Interpreting An Insurance Policy – Uninsured Motorist Coverage

Here is a 1974, opinion from the 14th Court of Appeals that is still good law today.  The opinion is styled, Janice Sue Milton v. Preferred Risk Insurance Company et al.

This is a lawsuit to recover benefits under the uninsured motorist provisions of an automobile policy.  The question for the Court is, at what point in time must the insured forward suit papers concerning a claim against an uninsured motorist, if the negligent party was insured at the time of the accident, but later became “uninsured” as that term is legally defined.

The Facts of this case are a little confusing and will not be discussed here.  The relevant Fact is that the insured, Milton, sued Preferred seeking benefits under her uninsured motorist provisions of her insurance policy with Preferred.

One is an uninsured motorist in Texas, under standard insurance contracts, when (1) his insurer becomes insolvent or denies liability, (2) he is a hit-and-run driver, (3) he has less coverage than the legally required minimum, or (4) he has no insurance.  The burden of proving that the offending motorist falls into one of the above categories is upon the insured.  Since this is a negative burden, proof that all reasonable efforts to ascertain whether the negligent party is insured have been fruitless will suffice.  The deposition of an agent of Allstate, which was taken on August 6, 1973, was introduced into evidence.  This agent stated that Allstate did deny coverage on the basis of noncompliance with the cooperation condition in the Lewis policy and on the basis that Cathy Lewis had not forwarded the suit papers immediately after she was served with citation.  Apparently, however, the appellant had reason to suspect that Allstate would deny coverage much earlier, in January of 1972, when notices were sent to Preferred Risk and American Economy of the possibility that Allstate would so deny coverage.  The evidence in this case supports the conclusion that Cathy Lewis became an uninsured motorist because of the denial of liability by Allstate.

So what happened in this case that is relevant is that the uninsured motorist in this case, originally had insurance coverage but because of her refusal to cooperate with her insurance company that provided her with liability coverage, she became uninsured under Texas law and thus, the uninsured motorist carrier became liable under that portion of the policy.