In Matters Of Insurance Coverage, Every Word Has A Purpose

A fight breaks out on the insured’s front lawn, and the homeowner’s child is involved in a scuffle with a neighbor’s child. The insured reports the incident as a precaution before any indication that a claim might result. Subsequently, the insured receives a $10,000 medical bill from the parents of the other child for treatment of a detached retina, with a threat to sue the homeowner for negligent supervision if the bill is not paid immediately. Although the claim sounds in negligence, coverage (defense and/or indemnity) under the insured’s homeowner’s liability policy is not a certainty.

Coverage under a homeowner’s liability policy for a claim of negligent supervision can turn on whether the “intended injury exclusion” uses the word “the” or the word “an” or “any.” Undoubtedly, there are policies now that are explicit in terms of who is covered for bodily injury caused by an intentional act. The purpose of this article is not to address the nuances of various homeowner’s policies, or frankly, whether a majority of policies cover claims of negligent supervision or not. This article is meant to highlight the fact that in addressing coverage issues, every word has a purpose.

A typical homeowner’s policy provides liability coverage for claims made against an “insured” for damages because of “bodily injury” caused by an “occurrence.” In those policies, an “occurrence” is defined as an accident which results in “bodily injury,” and although “accident” is usually not defined, Texas courts have supplied its meaning. Generally, “where acts are voluntary and intentional and the injury is the natural result of the act, the result was not caused by accident even though that result may have been unexpected, unforeseen, and unintended.” Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 826-28 (Tex 1997).

Under the scenario portrayed in the opening paragraph, the child’s intentional act of striking another child is not an accident under any definition, and as such, no liability coverage would exist to cover any liability claims brought against the child.

The lack of liability coverage for the child does not necessarily preclude coverage for the parent. Again, every word has a purpose. The reason that coverage for the parent may exist for the intentional act of the child is because of the common “severability of insurance” or “separation of insureds” clause. That provision states that “[t]his insurance applies separately to each insured.” See King v. Dallas Fire Insurance Company, 85 S.W. 3d (Tex. 2002). Thus, there can be an “occurrence” from the standpoint of the parents even when there is not an “occurrence” from the standpoint of the child.

The intent of the severability clause is to provide each insured with separate coverage, as if each were separately insured with a distinct policy, subject to the liability limits of the policy. Utica Mut. Ins. Co. v. Emmco Ins. Co., 309 Minn. 21, 243 N.W.2d 134, 142 (1976). The severability clause serves to provide coverage when there is an “innocent” insured who did not commit the conduct excluded by the policy. Walker v. Lumbermens Mut. Cas. Co., 491 S.W.2d 696 (Tex. Civ. App.-Eastland 1973, no writ)).

In King, Dallas Fire Insurance Company brought a declaratory judgment under a commercial general liability policy seeking a declaration that the underlying claims by an individual who was assaulted by the insured’s employee were not covered. The Supreme Court of Texas held that the severability clause created separate insurance policies for the insured and the insured’s employee, and the employee’s assault on a third person who alleged negligent supervision by the employer was to be viewed from the perspective of the insured employer in determining whether the event was an “occurrence” within the meaning of either the general liability policy or whether the intentional injury exclusion applied.

King unequivocally supports coverage for a negligent supervision claim against an innocent parent, right? There are post-King cases that seem to agree with that proposition. However, those cases overlook an important segment of the King opinion detailing with the actual wording of the “expected or intended injury” exclusion. The “expected or intended injury” exclusion in King excluded coverage for “bodily injury expected or intended from the standpoint of the insured.”

Although there are post-King opinions where the courts miss the significance of the word “the” contained in the King exclusion, one court aptly noted its significance, albeit in addressing an auto exclusion. See Bituminous Casualty Corp. v. Maxey, 110 S.W.3d 203 (Tex. App. – – Houston [1st Dist.] 2003, rev. den’d).

In a case of first impression, the well reasoned opinion in Maxey held that the severability of insurance clause, which required the policy to be read as if each insured were the only insured, did not require the auto exclusion applying to “any insured” to be read any differently from its grammatically accepted meaning. The court summarized the general rules of contract construction, which I will not retread, and held that the term “any insured” means what it says. In other words, the severability clause did not require the courts to replace the words “any insured” in the policy with the words “the insured.”

The rule to remember is that just because one case finds coverage under a general liability clause for negligent supervision does not mean that your policy will provide the same coverage.

In matters of insurance coverage, every word has a purpose, and coverage can turn on something a simple as the words “the,” “an,” or “any.”

Auto Insurance Coverage Basics

Even a slight fender bender in a parking lot can ruin your day. Road accidents can turn a good day into a wild one, but you should not let it ruin your life. You pay auto insurance coverage not only to comply with the law, but you pay it to protect your assets. If you drive a car, you need to have auto insurance coverage. There are different types of auto coverage; the states require you to have some, but insurance companies suggest you to purchase more. The following passages explain key features of the most important auto coverage.

· Liability Coverage: this coverage comes in two different types including Bodily Injury and Property Damage. In the event of road accidents for which you are liable, the insurance company will pay for the damages and injuries that you cause. Liability coverage prevents you from spending too much on medical payments or repairs for someone else’s injuries and property damage.

· Personal Injury Protection (PIP): it covers medical payment and other expenses for your injuries regardless of who is at fault in an accident.

· Medical Payments: in case the PIP coverage reaches its limit for other expenses following an accident, separate medical payments coverage can be helpful. Sometimes you can use it in conjunction with your health insurance as well.

· Collision: it covers repair cost for any damage to your vehicles due to an accident. It may include paint job, replacement parts, broken windscreen, and engine repair.

· Comprehensive: this coverage covers damages to your vehicle due to non-accident causes. Some common causes are fire, theft, vandalism and falling objects.

· Underinsured and uninsured motorists: in case you are involved in an accident with another driver who does not have enough insurance or no insurance at all, this coverage requires your insurance company to remunerate for the damages to your vehicle.

Every state has different rules regarding auto insurance. Depending on where you live, you may need to purchase all the above coverage or only some of them. The limit of each coverage policy is subject to insurance laws too. This table lists the recommended limits for common types of coverage.

Deductibles & Limits

Bodily injury: $100,000 per person, $300,000 per accident

Property damage: $100,000 per accident

Personal Injury Protection: Either deductible or no deductible; it can be optional or mandatory depending on the state. Either deductible or no deductible; anyone with an existing health insurance may not need to purchase this coverage.

Collision: $500 to $1,000

Comprehensive: $500 to $1,000

Uninsured motorist: $100,000, but if this coverage is less

Underinsured motorists: $100,000

More Optional Coverage

Collision and Comprehensive are optional, but they are important. Even when the state does not list them as mandatory, they are still necessary and worth the money. Apart from those two, insurance companies also offer other optional coverage including:

· Rental Reimbursement: your insurer provides an amount of money as compensation for transportation expense during the period when your car is in the shop for repair after an accident. The amount depends on the company’s policy. The money should be enough to rent a car until your car is ready to go again.

· Roadside Assistance: it can be helpful in case your engine breaks down in the middle of nowhere that you need towing service to a repair shop. Some car manufacturers provide this service free of charge with the purchase of a car, so you may not need to buy this coverage.

Money-saving Tips

Auto insurance does not come cheap, but there are ways to save money on premium. One of the ways is to make use of insurance discounts available from most insurers. Even when you are not eligible, you can reduce the premium by increasing deductible or use a car that meets the insurer’s safety requirements.

A deductible is like reserve cash from you for the insurance company. You can consider this a down payment for the premium. If you pay more for down payment, your monthly installments for premium will be less. Increasing deductible from $250 to $500 can reduce up to 30% of the premium. If you can afford it, going for more deductible is a good decision. Many types of coverage allow for the deductible, but you should focus on Liability Coverage.

The financial impact of an accident for which you are liable can be devastating; total cost of car repair and medical payments can reach hundreds of thousands. By increasing the limit of liability coverage, you have better financial protection from the insurance company. However, higher limit means higher premium, and this is why you should consider increasing deductible.

Collisions and Comprehensive are optional.

The basic rule is that you should purchase both if your car is worth at least ten times the amount you pay for those two coverage types. For many older cars, Comprehensive and Collision coverage are not worth the money. Omitting them can save much money.

New cars are not always more expensive to insure than old ones.

New cars have better safety equipment and protective features to keep the driver and passengers save for examples airbag and restraint system. Alarm system and anti-theft equipment are good safety features as well.

Most auto insurance companies offer discounts for such features.

If your car does not have them, consider installing third-party safety equipment to be eligible for the discounts. A safer car is less risky, and insurance companies are grateful for that.

Auto Insurance Coverages and Discounts Explained

Auto Insurance Coverage

Liability Coverage: Protects you in the event that you unintentionally cause injuries to other drivers or damage to other vehicles or property. This coverage normally comes into play when you are the at-fault party in an accident. Coverage in many states in generally “split limits”, meaning per person coverage, per accident coverage, and property damage coverage are separated with limits defined individually. For example; 50/100/50 means; up to $50,000 of coverage is available if one person claims injury damages, $100,000 is the maximum provided for all injury damages no matter how many people sue, and $50,000 is provided to fix cars or other property damaged by you. In addition, many auto policies provide attorneys fees and court expenses on top of the listed coverages.

Uninsured and Underinsured Motorist Coverage (UM): UM can provide coverage for medical costs, pain and suffering for bodily injury to you and others in your vehicle, if injury is caused by a driver with no coverage or not enough coverage. For example if you are in an accident where the at-fault party has no coverage, very little coverage, or flees the scene and is not found, and your injuries are deemed deserving of compensation in addition to the medical coverage provided by your policy UM coverage may be made available.

Personal Injury Protection (No Fault): Required coverage under Florida’s No-Fault Law. Provides a percentage of first dollar medical expenses to you regardless of fault in the accident. May people make the mistake of thinking that because of this coverage there is “no-fault” in an accident. This is incorrect and only refers to first dollar medical expenses sustained in an accident to a certain limit. The purpose of this coverage is to prevent minor lawsuits for medical bills from tying up the court system.

Medical Expense Coverage: May pay certain medical expenses for injuries sustained while occupying your car, regardless of who is at fault. This coverage is optional and simply provides for additional medical coverage beyond the standard personal injury protection coverage provided required by the law.

Comprehensive Coverage: May pay for damage to your car, less any deductible, caused by things other than collision or upset (fire, theft, glass breakage, for example).

Collision Coverage: May pay for damage to your car, less any deductible, caused by a collision with another object.

Towing & Labor: This coverage may provide a limited amount of reimbursement for expenses such as towing or car repairs made at the site of vehicle disablement.

Rental Reimbursement: This type of coverage provides limited reimbursement for a rental car used while your car is being repaired for a covered claim.

Auto Insurance Discounts:

Discounts may vary depending on the state and company but many are fairly standard across the industry.

Good Driving Record: Generally determined by the insured drivers previous three years driving record. In most cases if the insured driver has been been ticket and accident free there will be a discount available.

Driving a Safe Car: A vehicle safety discount will provide credit for cars that have tested and shown a history of limiting and preventing injuries to the vehicles occupants.

Low annual miles: The price you pay is determined by your risk and one major factor affecting risk is the amount you drive the car. If your annual mileage is below a predetermined number you may be eligible for a discount.

Student away at school without vehicle: If the primary driver of a vehicle is a student that is away at college and does not take the car to college with them a lower premium may be provided. The assumption is that the student will only be driving and have regular access to the vehicle on a limited basis such as holidays and for this reason the risk and price are lower.

Student with drivers education course: One of the most often considered discounts for young drivers. Either provided through a school or the insurance company young driver education can provide a reduction in premium.

Carpools: The reasoning behind this coverage is similar to the low mileage discount. Less driving equals less risk.

Seasonal Driver: Many drivers have vacation homes and keep a car there permanently. Many companies will reduce the premium or suspend coverages during the time when the car is parked and not driven.

Multiple cars insured with a company: A very common discount provided to customers who insure more than one owned vehicle with the same company.

Have additional lines of business insured with a company: Called a multi-line discount, provides a policy price reduction when an insured has vehicles and one other type of coverage such as homeowners insurance.

Longevity with a company: Many companies will allow for a lower premium based on the time a person has been with a company. The discount is intended to provide incentive to stay with that company.

Good Student: Studies has shown that good grades in school correlate to less accidents on the road and therefore insurance companies are willing to provide a lower premium to students with above average grades.

Anti-theft devices: Car alarms can deter theft, and reduce vandalism resulting in less insurance claims and a reason for reducing the premium.