An insurance company’s attempt to avoid paying underinsured motorist coverage benefits to a student who was critically injured in a school bus crash has failed.
In Sleiter v. Am. Family Mut. Ins. Co., 19 students were injured in a school bus crash caused by the negligent driver of another vehicle. That driver only carried an insurance policy with a maximum $60,000 liability coverage. Meanwhile, the school district had an insurance policy that covered up to $1 million.
That may sound like a lot, but spread among 19 injured people – some of whom suffered severe, critical, debilitating and lasting injuries – it’s not all that much. After a special master was assigned to calculate the damages of each student, plaintiff’s personal damages were found to be $140,000. (In total, student damages were estimated to be $5.3 million). Because the policy couldn’t reimburse students their full amount of damages, each was given a percentage, based on the severity of their injuries.
For plaintiff, he received $1,600 from the at-fault driver’s insurance policy and $34,500 from the school bus policy. Still, this was only a fraction of his $140,000 in damages.
From there, his parents on his behalf sought to collect from their underinsured motorist (UIM) policy, which provided up to $100,000 in coverage. Because he’d already received $36,100, the amount they sought to collect under their own policy was the difference, or $63,900.
The insurance company refused. On its logic, the policy would only reimburse when the total amount of insurance available to plaintiff was less than $100,000. Here, the insurer argued, plaintiff had access to more than $1 million in coverage. But, as plaintiff noted, he couldn’t collect on all that due to the special circumstances.
The purpose of this “total available” provision is to ensure that injured parties seek compensation from all directly liable parties before turning back around to collect UM/UIM from their own insurance company. But in this case, the actual amount he was able to receive was far less than the the policy limit or even what the share to which he was entitled.
Still, district court granted summary judgment to defendant insurer. Plaintiff appealed, and that appeal was recently weighed by the Minnesota Supreme Court.
In that state, the law requires all auto insurance policies to carry a minimum level of UM/UIM coverage, which the law states is to be available to the injured person when his or her damages exceed the limit of “coverage available” to that person.
So this was the central question: Did the plaintiff truly have more than $1 million in “coverage available” to him?
The answer, clearly, is no. If he had been the only person injured in the school bus crash, or maybe only one of a handful, that policy might have been enough to cover his losses. But he was one of 19, and there simply was not enough to go around.
The interpretation of the law and policy, as set forth by the plaintiffs, was consistent with the legislative purpose of UM/UIM coverage, which is to relieve the severe economic burden placed on uncompensated victims of auto accidents. Defendant’s interpretation, meanwhile, did not serve this purpose, and would have left him (and his parents) significantly burdened by costs and damages incurred through no fault of their own.
Thus, the state supreme court reversed the trial court and ordered benefits be granted to plaintiff.
If you have been a victim of a traffic accident, call Chalik & Chalik at (954) 476-1000 or 1 (800) 873-9040.
Sleiter v. Am. Family Mut. Ins. Co., Aug. 5, 2015, Minnesota Supreme Court
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