Case Law Watch

Commercial Liability-AutoBauer v. Century Surety Company
(Wis. App. May 2, 2006)
Ruling: Unloading constitutes “Operation” under Wisconsin coverage statute. The court held that the commercial liability insurer of a motor carrier was obligated to defend its insured in a personal injury action commenced by a truck driver. Pursuant to Wisconsin Statute §194.41, a motor carrier must be covered by insurance that will pay for damages “against the owner or operator” because of “negligent operation.” The sole issue was whether an individual who was helping the truck driver unload a turbine from his truck when the accident occurred became an operator of the truck for purposes of coverage under the statute. The court held that the individual became an operator of the truck at the time of the accident.

Auto–Uninsured/Underinsured Motorist CoverageHaydel v. State Farm Insurance Co., et al.
(La. App., First Circuit, May 5, 2006)

Ruling: Insured’s son not covered under UM/UIM policy; not relative residing with insured. Insured claimed benefits under his State Farm UM policy for coverage for his son’s death as a passenger in an auto. State Farm disclaimed, arguing that insured’s son did not “primarily” reside within the insured’s household at the time of the accident as required by the policy provisions. The court found the insured’s son was not a “relative” under the policy language (“a person related to you or your spouse . . . who resides primarily with you”) because the insured testified that his son resided with his mother for “most” of the school year and spent “70 percent” of his time in his mother’s household. The son’s mother, who testified she had sole custody of the son, confirmed the insured’s testimony.

Walker v. Employers Insurance of Wausau(Ind. App. May 12, 2006)

Ruling: “Hit-and-Run Auto” requires physical contact with insured vehicle. Insured was injured when a pick-up truck swerved in front of his tractor-trailer and kicked-up gravel, causing the insured to apply his brakes, skid, and ultimately jackknife. His uninsured motorist carrier denied coverage for the claim on the ground that the insured was not “hit” by the unidentified vehicle. The court held that the term “hit-and-run auto” as used in the policy requires physical contract with the insured vehicle, but that contact may occur when an unidentified vehicle strikes an object impelling it to strike the insured vehicle and a substantial nexus between the unidentified vehicle and the intermediate object is established.

Hedges v. Nationwide Mutual Insur-ance Company
(Ohio May 3, 2006)

Moore v. State Auto. Mut. Ins. Co., 88 Ohio St.3d 27 (2000), held that the UIM statute, R.C. 3927.18 did not limit UIM coverage in such a way that an insured must suffer bodily injury, sickness or disease. The Moore case presented similar facts: A mother seeking UIM benefits for the death of her non-insured son. Subsequent to Moore, however, the statute was amended. The court held that under the amended statute, which included the phrase “suffered by insureds,” required bodily injury to an insured for the UIM coverage to be available.

Bad FaithCombetta v. Ordoyne, Jr., et al.
(La. App., First Circuit, May 5, 2006)

Ruling: Settlement with some, but not all claimants eligible for coverage under UM/UIM policy not bad faith. Louisiana law requires insurers to pay any undisputed amount of an insured’s claim within thirty days after receipt of satisfactory proof of loss. LSA-R.S. 22:658(A)(1). After a delay of sixty days, an insurer is deemed to have breached its duties to its insured. LSA-R.S. 22:1220(B)(5). Plaintiff claimed State Farm’s payment of remaining policy limits to him after satisfying claims of two other insured’s was improper and insufficient given the nature of his injuries and medical bills. The court found that State Farm did not act in bad faith vis-à-vis plaintiff because it had not received proof of the nature or extent of any of plaintiff’s injuries at the time it paid the first two claimants. Further, the court found State Farm would have violated Louisiana law had it waited to receive plaintiff’s proof of loss prior to paying the claims it received prior to plaintiff’s proof.

Duty to DefendCertain Underwriters at Lloyd’s v. Professional Underwriters Agency, Inc.
(Ill. App., 2nd Dist., May 3, 2006)

Ruling: Insurer not obligated to defend insured while rescission action pending. The issue presented in this appeal was whether an insurer that has a pending claim for rescission of an insurance contract must initially provide to the insured a defense in an underlying action, during the pendency of the rescission action. The court held that an insurer’s obligation to act on its duty to defend is delayed until the conclusion of the rescission action. If the insurer eventually loses in the rescission action, it will be liable for the cost of the defense, both during and after the rescission action, to the extent dictated by the governing insurance policy. If the insurer succeeds in the rescission action, it will not be liable for any of the cost of the defense.