Uninsured Claim

Insureds in Grand Prairie, Fort Worth, Dallas, Cedar Hill, De Soto, Irving, Carrollton, Mesquite, Garland, and other places in Dallas and Tarrant Counties should find this case interesting. It deals with the definition of “uninsured motor vehicle” in an automobile insurance policy.
The case was decided on February 8, 2012. The opinion was issued by the Austin Court of Appeals. The style of the case is, “Nealey Michelle Malham v. Government Employees Insurance Company“.
Malham appealed her take-nothing judgment in her suit for uninsured motorist coverage against Government Employees Insurance Company (GEICO). This appeals court upheld the take-nothing judgment.
Here are some facts:
Malham was injured in an accident in which the car she was a passenger was struck by a pickup owned by the City of Killeen and driven by a city employee in the course and scope of his employment. Malham sued the city for the employees alleged negligence. Malham settled her claims against the city for $87,500. Then, she filed a claim with GEICO for uninsured motorist benefits due to back surgery she alleges she had due to injuries sustained in the accident. Malham sought a declaration that the City vehicle was an “uninsured motor vehicle” as that term is defined in her contract with GEICO, and that she was entitled to recover $300,000 from GEICO under the terms and conditions of the uninsured motorist coverage contained in the policy. The court entered finding of fact and conclusions of law supporting its conclusion that GEICO was not liable to Malham for the payment of any uninsured motorist benefits under the terms and conditions of her GEICO policy.
In discussing this case, the court pointed out that at the time of the accident, Malham’s GEICO policy contained the following Uninsured/Underinsured Motorist Coverage provision:
We will pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by a covered person, or property damage, caused by an accident.
The parties did not dispute that Malham was a “covered person” or that she was legally entitled to recover damages from the City as a result of the accident. The sole point of disagreement between the parties with respect to the above-quoted provision was whether the City vehicle was an “uninsured motor vehicle” as defined in the GEICO policy.
The GEICO policy contains, in pertinent part, the following definition:
I. “Uninsured motor vehicle” means a land motor vehicle or trailer of any type:
1. To which no liability bond or policy applies at the time of the accident.
…
II. However, “uninsured motor vehicle” does not include any vehicle or equipment:
…
2. Owned or operated by a self insurer under any applicable motor vehicle law.
3. Owned by any governmental body unless:
a. the operator of the vehicle is uninsured; and b. there is no statute imposing liability for damage because of bodily injury or property damage on the governmental body for an amount not less that the limit of liability for this coverage.
Malham contended that, under the above provisions, the City-owned vehicle was an “uninsured motor vehicle” under the GEICO policy definition.
The court said that the City is a party to a Liability/Property Interlocal Agreement (the “Agreement”), which creates the Texas Municipal League Joint Self-Insurance Fund (the “Fund”) for the purpose of “providing coverages against risks which are inherent in operating a political subdivision.” The City and other political subdivisions that are parties to the Agreement are referred to as “Pool Members.” The Agreement incorporates a Texas Municipal League Liability Self-Insurance Plan (the “Plan”) along with accompanying Declarations of Coverage. The liability coverage document associated with the Plan provides, in part, that “the Fund will pay on behalf of the Member or Covered Party all sums which the Member or Covered Party shall become legally obligated to pay as damages … because of bodily injury or property damage … arising out of the ownership, operation, use, loading, unloading or maintenance of an automobile.” “Covered Party” includes the Pool Member – in this case the City – and any employee of the City acting within the scope of his or her duties or employment. The associated “Automobile Declarations of Coverage” provide that the limit of liability for each occurrence is $2,000,000. The question before the court, then, was whether the liability coverage provided for by the Agreement constituted a “liability policy” as that term is used in the GEICO policy. The court concluded that it did.
These cases obviously require involvement by an experienced Insurance Law Attorney. That attorney should be able to apply the facts of a particular case to the language in a particular policy and give advice on the best course of action.