Tag Archives: Coverage

Homeowner’s Insurance Does Not Cover Defective Construction « South Carolina Construction Defect Law

05 Tuesday Oct 2010

Posted by in Insurance, Insurance Coverage

≈ Leave a comment

Tags

,

The Sixth Circuit Court of Appeals ruled that an insurer was not obligated to pay for water damages to a condominium building because the insurance policy specifically excluded coverage for damages caused or resulting from building construction and design defects. TMW Enterprises, Inc. v. Federal Ins. Co., No. 09-1542, (6th Cir. Aug, 25, 2010). Substandard construction on an exterior wall allowed the water intrusion which resulted in damages of $4 million.

“In no case will we entertain any loss or claim that occurred or was in progress prior to the policy period inceptiondate or after the policy period expiry date shown on the Declarations.” This, and other similar language is common in policies as it implies that defective construction occurs prior to completion. While this language is in the insuring agreement, the clause discussed in the TMW case was a specific exclusion which related to substandard construction.

via Homeowner’s Insurance Does Not Cover Defective Construction « South Carolina Construction Defect Law.

What happens when someone other than the named insured is driving the insured’s car and has an accident?

10 Thursday Jun 2010

Posted by in Insurance, Insurance Coverage, Liability, NC Law, Negligence

≈ Leave a comment

Tags

, , , , , , , ,

INSURANCE COVERAGE

In North Carolina, the insurance contract controls whether insurance coverage exists. There are several variations in insurance policies that are directly bearing on the question of coverage in this type of situation. In order to determine whether there could be coverage a determination needs to be made as to whether the insurance policy contains “Any Person”, “Reasonable Belief” or “Permissive Use” language and whether the person driving the car (tortfeasor) was in “lawful Possession” of the vehicle.

“ANY PERSON”

Some insurance policies define the insured as “any person using your “covered auto”.  This provision provides coverage to anyone using your car. It has no limiting language, so presumably even someone who has stolen the insured’s car would be an insured and the insurance company would likely have to provide coverage to that person.

“REASONABLE BELIEF”

The analysis used to determine whether the tortfeasor had “Lawful Possession” or “Reasonable Belief” that he could use the vehicle when the accident occurred is almost identical. In Nationwide Mut. Ins. Co. v. Baer, 113 N.C. App. 517, 520 (1994), the court held that the “Reasonable Belief” exclusion included in the Nationwide insurance policy was not in conflict with the N.C. Financial Responsibility Act. The court reasoned that the exclusion requiring a person have a reasonable belief that he was entitled to use the vehicle was simply another way of determining whether a person knows that he lacks the owner’s permission to use the vehicle. In previous cases, the court had concluded that the exclusion broadens the inquiry into whether the tortfeasor had a subjective, reasonable belief that he was entitled to use the vehicle.

“PERMISSIVE USE”

However, some insurance policies particularly corporate policies contain a “Permissive Use” clause. These types of policies usually extend coverage to “any person while using the insured auto with the permission of the named insured provided his actual operation is within the scope of such permission”.

If the insurance policy in question contains the “Permissive Use” clause, the analysis of coverage is as follows:

  • First, did the insured grant permission for the tortfeasor to use the vehicle?  The permission can be either express or implied. If not there may not be coverage.
  • Secondly, did the tortfeasor exceed the scope of the permission granted? The scope of the permission can be limited temporarily, geographically, and to limited purposes. N.C. courts follow the minor deviation rule, which provides that if the use of the vehicle by the permittee is not a gross deviation of the terms then coverage will apply.

“LAWFUL POSSESSION”

The N.C. Financial Responsibility Act requires that the policy provide minimum coverage if the tortfeasor is in “Lawful Possession” of the vehicle. “Lawful Possession” basically means that the tortfeasor did not steal the vehicle. Most insurance policies do not include language regarding “Lawful Possession” however this does not prevent the insurance company from having to provide coverage if the tortfeasor was in “Lawful Possession” of the vehicle at the time of the accident. The statute will control in situations where the language of the statute and the language of the insurance policy are in conflict with each other.

CONCLUSION

Coverage analysis should begin with the insurance policy. If the policy contains “Any Person” language, there is almost certainly coverage regardless of the reason why the tortfeasor had possession of the vehicle. If the policy contains the “Reasonable Belief” language, the analysis is one-step. Did the tortfeasor have a “Reasonable Belief” that he was entitled to use the vehicle? If the answer is yes then he is likely entitled to full coverage. If the answer is no, he probably not entitled to any coverage.

If the insurance policy has a provision, regarding “Permissive Use” the coverage determination hinges on whether the individual had permission from the insured to use the vehicle and that he did not exceed the scope of that permission. If both of these elements are met, then the policy will likely provide coverage. If the individual did not have permission to the use the vehicle, you then must look the N.C. Financial Responsibility Act to determine if the individual was in “Lawful Possession” of the vehicle and therefore entitled to minimum limits coverage. For these types of analyses, you should also consult an attorney specifically one familiar with insurance law, insurance defense, and insurance coverage.

When Is A Borrowed Car Covered Under Your Automobile Insurance Policy As A Substitute Vehicle?

07 Monday Jun 2010

Posted by in Insurance, Insurance Coverage, NC Law

≈ Leave a comment

Tags

, , , , ,

Consider the following, you are a small businessperson and the vehicle

Jennifer Meyers / The Post-Standard

you normally drive is owned by and insured under your business automobile insurance policy. One day your normal vehicle, the one insured under the policy, is low on gas or maybe it needs new brakes so you borrow your wife’s car for the day. Unfortunately, you are involved in a horrible accident and incur several hundred thousand dollars worth of medical bills. The person who hits your vehicle has little or no insurance. Your wife’s vehicle has a $100,000 policy. The company policy for the vehicle you normally drive is $1million in coverage. Are you covered under your company’s automobile policy’s uninsured or underinsured motorist coverage? The answer is it depends.

Typical UIM language in an automobile policy might include the following:

B. Who is An Insured

If the named insured is designated in the Declarations as:

2. A partnership, limited liability company, corporation or any other form of organization then the following are “insured”:

a.         Anyone “occupying” a covered”auto” or a temporary substitute for a covered “auto”. The covered “auto” must be out of service because of its breakdown, repair, servicing, “loss” or destruction.

The analysis to the above hypothetical revolves around determining what is meant by out of service because of a “breakdown, repair, servicing, “loss” or destruction” of your covered auto. In Ransom v. Fidelity and Casualty Co., 250 N.C. 60 (1959), the N.C. Supreme Court held that Francis Lee who drove his brother’s car because his own car was low on gas was not covered under his insurance policy because his car was not withdrawn from normal use. In Maryland Casualty Co. v. State Farm Mutual Automobile Insurance Co., 83 N.C. App. 140 (1986), the court held that Thomas who had borrowed a truck that day did not have coverage under his insurance policy because even though his covered vehicle was rusted and worn out it was not withdrawn from normal use. However, perhaps if your insured vehicle needed repairs you would be safe to borrow another car for the day. In Martini v. Companion Property and Casualty Ins. Co. the N.C. Court of Appeals found coverage for Douglas Martini who had borrow his wife’s car for the day because his Sequoia, insured under his company policy, was in need of new brakes. The court distinguished Martini’s case from Ransom and Maryland and found the facts more in line with the decision in Nationwide v. Fireman’s Fund Ins. Co., 279 N.C. 240 (1971) which held that coverage did exist for a man who borrowed a vehicle while having his insured vehicle painted.

The moral of this story is be careful when you borrow someone else’s car that they either have adequate insurance coverage or that your own insured vehicle is truly out of service otherwise you might be left without insurance coverage.

Failure to Conform Exclusion Eliminates Insurers’ Duty to Defend Insured in Recent NC Supreme Court Case

03 Thursday Jun 2010

Posted by in Insurance Coverage

≈ Leave a comment

Tags

, , , , , ,

Pursuant to an appeal from 664 S.E.2d 317 (2008), the NC Supreme Court reversed the Court of Appeals holding that the insurance company did not have a duty to defend its insured under a CGL policy when the policy excluded coverage for false statements made about the insured’s own products. In Harleysville Mut. Ins. Co. v. Buzz Off Insect Shield LLC, et al, the Court in reviewing the insurance policy found that the policy did provide coverage from some advertising injuries but not for injuries caused by false statements made by the insured about its own products. When the Court compared the allegations in the complaint to the insurance policy language, it was the CGL policies “Quality or Performance of Goods- Failure to Conform to Statements” exclusion that eliminated the insurance company’s duty to defend. This insurance company could still be on the hook for indemnity, which is a separate issue but for now they have dodged the bullet.