Insurance coverage in tractor-trailer accidents is rarely a simple matter.
First, there is the fact that there are usually numerous entities involved. Rarely is the trucker employed by the owner of the tractor or the trailer. There is also typically a separate company paying for the goods inside to be shipped. In some cases, there is a middle party that arranges these connections as well. The agreements for liability insurance coverage and indemnification among these varying parties.
Second, these accidents also tend to be quite serious, particularly when a tractor-trailer collides with smaller, passenger vehicles. The injuries are often severe and sometimes fatal, meaning the stakes are high.
In the recent case of Nat’l Am. Ins. Co. v. Artisan & Truckers Cas. Co., the complexities of trucking accident liability is highlighted. As the U.S. Court of Appeals for the Seventh Circuit notes, “This case provides a warning to insurance companies who refuse to defend their insureds.”
According to court records, a driver was operating a tractor-trailer when he rear-ended a pickup truck carrying plaintiffs, a married couple. The injuries sustained by plaintiffs were severe.
The couple sued for damages. As the federal appeals court noted, they lodged complaints against, “smartly, everyone.” That included the carrier (the company whose placards appeared on the tractor at the time of the rash) and the apparent driver. They also sued another man who was in the tractor at the time of the crash, as it wasn’t clear at that point whether he was driving, as well as the driver’s father, who owned the tractor.
As soon as the driver learned of the truck accident lawsuit, he contacted his own insurer to determine coverage, and his insurer denied coverage, stating it did not apply because he was driving on behalf of the carrier at the time. The insurer stated a specific exclusion in the policy indicating it would not pay for damages caused by the covered auto or insurer when the auto is being operated, maintained or used on behalf of anyone else, regardless of whether the purpose was for compensation. Because the tractor placard displayed the name of the carrier, the insurer refused coverage or to provide a defense.
However, the owner of the trailer had never actually signed a lease with the carrier for use of the tractor until more than a week after the crash. Although the placement of the placard created the question as to whether there was a contract in place, the lack of a signature agreement indicated the driver’s insurer should cover the defense and damages.
Meanwhile, the carrier’s insurer not only defended its insured, but also the driver, although it did so under reservation of rights (i.e., they reserved the right to collect damages from driver’s insurance company later).
The case ultimately settled for both injured parties for nearly $100,000. Per that agreement, driver and his father assigned the insurance company rights to pursue damages against their insurance company to recover under their policy.
That gave birth to this case, in which the defending insurer sued the one that refused for breach of contact.
As it was later revealed, the driver/owner of the tractor did not have the right to display that placard until after the agreement was finalized – eight days after the crash.
District court granted summary judgment to plaintiff insurer. Defendant insurer appealed. The federal appeals court affirmed.
The court noted even though some of the counts of the original complaint fell into the exclusion portions of the policy, there were numerous causes of actions or theories of recovery of the insured, and at least one of those was clearly within the coverage of the policy. In that case, even where other theories of recovery are excluded, the insurer had a duty to defend and, if ordered, provide coverage.
Contact the North Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.
Nat’l Am. Ins. Co. v. Artisan & Truckers Cas. Co., Aug. 6, 2015, U.S. Court of Appeals for the Seventh Circuit
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Report: High-Speed Police Pursuits Perilous to Innocents, Aug. 1, 2015, Asheville Car Accident Attorney Blog