Court Examines Question of Insurance Policy Coverage Limitations After Tragic Car Accident

Many employees routinely use their own automobiles in the course of their employment. Whether running an occasional errand on behalf of the company, or using a car to make door-to-door sales calls, employees who drive their vehicles for the benefit of their employers may wonder how liability is affected if they are involved in an accident. Generally speaking, an employer is responsible for the negligence of its employees who operate motor vehicles on behalf of the company. For this reason, employers maintain liability insurance policies that cover them for losses that may arise from auto accidents caused by employees. Like other policies, these liability policies can be subject to specific limitations to coverage as arranged between the employer and the insurer. One example where the language of the policy exceptions proved determinative is the 2010 case of Anderson v. State Farm Fire & Casualty Insurance Co.

Donald Anderson worked for Labor Finders, a staffing agency with offices throughout the state of Louisiana. Anderson was killed when an oncoming motorist, Gordon Pugh, Jr., crossed the center line and struck his car as Anderson was driving to an appointment for work. After her father’s death, Monica Anderson filed a wrongful death action which named Pugh, Pugh’s insurer (State Farm Fire & Casualty Insurance Company), and National Union Fire Insurance Company as defendants. National Union was included because the company had issued a liability policy to Labor Finders which was in effect at the time of the accident. This policy, which applied to employees of Labor Finders, contained an endorsement for uninsured/underinsured motorist (UM) coverage. National Union answered, denying that Anderson was covered under the policy. Monica settled with Pugh and State Farm, after which National Union filed a motion for summary judgment. The trial court concluded that under the clear and unambiguous terms of the policy, Donald Anderson was not covered.

On appeal, the First Circuit conducted its own detailed analysis of the policy language. After noting that “insurers have the right to limit coverage in any manner desired, so long as the limitations are clearly and unambiguously set forth in the contract and are not in conflict with statutory provisions or public policy,” Campbell v. Markel American Insurance Co., the court found that an exclusion within the National Union policy which denied coverage to any employee who was injured in the course of operating an automobile applied to Anderson’s death. The court also concluded that Anderson was not covered under the policy’s UM endorsement because it extended coverage only to a “partner or officer” of Labor Finders, of which he was neither. Accordingly, the court concluded that the trial judge correctly found that Anderson was not eligible for liability coverage under the National Union policy, and affirmed the decision.

The Anderson case provides a warning to employees that they should not assume they will necessarily be covered by their employer’s insurance policy if they are involved in an accident–particularly, as here, one where they are not at-fault. We can presume, though it is not stated in the court’s discussion, that Monica Anderson settled with State Farm (the at-fault driver’s insurer) for a sum that was within the policy limits. The suit against National Union was, perhaps, an understandable attempt to obtain more funds beyond those she received in the State Farm settlement. While Monica’s situation is tragically sympathetic, the court made it clear that an issuer can use the language of a policy to limit coverage substantially, even to the detrmiment of an “innocent” party.

If you have been injured in a car accident, call the Berniard Law Firm today toll-free at 1-866-574-8005 and speak with an attorney who can help.

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