Insurance Protection When Being Sued

Relevant to Texas Insurance Law is a case reported on by the Cook County Record, an Illinois publication.

A Judge’s ruling in a traffic crash personal injury case could cost the insurance company, Liberty Mutual, $4.5 million, even though the policy at the heart of the case is supposedly capped at $25,000.

The judgement issued in this case is currently stayed pending an appeal at the U.S. Court of Appeals for the Seventh Circuit.

In this case, the facts are not in dispute even though the amount in controversy is being litigated.  A vehicle insured by Kimberly Perkins through Liberty Mutual included coverage for her daughter, Michiah Risby.  However, it did not insure Miquasha Smith, who was the driver of the car involved in the one-car accident that severely injured Monteil Hyland.

The first issue in the case is the conflicting statements by Risby and Smith.  According to Risby, she did not authorize Smith to take her mother’s car from a party, but Smith, a 16 year old restricted driver who did not have insurance, said she was given permission to take the vehicle from the party they were both attending.

During a Liberty Mutual investigation based on a liability coverage limit of $25,000 per person, it was concluded that Smith was neither credible nor covered under the policy.  The case therefore closed since neither insured, Perkins or her daughter Risby, were named in the lawsuit.  But that did not stop Hyland’s mother from filing suit against Smith.  Liberty Mutual later informed all parties that it still denied coverage for Smith.

The Judge in the case decided the important issue in the case for him was that Liberty Mutual did not provide a defense for Smith in the case.  Nor did Liberty Mutual file a declaratory judgment action seeking a determination on the issue of the duty to defend or the duty to insure.

In 2014, the Judge entered an order for Hyland for more than $4.5 million dollars against Smith, and Smith assigned Hyland any claims against Liberty Mutual for failure to defend Smith in the case .

In 2015, Hyland filed a complaint against Liberty Mutual for breach of the insurance contract and the duty to defend, but the complaint did not include bad faith or tortious conduct against Liberty Mutual.

The Judge deemed based on case law, that the court must the determine whether there is a need for trial – whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may be reasonably resolved in favor of either party.

Briefing in the case is suppose to be complete by mid December.

This situation is addressed in many places in Texas insurance law and an experienced Texas Insurance Lawyer needs to be consulted if something similar to this occurs.