Writing insurance law textbooks (Casualty Insurance Claims, Excess Liability – Rights and Duties of Commercial Risk Insureds and Insurers, and a new edition of Casualty Fire & Marine Investigation Checklists) it is occasionally possible to predict what a court might rule, or what might change on appeal. In preparing for the new edition of Checklists, I included an instruction regarding the definition of a “named insured” in personal liability (auto, homeowners) forms, when the definition includes a “spouse.” But with the states in turmoil over gay marriage at the time, just who is a “spouse” if one was married in a state allowing gay marriage, but had a claim in a state that did not recognize such marriages? It was one of those fickle pickles of insurance policy language.
No sooner had the text been submitted than the Roberts Court ruled in favor of gay marriage, now universal in all states. Hence my explanatory paragraph was moot. I contacted my editor at Thomson Reuters West, and we elected to delete it. He then checked with John DiMugno (my co-editor on Catastrophe Claims: Insurance Coverage for Natural and Man-made Disasters and the editor of Insurance Litigation Reporter).
John replied, “As to cases addressing whether a same sex spouse qualifies as an insured under the omnibus clause of an auto or homeowners policy, I don't think there are any [court cases.] I don't recall seeing one, and I at least look at every insurance law decision added to the Westlaw database on a daily basis. If I saw one, I would cover it in ILR. I'm sure the reason no case law exists (at least to my knowledge) is that insurers have not questioned their obligation to cover same-sex spouses in states that recognize gay marriage. If insurers did contest coverage, they would surely lose, given the universally recognized principle that ambiguities in an insurance policy must be construed in favor of coverage. With respect to other types of insurance, while the Westlaw database contains many decisions addressing the right of same sex couples to receive employment-related spousal benefits, no insurer (to my knowledge) has contested coverage once the employer elects to provide such benefits.”
My editor forwarded this to me with the question, “Is polygamy coming?” Considering that so many of us in the 21st century have multiple spice (one spouse, two or more spice, just not all at once but one after the other), who knows what the balance of our new century will bring?
(Photo: Shutterstock.com)
Politics, court decisions and the adjuster
Adjusters must remain constantly aware of political and legal decisions that may affect coverage interpretation. Occasionally, a court decision may even become language in a policy, such as the Inchmaree Clause in an Ocean Marine Hull policy that includes breakdown of machinery aboard the vessel, providing such loss did not result from a lack of due diligence of the insured. The clause's name comes from a maritime court decision involving a vessel named Inchmaree. Given the number of recent cruise ship problems, policy interpretation must keep marine adjusters on their toes figuring out whether or not coverage applies to a disaster.
Who is insured is always an issue that must be verified in every claim. (For some claim reps that might come as a surprise.) There are many court cases involving “permissive use” in commercial policies – the vehicle custodian may be allowed some limited personal use, but that may not extend beyond his or her “spouse,” and the custodian has no permission to allow others to use the vehicle.
Even the issue of “use” has drawn court attention. If a vehicle is used by the insured but the passenger decides to commit a “drive-by shooting” and injures a passer-by, is the injured victim entitled to sue the insured driver under the auto policy for “use of” the vehicle even if the insured did not anticipate that his passenger was going to shoot someone? There have been a number of cases fought on this issue and courts have gone both ways in their decisions.
We can't second-guess how a court might rule, but as the editor of the Insurance Litigation Reporter suggests, “an insurance policy must be construed in favor of coverage” whenever the issues are not clear. The courts may not always do that, but the insurer's adjuster should. It saves a lot of legal expense in the long run.
Ken Brownlee, CPCU, is a former adjuster and risk manager based in Atlanta, Ga. He now authors and edits claims-adjusting textbooks.
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