The case of Nat’l Am. Ins. Co. v. Artisan & Truckers Cas. Co. involves an insurance company that refused to defend its insureds after a trucking accident that left two people seriously injured.
As in many large truck crashes, there were numerous entities involved. The entire trucking industry is structured in such a way as to limit liability, which can make it difficult for the injured parties pursuing just compensation. That’s why, as the U.S. Court of Appeals for the Seventh Circuit noted, these plaintiffs were “smart” to sue every possible defendant. That included the driver, his father (who owned the tractor), the carrier (whose placard was on the trailer), the other individual who was in the semi-truck at the time of the crash (there was a dispute as to whether he was the one driving).
When the driver of the truck learned of the lawsuit, he contacted his own insurance company to request defense, as is standard for almost all defendants in motor vehicle accidents. However, the insurance company refused defense or coverage. The insurer argued the accident was excluded from policy coverage because defendant was driving the tractor on behalf of the carrier.
To be sure, the carrier’s placard was on the trailer at the time of the crash. However, the driver’s father hadn’t actually signed a contract with the carrier until eight days after the crash.
The case should have been fairly straightforward. This insurance company had issued a policy to driver’s father, the driver (as an additional driver) and for the tractor itself. The policy indicated it would pay damages for bodily injury, property damage and other covered costs and expenses for which an insured becomes legally responsible due to an accident arising out of ownership, maintenance or use of a covered auto.
But the insurance company argued that because the vehicle was being operated, maintained or used on behalf of anyone else or any other organization, coverage was not extended.
Counsel for the carrier company wrote to this insurance company and demanded it defend the driver and the owner of the truck. The insurer refused, and even declined to offer any evidence of why it was refusing. Then an attorney for the driver and truck owner again requested defense costs, and indicated it would seek reimbursement if the company refused. Again, the company refused.
Even when confronted with evidence that the truck owner never actually signed a lease with the carrier prior to the crash, the company refused.
Meanwhile, the carrier’s insurer provided a defense, which it was not necessarily required to do, though it did so under a reservation of rights, meaning it would seek reimbursement from driver and truck owner’s insurer if liability was determined.
The case was later settled out-of-court. That settlement agreement indicated the driver and owner’s portion of damages was nearly $100,000. (Total settlement agreement amount was $140,000.)
Carrier’s insurer then took action against truck driver and owner’s insurance carrier for reimbursement, and that’s what this case was.
District court granted summary judgment in favor of plaintiff insurer, and the federal appeals court affirmed. The court noted an insurer’s duty to defend is a broad one, and it exists when any complaint alleges facts that could potentially be within the scope of policy coverage. Here, that was the case, and the insurer had a duty to defend. Therefore, it must now reimburse plaintiff insurance company the cost of the settlement and other associated fees.
If you have been a victim of a traffic accident, call Chalik & Chalik at (954) 476-1000 or 1 (800) 873-9040.
Nat’l Am. Ins. Co. v. Artisan & Truckers Cas. Co. , Aug. 6, 2015, U.S. Court of Appeals for the Seventh Circuit
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