Articles Posted in Accidents

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Previously on the Personal Injury blog, we have explored that auto insurance policies commonly include coverage exceptions for damage or injury that arises from intentional acts. Another typical limitation concerns criminal acts, whereby the insurer’s obligation to cover losses is limited or entirely avoided when the policyholder’s claim is related to his or her own illegal activity. Similarly, life insurance policies that contain accidental death benefits usually include a provision that reduces or eliminates the pay-out when the policyholder’s death occurs while he or she is engaging in illegal activity. This very provision was at the center of an unpublished opinion by the U.S. Court of Appeals for the Fifth Circuit following a one-car accident in Lafayette Parish, Louisiana.

In 2002, Bryan Redeaux was killed in a single-car accident. At the time of his death, he was covered by a life insurance policy issued by the Southern National Life Insurance Company, Inc. that named his mother, Connie Redeaux, as the beneficiary. Southern paid Connie Redeaux $10,000 in life insurance benefits but denied her claim for accidental death benefits based on a policy exclusion “for a loss which in any way results from … injury or death occurring as a result of the commission of a crime or the attempt to commit a crime.” The coroner reported that at the time of the accident, Bryan Redeaux’s blood alcohol concentration (“BAC”) registered 0.21 percent, which was twice the legal limit under Louisiana law. Connie Redeaux filed suit in state court seeking to recover the policy’s accidental death benefits. The action was removed to federal court due to the applicability of the Employee Retirement Income Security Act. The parties filed cross-motions for summary judgment, and the district court granted Connie Redeaux’s. Southern appealed.

The court, after reviewing the trial record, determined that it was “undisputed that the insured was operating a motor vehicle at the time of his death and that his BAC was 0.21 percent, more than twice the legal limit under Louisiana law.” It rejected Connie Redeaux’s argument that the policy exclusion did not apply because no criminal charges were filed against her son; it is well established in the Fifth Circuit that “[t]he failure of the state criminal justice system to prosecute an individual … by no means constitutes an affirmative finding that the individual is absolved of any crime.” Thus, the court held that “the insured committed the crime of operating a vehicle while intoxicated under Louisiana law,” and reversed the district court’s judgment.

Although Louisiana generally endorses the view that “exclusionary provisions are to be strictly construed against the insurer with any ambiguity construed in favor of the insured,” policy holders should ensure they understand all limitations and exclusions. While Connie Redeaux’s loss of her son was tragic and her attempt to maximize her recovery under the policy understandable, the application of standard contract principles could produce no other result given the clear langauge of the policy.

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Previously on our personal injury blog, we have seen that an automobile liability insurance carrier’s coverage of a substitute vehicle is determined by the language of the insurance policy. Courts apply “ordinary contract principles” and interpret the policy’s language, and this interpretation “is usually a legal question that can be properly resolved in the framework of a motion for summary judgment.” Indeed, when the language of a policy is “clear and unambiguous a reasonable interpretation consistent with the obvious meaning and intent of the policy must be given.”

The court’s interpretation of an insurance policy’s language was central to the summary judgment in the recent case of Newman v. State Farm Mutual Auto Insurance Co., et al. In this case, the Third Circuit Court of Appeal for the State of Louisiana reviewed the Beauregard district court’s grant of the Clarendon American Insurance Company’s motion for summary judgment. On June 30, 2007, Ann Newman’s car was rear-ended by Leslie Roshong on Louisiana Highway 109 between Leesville and Vinton. Roshong was driving his personal vehicle, a 2006 Dodge Ram pickup truck, to a site in Vinton where he was to set up a mobile home that he moved from DeRidder as part of his business, Arrow Mobile Home Movers. Newman filed suit against Roshong and the insurer of his truck, State Farm. She later amended her complaint to add Clarendon, the provider of auto liability insurance for Arrow. Clarendon filed a motion for summary judgment, asserting that it did not cover Roshong’s personal truck. The trial court agreed and dismissed Newman’s claims against Clarendon. On appeal, Newman argued that two of the endorsements in Roshong’s policy with Clarendon which concerned interstate commerce extended coverage to the accident. The court found these endorsements inapplicable because Roshong’s truck did not carry a permit from the Interstate Commerce Commission (as required by one) and did not leave the state of Louisiana on the day in question (as required by the other). The court concluded that “there is no genuine issue of material fact as to coverage under the Clarendon policy, as under the clear language of the policy, neither [endorsement] provision provides coverage for the accident at issue.” Further, “the trial court committed no error in its interpretation of the Clarendon policy.” Thus, the court upheld the summary judgment in favor of Clarendon.

It is understandable that Newman would want to ensure to include in litigation all insurance companies who may be liable for her damages related to the accident. However, courts will not overlook the plain language of an insurance policy to invent ways for a litigant to recover from an insurer who had no contractual connection with the incident in question. This decision reflects Louisiana’s public policy concern that insurance companies must be permitted to limit their liability by contract in order to, for example, cover a driver’s personal vehicle without committing to cover other vehicles owned by the driver’s business. Without this ability to define coverage, insurance companies would face too much exposure and would likely withdraw from the market.

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The video game world was rocked recently by the shutdown of the Sony Playstation 3 Gaming Network. While a free service, the fact that gamers were unable to connect to the network and play their favorite games against both friends and strangers added a wrinkle to an already complex competition between the electronics giant and Microsoft’s X-Box system and network. However, a more significant wrinkle much less publicized exists: Sony was forced to shut down their network due to a breach by external individuals that exposed their personal data.

Most likely ending as a Multidistrict Litigation (MDL) situation wherein the litigation will be handled in one court and affect the rulings and settlement opportunities of people across the country, this situation affects hundreds, if not millions, of Americans. Headquartered in California, Sony still does not have a definitive answer for its customers regarding this situation. Yesterday’s news that 10 million credit card numbers may have been exposed in a data breach that involved a known vulnerability is all the more staggering.

When someone puts their faith, and personal information, in the hands of a company, let alone a giant like Sony, they believe this data will be kept secure. However, for this breach to occur, and for the company to admit it was a known issue, provides the legal basis for judicial recovery. Only time will tell what becomes of this privacy and information issue but the protection of secure data is paramount. What Sony will do to reassure its customers that they can continue to trust them remains to be seen.

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If hit by an uninsured or underinsured motorist while at work, an employer’s insurance may not cover the damage. While everyone in Louisiana who has a liability policy is required to have uninsured motorists coverage, they can receive an exception by signing a waiver. This can leave accident victims in the dust with tons of heavy medical bills and debt for making a decision they may not have fully understood. Ecolab, Inc. employee Lyndon Doyle found himself in this situation not this lucky.

On January of 2008, Doyle was injured in a car accident while driving a vehicle owned by Ecolab. His injuries resulted in medical bills totaling over $25,000. The woman who hit him, Aniece Smith, did not have enough insurance to cover all of Doyle’s injuries. Because Doyle’s employer Ecolab had a liability insurance policy issued by National Union, Doyle sought the full policy limit from National Union under the uninsured/underinsured motorist (UM) liability provision.

While National Union admitted that a policy covering Doyle existed, they denied that UM coverage was available because Ecolab signed waivers of that coverage on February 4, 2003, and December 18, 2003. Because of the company’s prior decision, Doyle had to argue that both waivers were invalid or not executed in accordance with the law. While originally arguing that the February 4th waiver was invalid because it did not contain a policy number nor the company name in the designated place, the plaintiff chose to concede that the waiver was valid, placing all emphasis on the second argument.

In order to win, Doyle had to argue that the second, December 18 waiver was invalid and that it superseded the properly executed February 4th waiver. To argue that it superseded the first, Doyle had to show that it was signed during the original policy term and not in conjunction with a renewal nor change in coverage. National Union admitted that the December 18 waiver was invalid but asserted that it was signed pursuant to a renewal, and thus did not supersede the first, valid waiver. The court finally decided that the second waiver was simply a renewal, and did not supersede the first because the signed waiver forms were identical and the Ecolab representative who signed both, assumed he had signed the second pursuant to a renewal.

Because the second improper waiver was simply a renewal, it did not supersede the first, properly executed waiver. Thus the UM waiver was in effect at the time of Doyle’s accident, and National Union did not have to pay him anything to help with his medical debt resulting from the accident.

This case illustrates an unfortunate reality: the decisions of your employer can gravely affect your ability to recover from an accident. By hiring the best available attorney, you can make sure that no possible avenue of recovery is missed. This may be the only way to get help with the massive amount of medical debt that may result from an accident while working.

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La. R.S. 22:1973B(2) assesses penalties to an insurance company who fails to pay a settlement within 30 days after an agreement is written. In a recent case, Smith v. Bambino, the Fourth Circuit discussed when and under what circumstances will commence the 30-day period.

Th defendant, Bambino, who was driving in New Orleans with the plaintiff, Smith, crashed with another vehicle on January 13, 2007. Smith sued Bambino, his insurer, Erie Insurance Company, and her UM carrier for the injuries she allegedly suffered from the accident. The parties attended mediation, where they executed a “Memorandum of Settlement Agreement” (“memorandum”) on October 19, 2009. Bambino and Erie paid Smith $85,000 approximately 50 days later. After receiving the settlement funds, Smith executed a “Receipt, Release and Agreement to Indemnify,” which released Bambino and Erie from liability. Consequently, the trial court granted Smith’s motion to dismiss with prejudice plaintiff’s claims against Bambino and Erie.

Subsequently, however, Smith filed a motion to assess penalties for late payment of settlement funds. The trial court rendered judgment in favor of Smith, awarding her the $5,000 in penalties she sought. The defendants appealed the judgment to the Louisiana Fourth Circuit (“Court”). On appeal, the Court vacated the lower court’s judgment and dismissed the plaintiff’s claim for penalties with prejudice.

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On August 29, 2005, Hurricane Katrina devastate much of the Gulf Coast, prompting the Louisiana Legislature to enact Acts 2006, which extended the prescriptive period within which insured’s were allowed an additional year to file certain claims under their insurance policies for losses incurred by the storms. Despite many insurance contracts granting only one year for insured’s to file claims, this prescriptive period extension allowed many residents more time to file as a result of the difficult circumstances caused by the storm. The Louisiana Supreme Court recently were asked to determine whether the Plaintiffs’ lawsuit, seeking damages from the Louisiana Citizens Property Insurance Corporation (LCPIC), filed nearly three years after Hurricane Katrina had prescribed. In an earlier decision made by the Fourth Circuit Court of Appeal, the prescriptive period was held to be interrupted by a timely filing of a class action petition against the insurer, which included the Plaintiffs as putative class members. Time is of the essence when filing lawsuits, here, the Louisiana Supreme Court held that the plaintiffs were timely and permitted to continue their lawsuit against LCPIC.

The plaintiffs, like so many other Gulf Coast residents, suffered extensive property damage as a result of Hurricane Katrina. Maneuvering through the insurance filing process became tedious and very difficult, the plaintiff’s constantly received refusals by the insurance company to make any payments on their policy limits. Thus, the plaintiff’s turned to legal help in order to obtain help to rebuild their homes and their lives. On June 27, 2008, the Plaintiffs filed a petition against their insurer, LCPIC, seeking payment of their policy limits and damages, including damages for emotional distress and mental anguish. The allegations included: The plaintiff’s property was completely destroyed during the storm, the properties in question were covered by a policy of insurance issued by the defendant LCPIC, yet, the company refused to pay the policy limits. In response, LCPIC filed an Exception of Prescription, arguing that the suit was not filed within one year of loss and that the extended period of prescription provided by legislation had also expired. The trial court initially granted the defendant’s exception of prescription and dismissed the plaintiff’s claim with prejudice, finding that they had failed to file their claim timely. However, on appeal the trial court’s decision was reversed, the prescriptive period had been interrupted by the timely filing of a class action against the defendant insurer in which the Plaintiff’s were putative class members.

Prescription, as defined by Louisiana’s civilian tradition, is defined as a means of acquiring real rights or of losing certain rights as a result of the passage of time. In the case of Cichirillo v. Avondale Industries, Inc, the court reasoned that prescription is designed to “afford a defendant economic and psychological security if no claim is made timely and to protect the defendant from stale claims and from the loss or non-preservation of relevant proof.” Prescription itself is a safety measure that was created in order to prevent defendants from the constant fear of a lawsuit twenty or more years after the fact. Conversely, the other type of period that exists in Louisiana, is liberative prescription. This is a period of time fixed by law for the exercise of a right, yet, a contractual limitation period is not a period of time fixed by law, it is a fixed agreement between the parties. Time is of the essence, yet, there are exceptions to the rule, this is exemplified by the fact that Louisiana extended the initial one year prescriptive period for property damage claims against insurers, for one additional year, allowing victims fo Hurricane Katrina more time to organize the various aspects of their lives that were devastated by the storm.

The primary issue in this recent Louisiana Supreme Court decision, was whether or not the class action suit in which the plaintiff’s were putative class members, interrupted prescription, thus, allowing them continued access to their legal claim against the insurance company. Louisiana civil code article 1793 states, “Any act that interrupts prescription for one of the solidary obligees benefits all the others.” Thus, by becoming putative class members in the initial lawsuit against the insurance company, the plaintiff’s maintained their legal claims against the defendants, allowing them to pursue further legal action against the company despite the passage of time. The court of appeal held that the filing of the class action suits against LCPIC suspended or interrupted the running of prescription against the plaintiff’s property damage claims since they were found to be putative class members when the original class action petitions were filed.

The defendant insurer argued that the contract, which provided one year from the date of the property damage, was the governing time period, even over the statutory extension provided by the Louisiana Legislature. The defendants supported this assertion by declaring that the public interest is served by permitting the insurer to limit the time of its exposure, as Louisiana Civil Code 802 states, “any suit not instituted within the specified time and any claims relating thereto, shall be forever barred unless a contract or the parties thereto provide for a later time.” However, even though the plaintiff’s did not unilaterally file a claim against the insurer within the one year contractual time period, they did enter into the class action against the insurer within the aforesaid time period. Upon the filing of the class action, liberative prescription on the claims arising out of the transaction or occurrences described in the petition were suspended as to all members of the class. The insurance contract provided a contractual time period, not a prescriptive time period, as a result, the additional one year time period afforded to Gulf Coast residents affected by the storm governs. The insurance company attempted to assert the contractual nature of its agreement to circumvent the application of the general codal and statutory rules of prescription is adverse to Louisiana civil Code Article 3471, which clearly circumscribes the limits of any contractual agreement attempting to incorporate a limitation period different from that established by law. Specifically, Louisiana Civil Code Article 3471 states:

A juridical act purporting to exclude prescrption, to specify a longer period than that established by law, or to make the requirements of prescription onerous, is null.

Thus, parties cannot “opt out” of prescriptive periods created by general codal and statutory rules. The plaintiff’s entered into a class action within the prescriptive time period, this interrupted the passage of time that would have taken away their legal rights to sue the insurer. Thus, the subsequent suit against the defendants was timely, and despite the contractual language that attempted to circumvent the Louisiana Legislature, the plaintiff’s filing was timely.

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On May 28, 2005, Brian Smith was delivering a car as a surprise gift to his mother. Chaos unfolded, however, when a trailer came loose in Morehouse Parish from a truck being driven by one of the defendants, Joshua Pruett. The truck, at the time, was being utilized as part of his delivery duties for Broubar, Inc., which was doing business as Acadia Crawfish. The trailer crossed the centerline and collided with the driver’s side of Mr. Smith’s car, and Mr. Smith died as a result of the injuries he sustained in the accident.

Mr. Smith’s mother, Gracie Smith, filed lawsuits against Acadia Crawfish, Pruett, Scott Broussard (the owner of Broubar, Inc.), and Farm Bureau as liability insurer and as Brian Smith’s uninsured motorist (UM) insurer. She later filed a separate lawsuit against Progressive Security Insurance Company and Broubar, Inc. The lawsuits were later consolidated into one lawsuit.

All of the parties to the lawsuit agreed that the defendants were liable for the accident because it was clear that the ball on the truck driven by Mr. Pruett was too small for the trailer hitch and he had not used any safety chains to ensure that the trailer would remain attached to the truck. They went to trial on the issue of damages for survival and wrongful death.

A survival action compensates the survivors for the damages suffered by a victim from the time of injury to the moment of his or her death. The cause of action is “inherited” – it belongs to the victim and is passed on at death. Damages in a survival cause of action can include the victim’s pre-impact fear, and if there is even a tiny amount of evidence showing any pain of suffering by a victim before his death, damages are warranted. The evidence in this case showed that the victim undoubtedly was in great fear as he attempted to avoid the collision. He had massive abdominal and chest injuries, with partial amputation of his lower left leg and hemorrhage in his brain. The Second Circuit therefore ruled that an award of $250,000 was not an abuse of discretion.

A wrongful death action, on the other hand, compensates the beneficiaries, usually family members, for their own injuries which they suffer from the moment of the victim’s death on. In this way, the wrongful death action belongs to the survivors, not the victim. Usually, the plaintiff in a wrongful death action can claim loss of love and affection, loss of services, loss of support, medical expenses and funeral expenses. In this case, Mr. Smith had supported her financially and was very close with her, more so than any of his eleven siblings. Awards for lost future income or support are, however, intrinsically difficult to calculate with absolute certainty and a plaintiff must be able to show an amount with reasonable certainty, not rely on mere speculation. Mrs. Smith was a widow and her only source of income was Social Security. As a result, she relied heavily upon the money her son often gave her. Except for an error in calculating the value of the car that Mr. Smith was driving, the appellate court affirmed all other aspects of the wrongful death action and Mrs. Smith was awarded a total of $584,368 for compensatory damages, loss of support, loss of services, and funeral expenses.

Progressive Insurance appealed the trial court’s determination that it was the primary insurance carrier for a substitute truck and was therefore liable for damages. Mrs. Smith had settled out of court with Farm Bureau for $100,000 under the liability coverage and $10,000 under the UM coverage. Farm Bureau then wanted to be indemnified by Progressive Insurance and filed a cross claim against Progressive. If the truck, which was a temporary truck (a 1998 Dodge) being driven by Mr. Pruett because the one he usually drove was being repaired, was insured by Progressive, then Progressive would ultimately be responsible for paying damages. The 1998 Dodge in connection with the trailer was found to be one vehicle and was a “temporary substitute vehicle” which, under La. R.S. 22:1296 requires insurance companies to extend coverage to temporary substitute motor vehicles. The 1998 Dodge was owned on paper by Broubar, Inc., but was normally used by Mr. Broussard, and he considered it his personal truck. The trial court found that all of the companies that Mr. Broussard owned were operated independently, so the truck could not be seen as an uninsured vehicle belonging to Broubar, Inc. (which would disqualify it from being a temporary substitute vehicle and, therefore, being covered by the policy). An insurance company cannot escape liability by not defining “temporary substitute vehicle” in its policy. The trial court ordered Progressive to pay all the damages, and that determination was upheld on appeal.

Although obviously complex, insurance dispute is a subject matter that attorneys like ours feel comfortable navigating. If you have any questions regarding a matter like this, it is important to consult with an attorney about your legal rights.

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In Oakdale, Louisiana, on March 8th, 2000, a pressurized tank owned by Arizona Chemical Co., Inc., containing a heat transfer fluid over-heated. The tank had a safety shut off valve which failed, resulting in the short-term release of chemical vapor into the air. The vapor, containing biphenyl and phenyl oxide, drifted toward the home of a nearby resident, Ms. Edna Miller. The release was short lived and was contained within 30 minutes but caused very real damages. Edna and Bruce Miller sued Arizona Chemical Co, Inc., for personal injuries following the chemical release. As a result, Edna Miler was awarded $12,5000 in damages. However, Bruce Miller’s claim was denied as a verdict in favor of Arizona Chemical was issued.

Both parties appealed the decisions in the Third Circuit Court of Appeals. The Court of Appeals affirmed Edna Miller’s award for $12,500 and refused to award her additional damages. Bruce Miller’s claim on appeal was also denied, and he was awarded no damages. Edna Miller was awarded damages while her son Bruce was not because he could not meet his burden of proof to show that the chemical release caused him any harm.
At the time of the exposure Edna was inside her home. Her son Bruce was at work, as a groundskeeper at a nearby high school. Mr. Miller left work to check on his mother when he heard about the chemical release. He found Edna outside on the lawn, nauseous, and about to leave the area. He helped her into her car and she drove away. Bruce Miler stayed on the property for several minutes, went in the house, had a glass of water and washed his face. He said his eyes and throat were burning and he felt shortness of breath.

Later that day Mrs. Miller visited the emergency room with heart palpitations, shortness of breath and nausea. She was released when she no longer had symptoms from the chemical release. Arizona Chemical company paid her medical bill and the bills of four other people that day who complained of symptoms related to the chemical release. Mr. Miller did not seek medical attention that day. He stated that five hours after the exposure he developed a rash on his hands. This rash was later found to be caused by his taking Celebrex and by his long time smoking habit, not from the chemical release. He has suffered skin rashes many times before in his life.

In order to recover damages for personal injury the injured party must prove that the other party was the primary, if not only, cause of the injury. Mr. Miller’s treating family practitioner testified that his breathing problems, rashes, and other symptoms were related to the chemical exposure. However, the physician did not know until the day of trial what chemical the Millers were exposed to, nor the type of ailments that particular substance could cause. The doctor said that the timing of the chemical release and Mr. Miller’s symptoms were what led him to that conclusion. The Defendant presented opinions of expert toxicologists who testified that Mr. Miller’s continuing symptoms could not have been caused by the brief transient exposure to the chemical vapor on March 8, 2000. Because Mr. Miller could not show that the cause of his symptoms was due to the chemical release, the Court of Appeals affirmed that he was not entitled to damages from Arizona Chemical Co., Inc.

Showing that an action by one party caused injury to someone can be complicated. The inured party must prove that their injury was caused by the other party and that the injury caused them some harm. In this case Mrs. Miller suffered some harm, but not harm requiring compensation more than the $12,500 the court said. Mr. Miller was not able to meet his burden of proof showing that the chemical release was the cause of his injuries and thus failed at his claim.

If you have suffered an injury due to chemical release or some other action of another party, you may be entitled to damages if you can meet the proper burden of proof. Whether or not a party has met their burden of proof is a question for the judge or jury and is essential to receiving compensation for personal injury. If you or someone you know has suffered an injury due to another party, an experienced attorney can help you determine if you may be able to meet the burden of proof to be awarded damages by the court.

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The Second Circuit Court of Appeal recently affirmed the rejection of Uninsured Motorist coverage from his mother’s automobile insurance, effectively denying him that kind of coverage for an accident where he was hit by another driver.
21-year-old Michael Tillman was driving his 1995 Dodge Ram pickup truck when he was struck from behind by Tommy Pritchard in 2008. Prichtard’s insurance company paid its policy limits to Tillman, who then sought more recovery from his mother’s insurance company, USAgencies. Paris carter, Tillman’s mother, had a policy in effect at the time of the accident and added the Dodge Ram to the policy shortly before Tillman’s accident.

However, before Carter added the Dodge Ram to her policy, she had rejected Uninsured Motorist Bodily Injury (“UMBI”) coverage when she completed an application for the policy. The policy to which she sought to add her son’s pickup truck did not include UMBI coverage and the truck would also not include that coverage. Tillman, however, argued that the insurance agent should have issued a new policy covering his truck because the agent was given the pickup’s title, which listed Tillman as the owner, and that she knew he did not live with his mother; he also argued that Carter could not effectively reject UMBI coverage for him without his written consent.

The Court of Appeals affirmed the lower court’s decision to dismiss the case summarily because there was no factual issue as to whether Carter rejected UMBI coverage for the Dodge Ram in her policy with USAgencies. The policy document, which Carter signed to reject UMBI coverage, explained that her choice to do so applied both to vehicles described in the policy at that time and to “. . .all reinstatement or substitute policies until [she] make[s] a written request for a change in [her] Bodily Injury Liability Coverage or UMBI Coverage.”

Moreover, the Louisiana legislature has passed statutes which announce that “[a]ny changes to an existing policy, regardless of whether these changes create new coverage, except changes in the limits of liability, do not create a new policy and do not require the completion of new uninsured motorist selection forms.” The Court rejected Tillman’s argument that Carter’s rejection of UMBI coverage might be invalid, citing the rebuttable presumption that Carter’s signed completion of the insurance form means that she knowingly rejected it. The Court reasons that the law is clear: one who signs a document is presumed to have done so with knowledge of its contents, regardless of whether they actually read it.

Further, the Court holds that the insurance agent had no onus to write a separate policy for the Dodge Ram when Carter did not request or direct the agent to obtain. The Court cites the principle that it is the client’s duty to determine the coverage needed, advise the agent of those needs, and to review the policy to determine whether it meets their needs. Lastly, the Court rejects Tillman’s argument that his mother, Paris Carter, could not reject UMBI coverage for him without his written consent. In addressing the authority he cites, the Court clarifies that the rejection requires only the written consent of the policyholder when such a rejection is executed on his behalf.

Though it’s a tough rule, it is important to read the documents you sign, especially when it comes to insurance coverage. Like many people, Ms. Carter might have signed rejection of the UMBI coverage in order to lower her insurance premium. In doing so, she allowed USAgencies to disclaim coverage for injuries sustained by uninsured motorists. However, if you’ve been injured in an automobile accident, you should seek out legal representation to fish out your best interest from these often complicated insurance provisions.

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The Louisiana Supreme Court decided a case recently which undercuts a major exclusion of many automobile insurance policies because it conflicts with what the State Legislature announced was in the best interest of the public. Many such policies contain various exclusions from coverage, including the one litigated over here: automobile business.

Sensebe v. Canal involved an auto accident where Sensebe was injured when her vehicle was rear ended by a pickup truck on the I-10 twin span bridge in St. Tammany Parish. Deborah Boudreaux was driving the pickup to her employer, an auto shop named Top Hatch, to have the seat covers replaced with leather. Gregory Hyneman was the owner the truck and had it insured with Mississippi Farm Bureau Casualty Insurance Company.

Hyneman’s policy with Farm Bureau contained an “automobile business” exclusion, which Farm Bureau argued applied here and excluded coverage on the pickup during the accident. They reasoned that Ms. Boudreaux was driving the pickup while employed by Top Hatch and as such, the pickup was not covered at the time of the accident.

The District Court agreed with Farm Bureau and dismissed them from the case, but the Court of Appeals reversed that decision by interpreting the insurance policy so as to not exclude the installation of upholstery as automobile business, but rather an after-market upgrade and not an automobile repair or service.
The Louisiana Supreme Court, however, considered the “automobile exclusion” as violating Louisiana Public Policy, which the State Legislature announced requires coverage for permissive drivers – those drivers who operate the covered vehicle with the permission of the policyholder. Because this is Louisiana’s highest court, it sets an important precedent for providing coverage for those injured by vehicles driven by permissive drivers. The Court reasoned that such exclusions, including their broader category of “business exclusion”, violate the legislature’s goal to create a comprehensive scheme to protect injured victims of careless drivers. The Court cautioned that the enforcement of such exclusions would result in motorists being allowed to drive in and out of coverage, depending on the purpose of a particular excursion.
The legislature also included some exceptions to “omnibus coverage”, the required coverage for all vehicles. The owner, they write, may exclude a person if the owner obtains and maintains another policy which provides coverage for the excluded person. Also allowed for exclusion are spouse and other household residents of the policyholder. The LA Supreme Court read these as being the only allowed exclusions from omnibus coverage because the legislature would have included others if it had wanted to allow others. The automobile business exclusion, therefore, was not allowed by the legislature and the fact that it conflicts with the omnibus public policy means it cannot be enforced. The Court sent the matter back down for litigation to continue, denying Farm Bureau’s request to be summarily dismissed from the case on the basis of that exclusion.

The legislature passed the Louisiana Compulsory Motor Vehicle Liability Security Law to pronounce its goals and requirements for automobile insurance, implicitly noting the high cost of automobile-related injuries. Thankfully, the scheme they have passed requires coverage for all drivers except for those noted allowable-exclusions (those otherwise covered by the owner and members of the same household). The idea is to require liability coverage for every vehicle that, by the very nature of driving, might injure someone else. In this case, the Louisiana Supreme Court has signed on to this goal and is enforcing this idea. Those injured in automobile accidents can now worry less about falling through a loophole in the insurance policy of the person who injured them.

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