Punitive Damages And Auto Policy

Dallas and Fort Worth area insurance lawyers need to read this November, 2017, opinion from the San Antonio Court of Appeals.  It is styled, Farmers Texas County Mutual Insurance Company v. Zuniga.

Zuniga was walking to school and struck by a car driven by Christopher Medina.  Zuniga sued Medina for negligence and gross negligence.  A jury awarded Zuniga $93,244.91 in actual damages and $75,000.00 in punitive damages.  Farmers insured Medina and paid the actual damages but then filed a declaratory judgment action seeking a declaration that the policy did not cover punitive damages.

Zuniga filed a motion for summary judgment on the punitive damages issue.  Farmers prevailed in this case.

This court in reviewing the policy language stated that their job was to honor the parties intentions and not remake their contract by reading additional provisions into it.  For example, there was not an exclusion for punitive damages in the auto policy and the absence of an exclusion cannot confer coverage.

If policy language is worded so that it can be given a definite or certain legal meaning, the policy is not ambiguous and the court can construe it as a matter of law.

The court recognized the law that says when a policy is ambiguous and can be interpreted in more than one way that the correct way to interpret the policy is in a way to favor coverage.

The court then cited the language in the policy.

The term “bodily injury” is physical damage to a human being’s body.

The plain meaning of “damages” is a sum of money to compensate for an injury.

The plain meaning of the word “for” is “”in exchange as the equivalent of.”  Thus, the Farmer’s policy promise to pay for damages for bodily injury was Farmer’s commitment to pay a sum of money as compensation in exchange as the equivalent of the physical damage to the injured person’s body.

The Farmer’s declarations page states three separate coverage amounts: one for bodily injury for each person, one for bodily injury for each accident, and one for property damage.

The Limit of Liability section does not expand the scope of coverage.

In ruling for Farmers, the court stated that the absence of an exclusion cannot confer coverage.