Car accidents are common and complicated. Wrecks can involve company cars, ride shares, and large commercial vehicles, all with different types of insurance. Impacts can occur while driving on a work errand. All these different types of accidents invoke numerous insurance questions. Questions such as; If you are out driving on a work errand, will your business’s uninsured motorist insurance provide coverage? The Louisiana Court of Appeals grappled with these issues in a recent appeal.
Dr. Kenneth Allan, a Chalmette based veterinarian, is the sole member of Chalmette Pet Wellness Clinic and Hospital. Dr. Allan was transporting a dog to his clinic when he was rear-ended. Dr. Allan was driving a vehicle in his wife’s name and sustained injuries from the car accident. Dr. Allan sued his uninsured motorist insurance carrier, Bankers, which provided coverage for his work vehicle to recover compensation for his injuries.
Bankers balked at paying his claim. Bankers and Dr. Allan asked the court to settle the coverage issue by filing summary judgment motions. They asked the court to determine if the Bankers policy provided uninsured/underinsured motorist insurance coverage for vehicles not owned by the pet clinic. The trial court ruled in favor of Dr. Allan, stating that Bankers should cover his claim. An appeal of the decision followed.
The appeals court discussed how courts decipher insurance contracts in Louisiana. The extent of coverage under an insurance contract is dependent on the common intent of the insured and insurer. Succession of Fannaly v. Lafayette Ins. Co. The role of the Court in interpreting insurance contracts is to determine the parties’ common intent. Green ex rel. Peterson v. Johnson. A court will deny coverage when the “policy wording at issue is clear and unambiguously expresses the parties’ intent,” and the facts make clear that the insurance policy provisions do not provide coverage. Bernard v. Ellis, When ambiguity does exist, Louisiana law requires that the contract be interpreted liberally in favor of coverage, in favor of the insured, and against the insurer. Stewart Interior Contractors, L.L.C., 969 So.2d 653, 658 (La. Ct. App. 2007).
The Court agreed with the trial court that coverage provisions, taken as a whole, were neither clear nor unambiguous and must be interpreted in favor of Dr. Allan. While part of the policy provided insurance for uninsured vehicles, another portion excluded any executive officers. The Court found potential ambiguity and confusion over coverage for the use of non-owned vehicles by the insurer if an executive officer owns the car. Here, Dr. Allan is the only member of the insured pet clinic and the only potential insured executive officer. The Court found that this effectively left no purpose for the Hired Auto Liability and Non-Owned Auto Liability endorsement because the policy would never cover the clinic under such a reading. This interpretation would lead to an absurd result–that Dr. Allan paid premiums for a policy he could never use. Thus, due to this ambiguity and confusion, the Court held the policy should be read to provide coverage.
This case reaffirms that Louisiana courts interpret insurance policies in favor of the insured when there is potential ambiguity. Although it does not logically follow that Dr. Allan would have purchased a policy that does not cover him as the only employee of his clinic, the plain text reads this way. Dr. Allan’s case gives an excellent example of how Louisiana Courts adjudicated coverage issues by weighing the policy language versus the parties’ intent under the contract.
An experienced insurance claim lawyer will help you understand what your policy of insurance covers. Seek one out if an insurance company refuses to provide the coverage you thought you purchased.
Additional Resources: KENNETH M. ALLAN, ET AL VS. BANKERS INSURANCE COMPANY ET AL
Written by Berniard Law Firm Blog Writer: Elisabeth Tidwell
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