Too Little, Too Late
in October 2016, Mary R. Evans was a student driver enrolled in a high school driver's training course. Driving lessons used vehicles provided by the high school and owned by the state. These state vehicles were equipped with brake pedals for both the student driver and the driving instructor, who was responsible for the safety of the unlicensed student driver. On October 28, 2016, Evans drove a vehicle under the supervision of driving instructor Perkins-Johnson. Evans and Perkins-Johnson were involved in an accident with another car ("The Accident"). At the time of the accident, Perkins-Johnson was employed by the state as a driver training instructor for the Red Clay School District. Perkins-Johnson was injured in the accident.
I State Of Delaware Insurance Coverage Office v. Diona Perkins-Johnson, Mary R. Evans and The Travelers Home And Marine Insurance Company CA No. N19C-10-260 MMJ, Superior Court of Delaware (19 August 2021), the state, after defending the student driver for three years, tried to transfer the obligation to its parents' insurers by providing a declaration aid.
Delaware law requires the state to procure state-owned vehicle insurance. State-owned vehicles are covered by a Pennsylvania Manufacturers Association Insurance Group policy ("PMA Policy"). The state-owned driver training vehicle driven by Evans at the time of the accident was covered by the PMA policy. Evans was "an insured" under the PMA policy.
Perkins-Johnson received workers' compensation
Perkins-Johnson claimed personal injury as a result of the accident. Perkins-Johnson sought and recovered workers' benefits from the State of Delaware, Perkins-Johnson's employer.
Perkins-Johnson also received PIP benefits from the PMA policy.
Perkins-Johnson sued and is seeking damages for personal injury resulting from Evans' alleged negligence. Evans was the only defendant.
The state provided a response on Evans' behalf, claiming defense against negligence and claims for damages. The state defense's response to the written discovery defended Evans' dismissal and took the dismissal of Perkins-Johnson. Evans' defense was not made subject to any state rights. The state does not specifically reserve the right to deny Evans liability insurance due to any exceptions to the PMA policy.
At one point, the state became aware that Evans was an extra insured on the travel policy at the time of the accident. The state then took the position that Evans was not insured according to the state's policy. On June 28, 2019, the state offered Evans' defense and compensation in the underlying disputes to the travelers.
On 30 October 2019, the state sued for declaration law measures. The state and Evans and the travelers have moved for summary assessments to determine who was responsible for Evans' defense and damages.
Interpretation of Insurance Contracts
Delaware, interpretation of contract is a determination of law. Delaware follows the objective theory of contract, that is, the construction of a contract should be what would be understood by an objective, reasonable third party. The parties' intentions are prioritized, which is reflected in the four corners of the agreement. An interpretation that gives effect to all conditions in an insurance policy is preferable to any interpretation that results in a conclusion that certain terms are uselessly repetitive.
Where the language of an insurance policy is "clear and unambiguous", the intention of the parties is established by enforcing the clear meaning of the terms and conditions of the policy, without resorting to external evidence. According to the doctrine contra preferentum, the language of an insurance policy must be interpreted against the policyholder.
The Delaware Code stipulates that the state must maintain minimum insurance coverage for government vehicles. The clear meaning of the charter is clear and unambiguous.
The court concluded that the state must, and did, maintain liability insurance for Evans against the claims for damages made by Perkins-Johnson in the underlying disputes. Evans was a permitted user of the state-owned vehicle covered by the state's PMA policy. That's why Evans is an "insured."
PMA policy exemption
The exact narrow question – whether damages are available to an employee who claimed compensation from workers from his state employer, as well as damages from a third-party tortfeasor, who is not an agent in the state but is still insured under the state liability insurance as a permissive user of state property -is a matter of first impression in Delaware but not difficult in the facts of the matter. The court found as a result that there may be more insured under the state's PMA policy. An insured under one section of the PMA policy may be different under another section of the PMA policy. For example, the state is named insured according to part IA of the PMA policy. Evans is an insured under Part IV of the Liability Insurance Section, Subsection D2 because she was a permitted user. The state is insured for workers' compensation claims.
According to PMA policy Part 1 A, Evans is not only "a insured" but essentially "the insured." Perkins-Johnson filed a claim for damages only against Evans, who has liability protection under the state's PMA policy as a permitted user of a covered state vehicle. Evans does not cover employee compensation according to the state's PMA policy. The state is not a named defendant in the underlying trial.
Delaware's doctrine of exclusivity for workers' compensation does not apply in this case to obstruct the State's defense and compensation of Evans in the underlying tort action brought by Perkins-Johnson. While an employee who collects employee benefits from his employer is unable to recover from his employer for negligence, Perkins-Johnson only brought the underlying claim for damages against Evans. Since the state is not a defendant in the underlying disputes, the state has an obligation to defend and indemnify Evans in the underlying damages action.
The state accepted the defense and did not give Evans a reservation of rights at the time of application. . In 2019, the state sent Evans a denial of cover letter, renouncing its obligation to defend and indemnify Evans in the underlying damages disputes, referring to PMA policy exclusions and knowledge gained by the state during the discovery that Evans was insured under the travel policy.  The state had plenty of opportunities to take in travelers earlier. The State therefore refrained from changing its original coverage position, almost three years after the date of the accident and more than nine months after the start of the underlying damages disputes. of primary liability protection for Evans in accordance with the state's PMA policy against Perkins-Johnson's claims for damages in the underlying damages disputes. Evans was covered by the state's PMA policy in the underlying damages disputes. Evans is insured under the state's PMA policy as a permitted user of a state driver training vehicle covered by the PMA policy. None of the PMA insurance exceptions apply to the facts of the case.
Travelers Policy is a secondary insurance available to Evans for damages that exceed the primary bodily injury insurance under the PMA policy. In the future, travelers can participate in Evans' defense.
The motions for summary judgment of travelers and Evans were granted.
This case teaches that where there is a dispute between insurers, it is up to the parties to act quickly, fairly and in good faith. The state failed to do so. It provided coverage according to its policy to Evans without reservation and defended her long before its sluggish investigation found that travelers can also insure Evans. Too little, too late.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims handling, bad faith insurance and insurance fraud almost as much for insurance providers. policyholder.
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 and claims management attorney and more than 54 years in the insurance industry.
He is available at http://www.zalma.com and email@example.com. Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award. For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claims staff to become insured.
Go to training available at https://claimschool.com; articles at https://zalma.substack.com, the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma ; Go to Barry Zalma videos at https://www.rumble.com/zalma; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to Insurance Claims Library-https: //zalma.com/blog/insurance-claims-library/ T the last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud- letter -2 / podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4phia19659037] Like this: