Universal Ins. Co. v. Office of the Ins. Comm’r – Rental Car Insurer Loses Bid to Avoid Claim Payment

Like North Carolina, Puerto Rico adheres to a “fault” or tort-based system with regard to how an injured car accident victim is made whole. Asheville car accident lawyers know this means injured parties generally have three options: Filing a claim with their own insurer (who will later seek reimbursement from the at-fault driver’s insurer), filing a personal injury lawsuit against the at-fault driver or pursuing a third-party car insurance claim directly with the other driver’s insurer. car1.jpg

The last option was the one pursued in the recent case out of Puerto Rico, Universal Ins. Co. v. Office of the Ins. Comm’r. The insurer, rather than follow a state court order to pay the injured party her due, filed a federal complaint. But the U.S. Court of Appeals for the First Circuit recently affirmed a decision by the federal district court, which found the claim barred on the grounds of res judicata. This means the matter had already been decided, and couldn’t be raised again.

This case is one example of how insurers will fight to avoid paying a claim – even those that may seem perfectly legitimate. It’s also relevant now during the summer, as it involves a rental vehicle, and many people are opting to rent a car when they visit from out-of-town.

Here, the crash the was the catalyst for the claim occurred in June 2009. Vehicle 1 was involved in a crash with Vehicle 2, which was a rental car owned by a large car rental agency.

The rental car was insured by a commercial policy from Universal Insurance Company. The driver of Vehicle 1 filed a third-party claim directly with Universal. However, six months after the crash, the claim was denied.

The injured party then filed a request for review with the Office of the Insurance Commissioner. The OIC reviewed the case and ordered the company to adjust and resolve the claim, as well as pay a $1,000 fine. The firm was given 20 days to request a hearing, or else the order would become final. Both sides agreed a hearing wasn’t necessary, as there were no facts in dispute, and the matter should be decided simply as a matter of law based on the information presented.

The insurer argued it was insulated from liability per the Graves Amendment, 49 U.S.C. 30106. This statute abolishes vicarious liability of companies that rent or lease motor vehicles based on the negligent driving of customers.

However, the OIC rejected the insurer’s argument and confirmed the earlier ruling. The insurer filed another motion for reconsideration, and that too was denied. At that point, the insurer did not file another appeal, even after being warned that failure to do so in a timely manner would make the ruling final.

Instead, the insurer responded by filing a complaint for declaratory and injunctive relief with the U.S. District Court. The district court ruled it lacked jurisdiction on the grounds of res judicata, and the First Circuit affirmed that finding.

Contact the North Carolina car accident lawyers at the Lee Law Offices by calling 800-887-1965.

Additional Resources:
Universal Ins. Co. v. Office of the Ins. Comm’r, June 19, 2014, U.S. Court of Appeals for the First Circuit

More Blog Entries:
Robinson v. Erie Ins. Exch. – Uninsured Motorist Coverage for Property Damage Denied, June 15, 2014, Asheville Car Accident Lawyer Blog

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