Insurance Coverage – How Do You Interpret It?

I live in Dallas, or Fort Worth, Arlington, Grand Prairie, Flower Mound, Mansfield, Justin, De Soto, Duncanville, Azle, or anywhere else in Texas – How do I know how to interpret my insurance policy? Here is a bunch of answers. Consult with an experienced Insurance Law Attorney. Ask you insurance agent. Attend an insurance seminar. Go to law school. Ask your next door neighbor or your boss at work.
The above may seem rediculous but sometimes the answer is hard to get even when asking the professionals. Here is my suggestion. Talk to the lawyer.
Legal conclusions are sometimes easy to reach but too often they are not so easy. Here is a case that argued over what the work “you” means in the policy.
The case was decided by the Texas Supreme Court in 1997. The style of the case is, Grain Dealers Mutual Insurance Company v. McKee, et al.
In this case, the Court had to determine whether the Business Auto Policy that Grain Dealers Mutual Insurance Company (Dealers) issued to Future Investments, Inc. (Investments), a corporation of which Gerald McKee is the president and sole shareholder, provides coverage for McKee’s daughter. The Court said no.
Here are the facts: McKee’s eleven year old daughter, Kelly, was injured in a one car accident while riding as a passenger in a car driven by her adult sister, Delane. The parties in this case agreed that neither Delane nor the car involved in the accident were covered under the Dealers policy and that the accident occurred during an outing unrelated to any business purpose of Investments. That Kelly resided with McKee when the accident occurred and Delane did not.
McKee sued his own personal automobile carrier, Companion Insurance Company, and settled with them. He then went after Dealers for coverage under the Personal Injury Protection (PIP) and Under-insured (UM) portions of that policy.
In analysing the policy, the UM endorsement provides three categories of “who is an insured” under the policy:
1. You and any designated person and any family member of either.
2. Any other person occupying a covered auto.
3. Any person or organization for damages that person or organization is entitled to recover because of bodily injury sustained by a person described in 1 or 2 above.
The PIP endorsement provided two categories of “who is an insured”:
1. You or any family member while occupying or when struck by any auto.
2. Anyone else occupying a covered auto with your permission.
In order for the policy to cover Kelly, she must fall within one of the categories of “who is an insured.” The Dealers policy provides: “Throughout this policy the words ‘you’ and ‘your’ refer to the named insured in the declarations page.” Investments is the “named insured” in the UM and PIP endorsements. The UM endorsement defines “designated person” as “an individual named in the schedule. By such designation, that person has the same coverage as you.” Investments did not name a “designated person” in the space provided in the UM endorsement and did not list additional autos to be covered under either endorsement. The names Gerald McKee and Kelly McKee do not appear anywhere in the policy or the endorsements. As a result, Kelly does not qualify as “you” or “designated person” under the endorsements.
Additionally, Kelly does not qualify as a “family member” under the endorsements. “Family member” is defined in both endorsements as a “person related to you [Investments] by blood, marriage, or adoption who is a resident of your [Investments] household, including a ward or foster child.” Kelly is obviously not related to Investments by blood, marriage, or adoption. Of course, she does not reside in Investments’ household. A corporation cannot have a “family” as that term is defined in the policy.
Because Kelly does not qualify as a “designated person,” a “family member,” or “you,” she does not fall within the first classification of who is an insured under the UM and PIP endorsements. The parties agreed that Kelly was not occupying a covered auto when the accident occurred. As a result, Kelly does not fall within category 2 of either the UM or PIP endorsements. In order to recover under category 3 of the UM endorsement, Kelly would have to be a person described in categories 1 or 2. Because she is not, it is clear that Kelly does not fall within any of the endorsement classifications of “who is an insured.”
Attorneys for McKee argued that the policy was ambiguous and thus should be interpreted as to afford coverage. The Court disagreed.
This case is a good read for understanding how courts might interpret a particular policy. What must be remembered is that each policy has to be read carefully and then the wording in that policy carefully examined in light of the occurrance giving rise to the claim against that policy.