Articles Posted in Auto Insurance

Almost all auto policies will have a form to fill out called a 515A.  This form when filled out and signed excludes named drivers from any coverage while they are operating the otherwise insured vehicle.

This topic was discussed in a declaratory judgement opinion from the Dallas Court of Appeals styled, John Dempsey v. ACCC Insurance Company.

ACCC sought to have the Court declare that ACCC had no liability under a policy of insurance issued to Sherman Clifton.  Shashana Clifton was an excluded driver under the policy.  All the paperwork making the exclusion binding was properly completed.

Insurance lawyers trying to help client with automobile property damage will find they need to understand and be able to explain the damages in two ways.  Actual Cash Value (ACV) and diminished value.

“Actual cash value” is the value of the vehicle, less depreciation.  The limitation of “actual cash value” has been upheld and found to be reasonable cash market value of the vehicle before the loss.  This is discussed in the 1968, Texas Supreme Court opinion styled, Superior Pontiac Co. v. Queen Insurance Company.

Even after a vehicle is fully repaired, its value may still be diminished, but the insurer is not liable to pay for this diminution of value.  This is discussed in the 20023, Texas Supreme Court opinion styled, American Manufacturers Insurance Co. v. Schaefer.  Keep in mind this is in the context of your own insurer, not the other guys insurance company.  The other guy’s insurance can be held responsible for diminution of value.

The terms “repair” and “replace” mean restoring the automobile to essentially the same condition as it was in immediately before the collision.  It would not be restored to the same condition if the repairs left the market value of the auto substantially less than the value before the collision.  This was the decision in the 1969, Corpus Christi Court of Appeals opinion, Northwestern National Insurance Company v. Cope.

As stated in the 1968, Tyler Court of Appeals opinion, Agricultural Workers Mutual Automobile Insurance Company v. Dawson, if a vehicle is repairable, the insured is entitled to no more than what it would cost to repair the property.  This presumes the vehicle has been repaired to essentially the same condition that it was in before the loss.  But if, after repair, the vehicle has not been restored to the same condition as it was in immediately before the loss, the owner may be entitled to recover for diminution in value without necessarily showing the repairs were inadequate.  This was discussed in the 1968, Texas Supreme Court opinion styled, Superior Pontiace Co. v. Queen Insurance Co.

If an insurer repairs a vehicle, it must use parts of “like kind and quality” according to the 2003, Texas Supreme Court opinion styled, American Manufacturers Mutual Insurance Co. v. Schaefer.

Here is some basic information about automobile policy coverage for damage to your insured vehicle.

Under this portion of an auto policy the limit of liability to the insurer is the lesser of:  1)  the actual case value of the stolen or damaged property, 2)  the amount necessary to repair or replace the property with like, kind, and quality, 3)  the amount stated in the declarations of the policy.

The terms “repair” and “replace” mean restoring the auto to essentially the same condition as it was in immediately before the damage.  This is discussed in the 1969, Corpus Christi Court of Appeals opinion, Northwestern National Insurance Co. v. Cope and the 1998, Austin Court of Appeals opinion, Great Texas County Mutual Insurance Co. v. Lewis.

Here’s some basic information for insurance lawyers.

“Collision” is defined in the standard policy as “the upset, or collision with another object, of your covered auto.”

As an example, in the 1984, Amarillo Court of Appeals opinion, Nutchey v. Three R’s Trucking Company, Inc., a three-inch depression in a road, which caused damage to a trailer fell under this definition of “collision.”

The terms of coverage for damage to the auto are fairly straightforward: “named-peril” coverage is provided on “covered autos.”  Specifically, the Texas Personal Auto Policy provides that the carrier will pay for “direct and accidental loss to your covered auto.”  The coverage is divided into “collision” coverage and “coverage other than collision.”  The “other than collision” coverage insures against more causes of loss than collision coverage.  If both collision coverage and the “other” peril coverage are purchased then the insured is said to have “comprehensive” coverage.   Different deductibles are charged for each coverage because insureds elect not to carry one of the two available coverages.

The most common type of loss is “accidental loss,” however the definition of “accidental loss” loss is not in most policies.  In 1997, the Austin Court of Appeals issued an opinion in State Farm Mutual Automobile Insurance Co. v. Kelly, which held that an “accidental loss” is a loss that does not ordinarily follow and cannot reasonably be anticipated from the producing act, that is, one that the actor did not intend to produce.  In Kelly when an insured made a good faith purchase of a stolen vehicle and insured it, only to have the police confiscate it and return it to its true owner, such an act is not the natural and probable result of the insured’s good faith purchase.  Accordingly, the loss of the vehicle was “accidental.”  Even though the insured intentionally purchased the vehicle, the ensuing confiscation by the police was unexpected, unanticipated, and unintentional on the insured’s part.  The court went on to say that a stolen vehicle, newly acquired by an insured was a “covered auto” even if the insured did not have good title.  The insured had an insurable interest that was enough to make it a covered auto.

In the 1955, Fort Worth Court of Appeals opinion, Farmers Insurance Exchange v. Wallace, an auto upset by a strong gust of wind while being driven on a public road was an accidental loss.

As it relates to uninsured motorist (UM) coverage, there are three important exclusions.

Auto policies do not provide UM coverage for any person for bodily injury sustained while occupying or when struck by any motor vehicle owned by the insured or any family member who is not insured for UM coverage under the policy.  This is known as the family member exclusion.  The Courts of Appeals in Houston, Dallas, and Corpus Christi have well written opinions dealing with and upholding this exclusion.  The Dallas Court of Appeals has written that: “It is not the function of UIM coverage to operate as liability insurance and protect family members from their own negligence in owning and operating an underinsured automobile.”

Another exclusion is “settlement without consent” exclusion.  To preserve the carrier’s right to subrogation against the at-fault party, the policy states that it will not provide UM coverage to an insured who settles with the at-fault party, without the carrier’s consent.  The Texas Supreme Court has limited the impact of this rule inasmuch as an insurer has to prove that it was prejudiced by its insured’s breach of this provision in order to void UM coverage.  This is discussed in their 1994, opinion styled, Hernandez v. Gulf Group Lloyds.  After the Hernandez case the carrier must prove that the tortfeasor would have been able to pay the carrier’s subrogation interest.  This standard was applied in the 1997, Houston Court of Appeals [1st Dist.] opinion styled, Davis v. Allstate Insurance Co. where the issue of whether the tortfeasor was judgment-proof presented a question of fact precluding summary judgment on the issue of whether the insured had materially breached the policy by settling without the insurer’s consent.  Because the carrier had not presented sufficient summary judgment evidence to establish the viability of the subrogation right it lost by the insured’s settlement, summary judgment for the carrier was not proper.

Insurance lawyers in the Dallas and Fort Worth area need an understanding as to what Personal Injury Protection (PIP) benefits cover and do not cover.

PIP consists of reasonable expenses incurred for necessary medical and funeral services as well as replacement of 80% of income lost during the period of disability up to the amount of PIP policy limits.  To receive the lost income benefits, the covered person must have been an income producer in an occupational status at the time of the accident.  When an insured had not yet reported to a summer job that was to start two days after the accident and had not yet earned any wages, the court upheld a jury verdict that the insured was not an income producer.  This was the result in the Houston Court of Appeals [1st Dist.] 1981, opinion styled, Slocum v. United Pacific Insurance Co.  The court did point out that “one does not have to be at work at the time of the accident to be in an occupational status.”  Thus, one simply needs to commence earning income before the accident to be considered an income producer in an occupational status.

If the covered person was not employed, PIP benefits include expenses incurred for obtaining services that the covered person would have performed had they not been injured.  If should be noted that the covered person must make an election as to whether he or she wishes to recover for lost income or the costs incurred in obtaining substitute services.  He or she cannot recover both.

Personal Injury Protection (PIP) coverage is different than other types of injury coverage.

PIP coverage exists if the insured or their family member is struck by a “motor vehicle” designed for use mainly on public roads or a trailer of any type according to the 1984, Houston Court of Appeals [1st Dist.] opinion styled, National County Mutual Fire Insurance Co. v. Wallace.  In Wallace, the court upheld a jury verdict that a forklift was a “motor vehicle” for purposes of PIP.  This holding was based mainly on the fact that the particular forklift in question had been used on a public road, as specifically required in the PIP language.

PIP benefits consist of reasonable expenses incurred for necessary medical and funeral services as well as replacement of 80% of income lost during the period of disability up to the amount of PIP policy limits.  To receive the lost income benefits, the covered person must have been an income producer in an occupational status at the time of the accident.  When an insured had not yer reported to a summer job that was to start two days after the accident and had not yet earned any wages, the court upheld a jury verdict that the insured was not an income producer.  This occurred in the 1981, Houston Court of Appeals [1st Dist.] opinion styled, Slocum v. United Pacific Insurance Company.  The court did point out that “one does not have to be at work at the time of the accident to be in an occupational status.”  Thus, one simply needs to commence earning income before the accident to be considered an income producer in an occupational status.

To be covered under most auto insurance Personal Injury Protection (PIP) provisions, a person needs to be “occupying” a vehicle.

“Covered person” as used in PIP coverage means the named insured or any family member while occupying or when struck by a motor vehicle designed for use maily on public roads or a trailer of any type.  “Covered person” also includes any person occupying the covered auto with the named insured’s permission.

Most PIP claims arise out of accidents when an insured, a family member, and/or a friend of the insured are “occupying” an insured vehicle.  The policy contains a very broad definition of “occupying.”  For example, when an insured injured himself in the act of getting out of the car, the Fort Worth Court of Appeals held that the insured was “occupying” the vehicle.  This was decided in 1976, and the case was styled, Berry v. Dairyland County Mutual Insurance Co.