Being allowed to use an employer owned vehicle is a nice benefit to have. When there is an accident there may be questions of who pays for the damage or injuries. In this case, any accident and insurance policy questions were completely in favor of the insurance company and backed up by both state statutes and case law guidance. But, poor customer service by the insurance company turned a complete legal victory into costly litigation.
Naddia Melder was employed by Grimes Industrial Supply. One of the benefits of her employment was the use of a pickup truck owned by Grimes. In March 2007, Mrs. Melder was involved in an accident with one other vehicle. It turned out that the other vehicle was underinsured and Mrs. Melder’s uninsured motorist insurance claim against her personal insurer was denied. Mrs. Melder brought a lawsuit against her personal insurance carrier, Louisiana Farm Bureau Casualty Insurance Company, in order to find a way for insurance to cover the accident.
Farm Bureau asked the Trial Court to grant summary judgment in favor of denying coverage for the accident and the Trial Court agreed. Mrs. Melder then appealed. Mrs. Medler’s appeal was based on her view that the Trial Court incorrectly determined that she was driving a vehicle that was owned or furnished by someone else and that her insurance policy did not extend to cover this vehicle. There was an exclusion in her policy which stated that coverage would not be extended to vehicles furnished to her, but she believed it should not apply because it conflicted with a Louisiana law. She also argued that the insurance payments she received were received late.
Uninsured motorist coverage does not attach to the vehicle, but instead attaches to the person who owns the insurance policy. Howell v. Balboa Insurance Co., 564 So.2d 298, 301 (La.1990). But, this has been narrowed by the Louisiana Supreme Court to include situations where the insured person is insured for vehicle liability insurance. Magnon v. Collins, 739 So.2d 191 (La. 1999). This means that an insurer may exclude insured customers from uninsured motorist coverage.
There is also the clearly recognized public policy argument that employers are required to insure vehicles they give to their employees to use specifically because personal insurance policies are not meant to cover the employee using the vehicle for employment purposes. Davenport v. Prudential Prop. & Cas. Ins. Co., 897 So.2d 98 (La. Ct. App. 2004). In the event an insurer is required to cover an accident, the claim amount must be paid within thirty days after sufficient proof is given. La.R.S. 22:1892.
The Appellate Court found zero merit to Mrs. Melder’s claim she should be entitled to uninsured motorist coverage under her personal insurance policy. Mrs. Melder’s accident happened when she was performing employment duties. Mrs. Melder’s personal insurance policy with Farm Bureau explicitly exempted coverage for vehicles furnished for the regular use of policy holder or a relative. The Appellate Court found no issue with any part of the Trial Court’s determination that the exclusion applied and Farm Bureau did not have to extend uninsured motorist coverage to Mrs. Melder’s work vehicle.
The only win for Mrs. Melder was that the Appellate Court found that Farm Bureau’s payment for the portions of the injury that was covered was paid too late. The law requires the benefits to be distributed within thirty days and Mrs. Medler did not receive hers until thirty one days after giving sufficient proof. Farm Bureau gave no reason why it was late and was ordered to pay a penalty. The penalty is half of the claim amount. Mrs. Melder had a legitimate insurance claim of $5,000, so Farm Bureau was penalized $2,500. Additionally, Farm Bureau was ordered to pay Mrs. Meldar’s attorney fees of $3,500.
The delay in the payment of benefits ended up being extremely costly to Farm Bureau relative to the insurance claim. While initially only responsible for a $5,000 claim the penalties for a one day late payment turned an absolute win on the legal merits into $6,000 in penalties and attorney fees. This case illustrates the seriousness that the courts give to insurance policy payment deadlines.
Written by Berniard Law Firm Blog Writer: John Trepel
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