Insurance is a contract. When a court is asked to interpret an insurance policy, it will read the entire insurance policy and make a decision based on the clear and unambiguous language of the insurance policy. When an insurance company refuses to defend or reimburse an insured, the plaintiff will face what is believed to be a judgmental defendant, will enter into an agreement to establish a judgment on which the plaintiff promises not to execute in exchange for a right to step into the defendant's shoes and suit the insurer. This trick often works unless the insurer has a good reason to refuse to pay.
I Wilshire Insurance Company v Patrick Yager; Javier Lopez vs. Girard Insurance Company; Ira Lee Girard; Mary Ann Girard, No. 1
Alonso Pastor received commercial car insurance with Wilshire Insurance Company (Wilshire). Complainant Patrick Yager and Javier Lopez were involved in an engine accident during which Yager suffered injuries. The van owned and operated by Lopez was added as a covered car under Pastor's policy, but Lopez was not added as a named insured.
After the accident, Yager initiated a state lawsuit against Lopez and Pastor. Months after Wilshire received advice on behalf of Lopez, Wilshire issued a reservation of rights on the grounds that Lopez was not covered by the policy. The state action was dismissed regarding the pastor, and Lopez assigned his rights against Wilshire to Yager, with the couple agreeing to a $ 1.5 million sentence.
Wilshire initiated the underlying declaration action in federal court and sought a declaration that the insurance company had no obligation to reimburse Lopez under the insurance policy. Yager and Lopez appealed the district court's summary judgment in favor of Wilshire.
The policy defined "insured" as pastor "for all covered cars" and "[a] nyone while used with [Pastor’s] permission a covered auto. . . own [ed] rent [d] or borrow [ed] except
Wilshire had properly reserved its rights and was not prevented from raising cover defense, nor did it waive Wilshire from any cover defense. Waiver requires a clear expression of intent to waive a known right. In addition, Wilshire would only be barred from asserting cover defense if an insured person relied on Wilhire's actions.
As Lopez did not provide any evidence that Wilhire's intentionally waived his right to deny coverage or whether Lopez was reliably relying on any action taken by Wilshire, no substantive factual question was raised to exclude a brief assessment.
Although the vehicle driven by Lopez was insured, Lopez was not. In addition, as the owner of the vehicle that fit, Lopez did not fit within the definition of an authorized driver.
Finally, since Lopez was not covered by the Wilshire policy, his allegations of bad faith and violations of the Good Covenant of Faith and Fair Trade are not valid.
If Pastor or Lopez had any assets, it would have been better to go to trial than to accept the assignment and get nothing. If they had no assets other than the vehicle in the accident, it made sense to gamble on collecting the $ 1.5 million verdict. Of course, if the appellants' lawyer had read the entire policy, they would not have wasted their time in the district court and the ninth district. Catalog
© 2020 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance coverage, insurance management, insurance claims and insurance fraud almost equally for insurance companies. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and attorney management attorney and more than 52 years in the insurance industry. He is available at http://www.zalma.com and email@example.com.
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