JEDZINIAK – INSURANCE – FALL 2012
Insurance is regulated by the states unless the Federal Govt decides to step in.
When filing a tort suit on behalf of your client, you must serve your client’s insurer and notify them of the 1st party claim. (serve ins. co. by serving SCDept. Ins. comm.)
Three types of Torts
1) Intentional – Intent to harm
2) Quasi-Intentional – Intentional act, but no intent to harm.
3) General Intent – 1) Duty; 2) Breach; 3) Prox. Cause; 4) Damages (actual(special/general)/punitive).
· Must have actual damages to get punitive damages.
· Can ask for nominal actual damages to get punitive damages.
· 3 purposes for punitive damages (clear/convincing evidence of willful or wanton conduct)
o Punish wrongdoer
o Deter others;
o Additionally compensate π
· Where the ∆ resides or the act occurred
· If filed in Fed. Dist. Ct. à the Ct. applies the law of the state in which the Dist. Ct. sits (Erie Doctrine)
o If state law is not clear, they can:
§ make it up,
§ abstain (wait till issue is determined at the state level), or
§ issue a certified question to the State Supreme Court.
Questions of Construction
· A policy is interpreted under the Rules of Construction of the state where the policy was issued because it is a contract issue.
I. AUTOMOBILE INSURANCE OVERVIEW
A. MINIMUM FINANCIAL RESPONSIBILITY LIMITS (Liability)
· Determined by looking at Declaration Page of insured.
· MFRL are determined after considering both law and social policy.
· History of MFRL
o SC had lots of infrastructure and lots of cars on the roads à lots of wrecks à laws needed to protect innocent parties.
o Very little C/L, mostly statutory
· Current MFRL = 25k Bodily damage (of innocent party)/50k for multiple passengers/25k for property damage.
o If only two numbers (e.g. 25/50), it will be Bodily/Passenger
· MFRL Coverage is not considered in the underlying tort suit.
B. TYPES OF COVERAGE
· Four types of limits (all based off liability)
2) Uninsured Motorist (UM)
3) Additional Uninsured Motorist (AUM)
4) Underinsured Motorist (UIM)
· Equalized Limits – When all cars on policy have the same limits
· Out of State Coverage Provision (See out-of-state driver under UM)
o If driving in a state w/ higher MFRL, your policy is reformed to provide up to the minimum limits of the state you are in.
o If at-fault driver has out-of-state coverage provision, look to UIM.
o If no out-of-state coverage provision, look to UM
C. UNINSURED MOTORIST COVERAGE (UM – 1ST party coverage)
1. Introduction to UM Coverage
· MANDATORY for every SC policy issued
o Primary purpose is to protect insured against an uninsured motorist.
· Minimum UM Coverage
o Insurer must offer up to the liability limits on the policy (so at least 25/50/25).
o Insured may purchase Additional UM Coverage
· In theory – insurer is stepping in to defend the uninsured driver.
o Must notify insurer when you bring a UM claim so they can protect their interests.
2. When Does a UM Claim Exist?
· Six Instances of “Uninsured Motorist”
1) Driving illegally uninsured
2) Driving legally uninsured – Pay DMV set amount annually (no policy req.)
o Driver is still liable for underlying tort suit.
3) Impermissive Driver – Someone driving an insured car, but driver not covered under policy.
4) Insured Driver at time of accident but at time of suit, Insurer is insolvent.
5) Out-of-State Driver – At-Fault driver comes from state w/ policy limits lower than SC’s.
6) Phantom Driver (John Doe)
3. Initiating a UM Claim
· Serving your insurer
o Must serve the Director/Commissioner of the SC Dept. of Insurance.
o Must also serve the insurer (look at Declaration page for Ins. Co.)
· Successfully bringing a UM Claim (three-part test)
o Must report accident to police w/in a reasonable amount of time (< 8 months) o 3rd party (other than operator or owner) witness affidavit or physical contact with Unknown vehicle. o Insured must make a reasonable effort to learn identification of Unknown vehicle/driver 4. Additional UM Coverage · Insurer must offer UM Coverage up to l
being used as a vehicle)
o Class 1 = stacking (up to limits or amount of damages) (measuring vehicle)
o Class 2 = portability of 1 at-home vehicle (no measuring vehicle for class 2 – you get full coverage from your at-home vehicle)
o If car is not being used as a vehicle, no UIM available for that car.
§ However, may still go home as a class 2 and take from a vehicle for which you are a class 1 driver
§ If class 1 for vehicle in accident, you may go home and stack all vehicles for which that person is a class 1 driver.
· Two Types:
1) Actual Damages
o Specials (economic) – Out of pocket expenses (e.g. med bills)
§ Must liquidate damages (i.e. provide medical bills)
o General (non-economic) – must only be generally averred.
§ E.g. pain and suffering
§ An expert is usually needed
2) Punitive Damages
o Clear and Convincing Evidence that other party violated a duty.
o Clear and Convincing Evidence of willful or wanton behavior.
· 1st – damages determined in underlying tort suit.
· 2nd – determination of who must pay the damages
o b/c a tortfeasor usually won’t have sufficient resources to cover π’s damages, you must recover from insurer (based on contract language).
II. UNINSURED MOTORIST (UM) COVERAGE
A. BRINGING A UM CLAIM
· Three part test
1) Must report the accident to police w/in a reasonable amount of time (8 months)
2) 3rd party (other than operator/owner) witness affidavit or physical contact with unknown vehicle
3) make reasonable effort to learn identity of unknown vehicle/driver
· Affidavit serves purpose of fraud prevention
· John Doe Statute was enacted to protect insurance companies.