SW Legal Educational Publishing
SOUTH-WESTERN LEGAL STUDIES IN BUSINESS CASE UPDATES—INSURANCE
SW Legal's Case Updates is a SW Legal Studies service to provide briefs of the latest state and federal court cases. Review the summaries and, for cases of interest, select the case brief. If you cannot find a case of interest, return to Topic Index .
Title
Summary
Indiana Court Changes Interpretation of Standard CGL Policy Term
Briefed Case
Indiana high court held that CGL policies would be construed to cover losses suffered by a contractor due to defective work of subcontractors, so long as the work was shown to be unintentional.
(Updated November 2010)
Injured Party May Not Collect Twice Based on Underinsured Motorist Coverage
Briefed Case
Appeals court held that a person injured by another driver, who had underinsured motorist coverage, may not collect against his own insurance company if the other party’s insurer voluntarily pays above the policy limit and thereby satisfies the jury verdict.
(Updated November 2010)
Religious Organization “Sharing” Plan Is Insurance Subject to State Regulation
Briefed Case
Kentucky high court held that a medical “sharing” plan, where by people made regular monthly payments, based on actuarial tables, to help cover health expenses of other members, is in fact insurance subject to state regulation.
(Updated October 2010)
When Policy Clearly Excludes Certain Coverage, There Is No Duty to Defend or Indemnify
Briefed Case
Appeals court held that a company's commercial general liability policy expressly excluded auto accidents except for two specific kinds of vehicles. Since those vehicles were not involved in an accident that happened by an employee on the job, the insurer has no duty to defend or indemnify the company.
(Updated April 2010)
Defective Workmanship Exclusion Narrowly Applied
Briefed Case
Appeals court held that an insurer had to cover the loss suffered by a general contractor when a new building the contractor built had to be demolished because a subcontractor built a defective foundation. The defective workmanship exclusion in the policy only applied to the value of the workmanship in the defective foundation, not to the value of the rest of the building.
(Updated April 2010)
Insurer Need Not Make Payments When Insured Parties Fail to Cooperate
Briefed Case
Court held that when a home owner refuses to cooperate with the homeowner’s insurance company in an investigation of a house likely burned by arson, the insurer has no duty to pay benefits due to a breach of contract, which requires cooperation under oath.
(Updated January 2010)
Injury Due to Assault by Employee Negates Insurance Coverage
Briefed Case
Appeals court held that the injuries suffered by the patron of a bar, when he was ejected from the bar by security personnel, were not covered by insurance due to the provision that excluded injuries from assault and battery, as occurred in this instance.
(Updated November 2009)
Insurer Must Cover Malpractice Damages under Claims Made Policy
Briefed Case
Appeals court held that a physician and his employer properly notified insurer of a claim made against them for malpractice. Since the insured properly reported the claim to the insurer, under the claims made policy, the insurer must cover the settlement agreed to by the physician.
(Updated November 2009)
Drug Overdose from Prescription Medication Excluded from Homeowner Insurance Coverage
Briefed Case
Appeals court held that a homeowner’s insurance policy clearly excluded liability for bodily injury that arose from incidents arising from controlled substances. As a guest in a home died from an overdose of the homeowner’s prescription drug, a controlled substance, the insurer could not be held liable.
(Updated November 2009)
Proper Delivery of Policy Cancellation Notice Must Be Met for Cancellation to Occur
Briefed Case
Washington high court held that an insurance company did not ensure that a certified letter to an insurer had been delivered, so its attempt to cancel an insurance policy was ineffective and the policy was still in effect.
(Updated September 2009)
Health Insurer Liable for Coverage Cannot Dump Costs on Medicare
Briefed Case
Utah high court held that even though Medicare coverage became available for a child with catastrophic medical expenses, previously existing health insurance must cover the expenses it was obligated by the policy to cover until Medicare became effective at a later point in treatment.
(Updated August 2009)
Victim of Random Drive-by Shooting Not Due Uninsured Motorist Benefits
Briefed Case
New Jersey high court held that the owner of a car, who was shot in an apparent random drive-by shooting as she approached her car, was not due coverage from her uninsured motorist insurance as the shooting was not related to ownership or operation of the car.
(Updated June 2009)
Injury Imposed on Assailant at Home Covered by Homeowners Insurance
Briefed Case
Connecticut high court held that when two men argued, and one, the homeowner, threw the other off his porch causing injury, the homeowner’s insurance company had a duty to defend the homeowner as the policy applied to the accident.
(Updated June 2009)
Intentional Misreporting of Information Negates Duty to Defend Mortgage Broker
Briefed Case
Appeals court held that a mortgage broker that falsified credit scores on mortgage applications, and was forced to indemnify lenders for making bad loans, was not due coverage from its liability insurance policy as the actions fell under the fraud and dishonesty exclusion.
(Updated May 2009)
Pollution Exclusion Applies to Carbon Monoxide Release
Briefed Case
Georgia high court held that a commercial general liability policy was clear in its definition of pollution damage excluded from coverage. Carbon monoxide is a pollutant, so the insurer did not have to defend the policy holder in suit for injury suffered due to the presence of the gas in a residence.
(Updated February 2009)
Life Insurance Benefits Need Not Be Paid for Death of Drunk Driver
Briefed Case
Appeals court held that the administrator of a company’s employee benefits plan was within his rights to deny payment of life insurance benefits for an employee killed in a one-car crash when driving while highly intoxicated.
(Updated January 2009)
Insurance Company Has Duty to Defend Novel Damages Claim
Briefed Case
Texas high court held that a commercial insurer has a duty to defend the maker of a cellphone sued for alleged damage to human cells caused by radiation emitted by cellphones. The claim is for bodily injury caused by the product; that falls under the standard commercial general liability policy.
(Updated January 2009)
Insurer Not Liable for Failure to Provide Policy Requested by Third Party
Briefed Case
Appeals court held that an insurer was not liable for failure to provide an insurance policy requested by a home buyer through the home seller. The buyer never directly dealt with the insurer, so the insurer owed no duty to the buyer when a loss was later incurred, and there was no insurance on the property.
(Updated December 2008)
Drug Addict Who Completes Rehab No Longer Due Disability Coverage
Briefed Case
Appeals court held that long-term disability benefits no longer applied to a worker who successfully completed treatment for addiction to narcotics and wanted to remain on disability benefits. Since the worker successfully completed rehab, benefits would not continue.
(Updated July 2008)
Driver Who Has Left Vehicle No Longer Covered by Vehicle Policy
Briefed Case
Idaho high court held that a sheriff who left his vehicle to assist at a roadside problem, and was hit by a vehicle, was not covered by the underinsured and uninsured policy that applied to his vehicle since he was no longer occupying the vehicle.
(Updated June 2008)
Failure to Quickly Notify Insurer Did Not Invalidate Policy
Briefed Case
Texas high court held that when an insured failed to notify an insurer in a timely manner about a matter that could cause the insurer to defend or indemnify the insured, it did not invalidate the policy. The delay in notification was immaterial as it did not prejudice the outcome of the matter.
(Updated May 2008)
Intentional Torts Not Covered by Umbrella Liability Policies
Briefed Case
South Dakota high court held that an insurer did not have a duty to defend an insured who had a liability umbrella policy and was sued for alienation of affection. The court held that intentional torts are excluded from coverage.
(Updated April 2008)
Uninsured Motorist Coverage Did Not Extend to Passenger Injured in Accident
Briefed Case
Nebraska high court held that the uninsured motorist provision of an automobile insurance policy clearly stated who was covered. Its terms did not include a passenger in a car struck by an uninsured motorist. Insurers have the right to specify who is covered by a policy.
(Updated March 2008)
Theft Changes Classification of Vehicle for Insurance Purposes
Briefed Case
Maine high court held that a peace officer’s personal auto policy covered injuries he suffered when his patrol car was stolen, and the thief ran over the officer. The theft of the vehicle changed its classification from a work vehicle to a stolen vehicle, and the officer’s personal uninsured motorist coverage applied.
(Updated March 2008)
Drunk Driver Killed in Accident Not Due Personal Accident Insurance Benefits
Briefed Case
Appeals court held that a drunk driver who was killed in a one-car accident violated the terms of his Personal Accident Insurance policy as the cause of death was self-inflicted due to voluntary consumption of a large amount of alcohol.
(Updated March 2008)
Insurer Has No Duty to Provide Details to Applicant of Health Test Results
Briefed Case
Appeals court held that a life insurance company had no duty to reveal to a policy applicant the details of blood and urine sample tests used to help set policy rates.
(Updated December 2007)
Insurer Not Responsible for Defending Insured for Claim of False Label on Shipment
Briefed Case
Michigan high court held that a general liability policy did not require the insurer to defend the insured who was sued by a competitor for trademark infringement for shipping the competitor’s product with a label from the insured. That action falls outside of the scope of the policy.
(Updated November 2007)
Clock Runs from Date Policy Coverage Could Have Begun
Briefed Case
Appeals court held that in a claim for underinsured motorist coverage, the clock on the four year statute of limitations began to run when the other motorist’s insurer resolved the matter and the driver’s insurance could then become relevant.
(Updated November 2007)
Insurer Responsible for Practical Joke Taken Badly
Briefed Case
Washington state high court held that an insurer acted in bad faith for failing to defend a client dentist who was sued by an employee who did not like a practical joke the dentist played on her. The tort she claimed to have suffered can be considered an accident for purposes of the policy.
(Updated October 2007)
Full Policy Value in Force for Policy Cancelled after Short Time
Briefed Case
Appeals court held that the full limit of a policy would apply to damages sustained by a policy holder even though the policy was cancelled after three months. The policy did not state that coverage limits would be prorated, so full coverage was in effect.
(Updated May 2007)
Consequential Losses Part of Direct Loss under Fidelity Policy
Briefed Case
Montana high court held that expenses incurred by an employer investigating dishonesty by an employee are part of direct losses that would be covered by a fidelity policy that covers acts of employee dishonesty.
(Updated May 2007)
A Building Being Renovated Treated Same as Building under New Construction
Briefed Case
California high court held that an “under construction exception” to a “vacancy exclusion” that limited coverage would apply to building renovations just as it applied to new construction, hence the vacancy exclusion did not apply when damage occurred during renovation.
(Updated March 2007)
Insurer Does Not Cover Legal Fees for Injuries Not Covered by Policy
Briefed Case
Virginia high court held that an insurer had no obligation to cover the legal fees incurred by a city that successfully defended itself against a bodily injury claim. Since the bodily injuries in question were not covered by the insurance policy, there was no right to collect coverage for legal fees spent on the defense.
(Updated January 2007)
No Professional Insurance Coverage for Acts of Fraud
Briefed Case
Louisiana high court held that professional insurance did not cover fraud by an attorney who cheated his clients. The policy excluded acts of dishonesty, criminality and fraud, so no coverage applied.
(Updated January 2007)
Food Lost Due to Mad Cow Scare Caused Business Interruption Insurance to Take Effect
Briefed Case
Appeals court held that when a U.S. company could not import and use the beef it bought in Canada, because beef imports were prohibited due to the Mad Cow disease, the company suffered a direct physical loss covered by its business interruption insurance.
(Updated October 2006)
Terrorism Insurance Did Not Cover Losses Due to Forced of Operations after 9/11
Briefed Case
Appeals court held that United Air Lines could not recover under its terrorism insurance policy for losses of business when the airline was forced to suspend operation for several days after the 9/11 attacks. The government suspended operations to prevent future attacks.
(Updated July 2006)
Asbestos Diseases Not Covered by Accident Insurance
Briefed Case
Appeals court affirmed that a policy held by an employer that covered “bodily injury by accident” did not apply to asbestos-related diseases suffered by workers.
(Updated February 2006)
No Duty to Defend Insured Accused of Intentional Sexual Molestation
Briefed Case
Rhode Island high court held that a medical malpractice insurer had no duty to defend or indemnify a physician accused of sexual molestation of a child-patient who later committed suicide.
(Updated July 2005)
Homeowner Insurance Applies to Injury Suffered after Unloading Vehicle
Briefed Case
Maine high court held that an injury suffered when carrying a load from a vehicle into a shed did not involve the vehicle; the homeowner insurance would apply to the injury even though the policy excluded injuries suffered while unloading a vehicle.
(Updated July 2005)
Sending Junk Faxes in Violation of Federal Law Due No Insurance Protection
Briefed Case
Appeals court held that a firm that sent junk faxes to other companies in violation of federal law, and was sued by the recipients, could not receive coverage under its commercial general liability policy, as no coverage is due for such an illegal act.
(Updated June 2005)
Loss of Business Income Must Be Caused Directly by Factors Stated in Policy
Briefed Case
Appeals court held that a hotel chain was not due business income loss for the loss of customers who could not travel by air after the 9/11 attacks. The government did not order the hotels to close; it temporarily closed aviation.
(Updated June 2005)
Serious Deviation in Use of Company Vehicle Negates Insurance Coverage
Briefed Case
Texas high court held that an insurer was not liable on its auto policy when an employee, who was permitted to drive a company vehicle for business purposes, went on an 80 mile trip while on a date and crashed when drunk. Such a deviation from normal use terminates liability responsibility for the insurer.
(Updated March 2005)
Insured Can Be Required to Assign Title to Vehicle to Insurance Company to Collect for Total Loss
Briefed Case
Appeals court held that when an insurance company pays the full value for a car when it is stolen or totaled in an accident, it has the right to enforce the provision in the policy that requires the insured to assign title to the vehicle to the insurance company as a condition of receiving payment.
(Updated October 2004)
Insurer Must Defend Misuse of Trademark on Company Website
Briefed Case
Appeals court held that misuse of a famous trademark on a website would constitute an “advertising injury.” Hence, the liability insurer of the company that misused the trademark must defend the suit brought by the trademark owner for misappropriation.
(Updated March 2004)
Disability Due to Surgery Is Injury, Not Illness
Briefed Case
Appeals court affirmed that a disability suffered from complications in surgery is classified as a bodily injury, not a sickness. That meant a different classification for purposes of disability insurance.
(Updated February 2004)
Party Must Be Informed of Exclusions in Policy Coverage for Exclusions to Be Effective
Briefed Case
Wisconsin appeals court held that a drunk-driving exclusion in personal accident insurance purchased at the time of renting a car was not enforceable because the purchaser, who was killed when driving drunk, was not informed of the exclusion or given a copy of the policy. Hence the death benefit must be paid to the renter's estate.
(Updated February 2004)
Fraternal Organization May Require Arbitration of Insurance Disputes
Briefed Case
Appeals court held that life insurance policies issued by fraternal organizations, which are governed by a Model Fraternal Code rather than state insurance law, had the right to change their policies to require that all disputes be resolved by arbitration.
(Updated January 2004)
Commercial Insurer Has Duty to Defend Store Employee Accused of Sexual Molestation
Briefed Case
High court of SW Legal Virginia held that a commercial general liability insurer has a duty to defend not only the store-employer but also an employee of the store who was accused of sexually molesting a customer.
(Updated July 2003)
Physician Able to Perform Some Medical Services Not Totally Disabled.
Briefed Case
Maine high court held that a physician who was unable to perform major surgery, but could perform examinations, was not totally disabled, and so could not qualify for disability insurance from his carrier.
(Updated April 2003)
Carpal Tunnel Syndrome an Injury, Not Disease, for Purposes of Disability Insurance
Briefed Case
Georgia high court held that under Georgia insurance law, a person who develops carpal tunnel syndrome as a result of repetitive motions, not as a result of a disease, has suffered an accidental injury, not a sickness, for purposes of disability insurance coverage.
(Updated April 2003)
Intentional Tort Still Accident from Perspective of Insured Victim
Briefed Case
New Hampshire high court held that when a driver intentionally hit and injured a party who was on foot, the injured party could recover for his injuries under the uninsured motorist section of his auto insurance policy.
(Updated March 2003)
Houseguest Who Causes Fire Not Subject to Subrogation
Briefed Case
Appeals court held that it would not be in the interest of equity to require a houseguest to be liable to an insurance company that paid for the loss suffered by the homeowner due to a fire started by the negligence of the houseguest. There is no right of subrogation in such instance.
(Updated March 2003)
Landlord's Insurer May Not File Subrogation Claim Against Tenant's Insurer without Agreement in Lease
Briefed Case
Maine high court held that when a landlord's liability insurance policy pays for damage suffered in a fire in a tenant's apartment, there is no right of subrogation against the tenant's insurer unless the lease specifies such a requirement.
(Updated March 2003)
Business Income Insurance Applies to Suspension of Operations, Not Reduced Operations
Briefed Case
California appeals court affirmed that business income insurance, which promised to replace income lost due to suspension of operations due to a casualty loss, such as a flood that affected a law office, did not apply because the office only reduced operations during repairs, it did not suspend operations..
(Updated March 2003)
9/11 Attack on World Trade Center Held One Occurrence
Briefed Case
Trial court held that insurance binders are the same as policies and so provide the same coverage as the policies would when they issue. The court also held that the attack on the two World Trade Center buildings was one occurrence for purposes of insurance.
(Updated January 2003)
Homeowner Insurance Does Not Cover Sale of Deadly Heroin
Briefed Case
Appeals court held that a homeowner who sold heroin in his home, which killed a user in his home, had no right to insurance coverage in a lawsuit filed by the heirs of the deceased. The sale of heroin was an intentional act excluded from coverage.
(Updated December 2002)
Pollution Exclusion Includes Carbon Monoxide from Defective Heater
Briefed Case
A commercial liability insurance policy for a homebuilder, which contained a pollution exclusion clause, relieved the insurer of providing coverage for injury caused by release of carbon monoxide gas from a defective heater installed in a home. The policy terms were clear in covering such incidents.
(Updated November 2002)
Homeowners' Insurance Covers Liability from Tort Injury Inflicted by Insured
Briefed Case
Appeals court held that a tort liability that resulted from a beating inflicted by a policyholder's son on a classmate was "an occurrence" covered by homeowners' insurance. Therefore the insurer was liable for the tort judgment.
(Updated July 2002)
Oklahoma Supreme Court Holds That Insurers May Prohibit Policy Stacking
Briefed Case
The Oklahoma high court held that a provision in an auto insurance policy that prohibits an insured from stacking one auto policy on another to increase liability coverage from the same company, is valid and consistent with the law in most jurisdictions.
(Updated April 2002)
Business Use of Property Brings Exclusion in Homeowner Insurance Policy into Effect
Briefed Case
The Virginia high court held that when a homeowner allowed a friend to use some of his property for business purposes, and that use caused a loss to occur, that the policy exclusion for damages related to losses caused by business activity came into effect.
(Updated March 2002)
Insured Must Give Timely Notice to Insurer of Event That May Trigger Liability
Briefed Case
Appeals court held that an insurer was not liable for coverage when the insured waited 25 years to inform the insurer of the occurrence of events that could lead to liability under an insurance policy. There is an obligation to give notice of occurrences as soon as practicable.
(Updated March 2002)
Rental Car Company Is Primary Insurer Despite Escape Clause
Briefed Case
Appeals court affirmed that at least in Washington, a rental car company is the primary insurer of a rented vehicle. The escape clause that names the renter's insurance company comes into play only if the rental car company's insurance is exhausted, even if the company is a self-insurer.
(Updated February 2002)
Infringement of Product Design is Not Advertising Injury Covered by Policy
Briefed Case
Appeals court held that an insurer had no obligation to indemnify a company sued for product infringement. The policy covered misappropriation suits that arose from advertising; the sale of a product that violates a patent is not an advertising injury.
(Updated February 2002)
Pollution Exclusion Does Not Apply to Appliance Malfunction
Briefed Case
Ohio high court held that the pollution exclusion in a general liability policy did not relieve the insurer from liability in a case where the malfunction of a heater in an apartment caused carbon monoxide poisoning. The exclusion was not specifically directed at such an incident and so does not exempt the insurer.
(Updated January 1, 2002)
Homeowners Insurance Does Not Cover Business-Related Injury at Home
Briefed Case
Appeals court affirmed that the "business activities" exclusion in a homeowners policy applied to a suit filed by a worker who suffered an injury when working on the property of the homeowner on facilities to be used for business purposes.
(Updated January 1, 2002)
Insured Party Sued for Damages After Statute of Limitation Expires Evades Liability
Briefed Case
Tennessee appeals court held that in a fatal accident case, where the insured driver who caused the accident was not identified for more than a year, the statute of limitations had expired, so he could not longer be made a defendant in a personal injury suit for damages.
(Updated December 1, 2001)
Policy Unclear as to Status of Golf Cart Is Read in Favor of Insured
Briefed Case
Appeals court held that where a homeowner's insurance policy is unclear as to liability coverage for an injury caused by a golf cart to a pedestrian, where one provision appears to provide coverage and another provision appears to exclude coverage, the ambiguity is resolved in favor of the insured.
(Updated December 1, 2001)
Divorce Agreement Fixed List of Beneficiaries of Life Insurance Policy
Briefed Case
Appeals court held that a divorce agreement that specified that a father's life insurance policy would list the two minor children of the marriage as the beneficiaries of his policy meant that he could not later add other beneficiaries to the policy even though the agreement did not specifically prohibit that.
(Updated November 1, 2001)
Advance Payments Credited Toward Judgment Only If in Same Damage Category
Briefed Case
Arkansas high court held that an insurance company could be credited for payments made to an accident victim prior to litigation. Advance payments are offset against the jury award by category. Overpayment by the insurer in some categories will not be offset against higher amounts awarded for other damage categories.
(Updated August 1, 2001)
Minnesota Law Does Not Govern Insurance Dispute Over Out-of-State Accident
Briefed Case
Minnesota high court held that, in an accident involving a Minnesota resident who was injured by a Nebraska resident in an accident in Nevada, where both parties had insurance from their respective states, the Nebraska insurer was not subject to Minnesota law with respect to the issue of whether it had to indemnify the Minnesota insurer for the payments it made to its policyholder.
(Updated August 1, 2001)
Breach of Contract by Health Insurer Is Not Breach of Fiduciary Duty
Briefed Case
Appeals court held that although an insured may have a suit for breach of contract, fraud, and false advertising against her health insurer for failure to properly review needed medical care, there is no suit for breach of fiduciary duty because there was no special relationship that created that duty.
(Updated June 1, 2001)
States May Not Tax "Independently Procured Insurance" from Across State Lines
Briefed Case
Texas appeals court held that the state could not impose a tax on insurance purchased by firms doing business in Texas that obtain insurance on their property in the state from out-of-state insurance companies not licensed to do business in Texas.
(Updated March 1, 2001)
No Bad Faith By Insurer That Properly Evaluated Claim
Briefed Case
Court dismissed a suit brought by an insured hotel owner who was unhappy with the insurer's evaluation of the damage caused by a hurricane. The insurer appeared to properly evaluate the claim, notifying the insured at all stages of the process; only later did the insured protest and hire its own expert.
(Updated February 1, 2001)
Accident Victim Must Give Lawsuit Proceeds to Health Insurer to Cover Medical Expenses
Briefed Case
Appeals court upheld the right of an employer's medical insurer to recover the proceeds an injured employee got in settlement from an accident that caused her to incur over $200,000 in medical expenses covered by the insurer.
(Updated February 1, 2001)
Denial of Total Disability Payments Upheld on Basis of Medical Evidence
Briefed Case
Court dismissed a suit against an insurer who refused to pay total disability payment to employee who claimed disability. While the employee suffered back problems, the medical evidence was clear that he was not totally disabled, which was what the policy required.
(Updated January 1, 2001)
Employee on Medical Leave Is "Active" Employee for Life Insurance Purposes
Briefed Case
Appeals court affirmed judgment in favor of a life insurance policy beneficiary who had been denied benefits from a policy that covered his wife. Her employer provided the policy. The insurer had claimed that since she was on medical leave when she was killed in an accident the policy was not in force. The court held that she was an "active" employee under the policy.
(Updated January 1, 2001)
Death Caused by Pacemaker Not "Accidental Death"
Briefed Case
Appeals court upheld judgment for insurer that refused payment of death benefits under an accidental death benefit policy. The cause of death was the malfunction of a pacemaker, which allowed a heart problem to cause death. That does not qualify as accidental death.
(Updated December 1, 2000)
Landlord Cannot Sue Tenant for Fire Damage When Fire Insurance Policy in Effect
Briefed Case
Court dismissed a suit brought by a landlord against a tenant who accidentally started a fire that damaged an apartment. The tenant is a co-insured under a fire insurance policy and is not subject to subrogation by the landlord or the insurance company.
(Updated December 1, 2000)
Long-Time Pollution Leaks, While Unintended, Were Not Sudden and Accidental
Briefed Case
Court held that a comprehensive liability insurance policy that covered damages from "sudden and accidental" pollution releases does not include damages from long time leaks that caused damage. Words in policies are to have their ordinary meaning; the leaks were not sudden.
(Updated November 1, 2000)
Title Insurer Negligent But Restores Priority of Mortgage Company by Equity Rule
Briefed Case
An appeals court held that a title insurance company was negligent for failing to discover a lien placed against property for which a new mortgage was issued. The doctrine of equitable subrogation allows the new mortgage maker to take the priority of the original mortgage maker and stop the forced sale of the property to the other lien holder.
(Updated November 1, 2000)
Insurer's Insurance Comes Before Creditor's Insurance in Case of Insurer Insolvency
Briefed Case
Rhode Island high court held that the fund that insures insurance companies in case of their insolvency stood first in line to pay losses suffered by a homeowner whose property was damaged and whose insurance company was insolvent. The insurance held by the homeowner's mortgage company to cover uninsured losses does not have primary liability.
(Updated September 1, 2000)
Lessor Has No Obligation to Ensure that Leased Vehicles Are Insured
Briefed Case
Party injured by uninsured leased vehicle sued leasing company for failing to require lessee of vehicle to maintain proper liability insurance. Nebraska high court held that in long-term leases, by law the lessee is considered to be the owner of the vehicle and so has the obligation to maintain insurance.
(Updated June 1, 2000)
Uninsured Motorist Coverage Does Not Apply To Accident Caused by Hit-and-Run Car That Did Not Strike Insured
Briefed Case
Appeals court upheld a trial court decision denying coverage to a motorist by his insurer. The motorist was struck by a truck that was forced into them by a hit-and-run third party. Since the third party did not strike the insured vehicle, the uninsured motorist coverage did not apply.
(Updated April 1, 2000)
Insurance Policy May Not Conflict with State Public Policy
Briefed Case
Georgia high court held that the terms of a health insurance policy, which required its policyholders to reimburse the insurer for health costs when compensation was received from other sources, violated state policy that favors complete compensation when the insured was compensated for damages from an automobile accident.
(Updated March 1, 2000)
Bite by Dog Sitting in Parked Car Not Covered by Auto Insurance Policy
Briefed Case
Iowa high court held that automobile insurer is not responsible for liability arising from an auto owner's dog biting a child who approached the parked car, which had a door open. The injury was not related to the use of the car, so the auto policy did not apply.
(Updated February 1, 2000)
No Duty to Reveal Medical Test Results to Life Insurance Applicant
Briefed Case
Appeals court affirmed dismissal of a case against an insurer brought by the widow of a man who applied for life insurance but was rejected on the basis of the physical tests given as part of the application. Applicant died soon after failing the physical, but insurer had no duty to disclose test results to applicant.
(Updated January 1, 2000)
Sublessee of Rental Housing is Resident for Purposes of Renter's Insurance Policy
Briefed Case
Appeals court held that a sublessee of a rented duplex, who used the duplex as her primary residence, was excluded from coverage for bodily injury she suffered when attacked by her roommate's dog. Since she was a resident of the duplex, not a visitor, the policy did not cover her injuries.
(Updated January 1, 2000)
Letter Raising Possibility of Claim Against Insured Did Not Trigger Notice to Insurer Requirement
Briefed Case
Appeals court held that an insured had not violated the insurance contract provision requiring that notice of claims must be made in a timely fashion. The insured was sued more than two years after it first knew of a potential liability issue. Since there was no specific claim made originally, the insured did not have a duty to notify the insurer at that time of the initial correspondence.
(Updated November 1, 1999)
Water from Melting Snow Is Surface Water
Briefed Case
Appeals court held that damage to personal property caused by melting snow is excluded from coverage in homeowner insurance that excludes damage from surface water. Melting snow causes surface water, so such damage is not covered.
(Updated November 1, 1999)
Use of More Than One Adjuster Not Bad Faith By Insurer
Briefed Case
Arkansas high court held that the use of more than one adjuster to review damages to a home was not evidence to support a finding of a tort of bad faith by the insurer. However, it was for the jury to decide if the insurer or home owner was right about the value of the damages suffered.
(Updated October 1, 1999)
Suicide by Driver Is Not an Accident; Auto Insurance Coverage Does Not Apply
Briefed Case
Appeals court upheld verdict for insurer of driver who committed suicide by driving her car into a truck. Since the event was not an accident, the policy did not apply to the losses suffered by the other driver's insurance company.
(Updated September 1, 1999)
Involuntary Manslaughter Is Felony That Precludes Health Insurance Benefits
Briefed Case
Court held in favor of insurer that denied health benefits to insured who was injured when, driving drunk, he killed another driver and was convicted of involuntary manslaughter. A policy provision that excludes benefits in case of voluntary participation in a felony applies.
(Updated June 1, 1999)
Alcohol Exclusion for Death Benefit Only Applies at Time of Death
Briefed Case
Appeals court held that insurer must pay death benefits to beneficiaries of policy that excluded benefits if death occurred when insured was legally drunk. Insured died nine days after he caused an accident by drunk driving. While drunk when in the accident, he was not when he died.
(Updated May 1, 1999)
Sleeping in Camper on Pickup Truck Not Use of a Motor Vehicle
Briefed Case
Michigan high court upheld lower court verdicts in favor of insurer, that refused to pay PIP benefits to insured who suffered injury from a defective heater when sleeping in a camper on his pickup. Vehicle was not in use as a motor vehicle, so coverage did not apply.
(Updated May 1, 1999)
Tenants Not Liable to Insurer for Fire Due to Their Negligence
Briefed Case
Massachusetts high court held that a fire insurer had no subrogation claim against tenants for negligently causing a fire that resulted in payment for fire loss to landlord. Lease did not establish tenant liability, so insurer has no claim.
(Updated April 1, 1999)
Policyholders To Be Paid Replacement Cost Upon Incurring Debt for Reconstruction
Briefed Case
Insurer would not pay homeowner full replacement cost until the reconstruction on their fire-damaged home was completed. Court ordered insureds to be paid the replacement cost up front, once they incurred a valid debt to have their home repaired.
(Updated April 1, 1999)
Drunk Driver's Death Not "Accidental" So Policy Benefits Denied
Briefed Case
A drunk driver knew or should have known that injury or death was a possible consequence of driving drunk. Hence, an ERISA accidental death policy did not pay benefits to the beneficiary of an insured who was killed when, while legally intoxicated, he ran his car into a building
(Updated March 1, 1999)
Multi-Year Lapse Before Filing Disqualifies Injury Claim
Briefed Case
Doctor forced to quit practice due to psychiatric problem filed for injury benefits after his illness benefits expired. Appeals court upheld denial of disability benefits for injury because the notice requirements of the policy had been violated by many years.
(Updated March 1, 1999)
Student Walking to Board Bus Covered By Its Uninsured Motorist Insurance
Briefed Case
An uninsured motorist struck a student who was walking to board a stopped school bus. Court held that this constituted use of the vehicle, so the uninsured motorist insurance of the bus covered the student.
(Updated March 1, 1999)
The Term "Accident" to Be Construed in Favor of Insured
Briefed Case
Florida high court upheld ruling in favor of insured building contractor who sued insurer for coverage of losses incurred when builder accidentally built a house over the set-back line. Accident includes events not expected or intended.
(Updated January 1, 1999)
Marine Insurance Rescission Allowed Due to Concealment of Loss History
Briefed Case
Due to concealment, appeals court upheld rescission of marine insurance issued for yacht that sank on maiden voyage. Yacht was purchased by company owned by person who had long history of unrevealed yacht losses and multiple other insurance claims.
(Updated January 1, 1999)
Law When Policy Issued Governs Later Claim
Briefed Case
Insured, injured in accident, invoked underinsured motorist coverage in her policy to cover damages. Ohio high court held that the law at the time her policy was made formed a binding contract that was not altered by later changes in insurance statutes.
(Updated October 19, 1998)
Misrepresentation, Not Misstatement, Grounds for Policy Rescission
Briefed Case
Policy holder placed in nursing care for Alzheimer's six months after she received a policy. Policy holder was due trial to determine if her misstatement that she had not been hospitalized or diagnosed for anything other than high blood pressure were misrepresentations or were innocent so that the policy could not be rescinded.
(Updated October 19, 1998)
Uninsured Motorist Coverage Applies to Victim of Intentional Tort with a Vehicle
Briefed Case
Party with no-fault insurance was injured in his vehicle in an assault by an uninsured motorist using a vehicle. Court held that uninsured motorist coverage would apply despite the intentional tort because of the liberal coverage of no-fault insurance.
(Updated October 19, 1998)
Take Your Victims as You Find Them for PIP Benefits
Briefed Case
Trial court properly allowed application of "thin skull" doctrine, that tortfeasors take their victims as they find them, in case of breach of PIP benefits by insurance company. As in tort, the extent of damages are unforeseeable in the PIP contract.
(Updated May 29, 1998)
Sterile Bull Not Covered Property Damage Despite Disappointed Heifers
Briefed Case
Dairy herd owner incurred economic losses due to purchase of breeding bull that turned out to be sterile. Bull seller's liability policy did not apply because sterility is not an accident and economic loss to the dairy was not property damage.
(Updated May 29, 1998)
Car Rental Company Stands First in Line for Liability Responsibility
Briefed Case
Driver of rental car at fault in accident, who did not buy insurance from rental agency, was required by rental contract to look to his personal auto insurer for liability coverage. Minnesota high court held that under statute and common law, rental company stands first in responsibility.
(Updated May 29, 1998)
Insurer Has Good Faith Duty to Minimize Insured's Liability Briefed Case
Insurance company demanded release of all claims and subrogation rights in drunk driving accident in which it was clear its client was at fault. Failure to settle in such circumstances could well be bad faith, an issue for the jury.
(Updated May 29, 1998)
Ambiguous Policy Terms Construed To Favor Insured
Briefed Case
Medical expenses of live-in housekeeper injured in house fire denied by insurer. Court held that since the two conditions in the policy of live-in employees covered were inconsistent and ambiguous that, as usual, the policy would be interpreted so as to favor the insured.
(Updated 4-6-98)
Auto Insurance Benefits May Be Reduced By Amount of Workers' Compensation Benefits
Briefed Case
North Carolina law allows an offset to auto insurance policies covering uninsured motorists by sums received from workers' compensation benefits that arose from the same incident.
(Updated 3-11-98)
Bad Faith Claim Against Insurer Barred When Insurer Paid Judgment Against Insured
Briefed Case
Customer sued business for personal injury and business owner's insurance company for bad faith for not attempting to settle her claim. District court decision to dismiss case against insurance company because it paid the judgment won in the action against insured upheld by Florida high court.
(Updated 2-3-98)
Right to Convert Policy Does Not Continue Coverage
Briefed Case
Former employee killed less than a month after leaving employment. His life insurance policy had a right of conversion within 31 days of leaving employment. Because he had not elected to convert to a personal policy, there was no coverage in effect during the conversion period.
(Updated 12-29-97)
Mail Box Rule Applied to Insurance Policy Acceptance Briefed Case
Insurance policy holder's mailing of renewal premium two days before policy expiration held to form a contract under the mail box rule even though the renewal notice, which policy holder lost, stated that renewal was not effective until payment was received.
(Updated 11-14-97)

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