries with an endorsement for employer's liability coverage, known as a stop-gap endorsement. David Ward filed a complaint against his employer, United, alleging claims for employer intentional tort and seeking damages. While the case was pending, United filed an action against Gulf for a declaration that Gulf had a duty to defend and indemnify United for the claims asserted by Ward. The trial court granted summary judgment to United. The court of appeals reversed. The Supreme Court affirmed the judgment of the court of appeals, holding (1) an exclusion in a stop-gap endorsement stating that the insurance does not apply to bodily injury resulting from an act that is determined to have been committed by an insured with the belief that an injury is substantially certain to occur does not require a final determination by either a judge or jury before the insurer can refuse to defend a claim alleging a substantial-certainty employer intentional tort: and (2) that the claims stated in the underlying complaint were neither potentially nor arguably covered under the terms of the policy, and thus, Gulf had no duty under the policy to defend United.

Petitioner sued respondent for injuries he sustained when the car he was driving collided with respondent's minivan as she was pulling out of a grocery store parking lot. At issue was whether section 41.0105 of the Texas Civil Practice and Remedies Code precluded evidence or recovery of expenses that neither the claimant nor anyone acting on is behalf would ultimately be liable for paying. The court held that only evidence of recoverable medical expenses was admissible at trial. The court also held that the collateral source rule continued to apply to such expenses and the jury should not be told that they would be covered in whole or in part by insurance. Nor should the jury be told that a health care provider adjusted its charges because of insurance. Accordingly, section 41.0105 limited recovery and consequently, the evidence at trial, to expenses that the provider had a legal right to be paid.

This case stemmed from a commercial bus driver's diagnosis of tuberculosis and subsequent transmission of the disease to passengers. At issue was whether the transmission of a communicable disease from the driver of a motor vehicle to a passenger was a covered loss under a business auto policy, which afforded coverage for accidental bodily injuries resulting from the vehicle's use. The court held that because communicable diseases were not an insured risk under the policy at issue, the court reversed the judgment and rendered judgment for the insurance carrier.

Carter and Glenada Iverson were killed in a head-on collision with an underinsured motorist while driving a vehicle covered by their policy with State Farm. The personal representative of the Iversons' estate requested that State Farm provide underinsured motorist (UIM) coverage in an amount equal to the liability policy limits of $100,000. State Farm offered $20,000, the limit under the Iversons' policy for the UIM claims. Iverson sued State Farm in district court. The Supreme Court granted certification to answer whether an insurer may provide lower limits for underinsured motorist coverage than for liability coverage under Utah law. The Court concluded that (1) such coverage may comply with Utah law if the insurer follows the consumer notification requirements contained in the Utah Code; (2) because notification requirements differ depending on when the insured's policy was issued, a court must first determine whether a new policy existed on or after January 1, 2001; and (3) a new policy exists on or after this date when the insurer and the insured enter into a new contractual relationship or if changes are made to the terms of an existing insurance contract that materially alter the levels of risk contained in the contract.

Plaintiff Mark Peak broke his leg while helping Ellis and Rachel Adams move furniture using a rented U-Haul truck. The liability insurer for U-Haul paid its policy limits of $20,000 to Peak in exchange for a release that specifically named Ellis and arguably covered Rachel. When Peak sought additional compensation from another of insurer for the Adamses, the insurer denied coverage based on the release. Peak filed a negligence action against Adamses, alleging they were liable for negligence in their operation of the rental truck and their failure to remove snow from their driveway. The district court granted defendants' motion for summary judgment, concluding the release barred Peak's claims against both Ellis and Rachel. The court of appeals reversed. At issue was whether the release covered Ellis and Rachel as well as U-Haul and its insurer. On further review, the Supreme Court held that the district court correctly granted summary judgment for Ellis based on the release, while fact questions precluded summary judgment for Rachel. The Court vacated the decision of the court of appeals and affirmed in part and reversed in part the district court judgment.

This case involved the construction and application of a combined professional and general liability insurance policy issued by appellant to appellee where appellee requested a defense from appellant under the policy for a civil lawsuit. In that underlying suit, plaintiff alleged that while her mother was terminally ill, she consented to appellee's harvesting of some of her mother's organs and tissues after her mother's death and consented to the harvesting because appellee was a non-profit corporation. Appellee, instead, transferred the tissues to a for-profit company, which sold the tissues to hospitals at a profit. Appellee subsequently sought coverage under its general liability insurance with appellant and appellant denied coverage because the conduct alleged was outside the scope of the insurance policy's coverage. The court certified the following questions to the Supreme Court of Texas: (1) "Does the insurance policy provision for coverage of 'personal injury,' defined therein as 'bodily injury, sickness, or disease including death resulting therefrom sustained by any person,' include coverage for mental anguish, unrelated to physical damage to or disease of the plaintiff's body?" (2) "Does the insurance policy provision for coverage of 'property damage,' defined therein as 'physical injury to or destruction of tangible property, including consequential loss of use thereof, or loss of use of tangible property which has not been physically injured or destroyed,' include coverage for the underlying plaintiff's loss of use of her deceased mother's tissues, organs, bones, and body parts?"

The Federal District Court for the Northern District of Alabama certified a question to the State Supreme Court. The Court was asked whether the failure of an insured to give notice of a proposed settlement to an insurance company causes the insured to forfeit underinsured motorist coverage (UIM), regardless of the insuredâs actual knowledge of that coverage, and regardless of prejudice to the insurance company if the insured has a copy of the policy that contains the coverage. In 2007, Delbert and Lou Ann Downey were stopped at an intersection on their motorcycle when a vehicle driven by Wyndell Thompson failed to stop and hit them. At the time of the accident, multiple insurance policies were in force. The Downeys had underinsured motorist coverage. The Downeys, in consideration of $10,000 and while represented by counsel (but without having notified Travelers Property Casualty Insurance Company that they were doing so), executed a general release to discharge Mr. Thompson and his insurance company from all liability arising out of the accident. Subsequently, and with different counsel, the Downeys notified Travelers of the accident for the first time and that they were making a claim under their underinsured motorist policy. Travelers denied the claim and the Downeys sued. The Supreme Court found that the Downeys were at all relevant times in possession of the policy, and it clearly provided UIM coverage. However, the Downeys did not meet the threshold of showing any condition under which their lack of notice could be excused. "In other words, the Downeys have âforfeit[ed]â UIM coverage."

Plaintiff challenged the denial of his claims for long-term disability benefits by defendant, who served as both the administrator of claims and the payor of benefits in the long-term disability plan in which defendant participated. At issue was whether there was a conflict of interest where defendant was both administrator and payor of benefits of the plan governed by ERISA, 29 U.S.C. 1001-1461. The court found that defendant considered the medical information submitted by plaintiff's doctors and relied upon the advice of several independent medical professionals to conclude that plaintiff failed to make a sufficient showing of disability under the plan and, even where plaintiff's own doctors offered different medical opinions than defendant's independent doctors, the plan administrator could give different weight to those opinions without acting arbitrarily or capriciously. Therefore, the court held that a reasonable basis supported defendant's benefits decisions and that the conflict of interest did not render the decisions arbitrary or capricious.