| If you are paying premiums for a policy of insurance, this may interest you.
Insurance policies are contracts of adhesion. That is, in construing the policy, courts will favor the insured, because there is an unequal bargaining ability between the insured and the insurer.
Insurance policies usually contain exclusions--events which are not covered and for which the insurer is not bound to provide a defense or to indemnify the insured for claims.
In a recent case, plaintiff filed a two count Complaint, alleging defendant caused personal injuries. The first count alleged the injuries were caused by defendant's negligence; the second count alleged defendant intentionally struck plaintiff.
Defendant submitted the matter to his insurance carrier. The carrier responded that it would defend and indemnify defendant on the negligence claim, but not on the intentional assault claim because it was particularly excluded under the policy.
YOU BE THE JUDGE: Does an insurance company have the right to refuse to defend a policyholder simply because a plaintiff has included a claim of intentional wrongdoing with allegations of negligence?
The carrier filed a declaratory judgment (D/J) action, seeking a determination that its policy decision was correct.
In the D/J suit, the trial court held the carrier was obligated to defend all claims filed by plaintiff--including the intentional assault claim.
On appeal, the Appellate Division reversed. The Court observed that both the carrier and its insured have a common interest in defeating plaintiff's claim, or in minimizing the jury award of damages to plaintiff. However, they have inconsistent interests in the theory of plaintiff's recovery--if the jury finds liability based on negligence, defendant is entitled to coverage under the policy; if the jury finds liability based on an intentional wrongdoing, defendant is without coverage.
An insurer's right to a trial on the coverage issue is preserved if it refuses to defend a complaint which asserts both covered and non-covered theories. Under these circumstances, the insurer is entitled to refuse a defense unless there is a declaratory judgment in advance of trial that the policy exclusion does not apply.
The decision points out that a courtroom can bring justice and may be the only way to protect your rights. We know courtrooms; we have harnessed the power of the law in courtrooms to bring justice for our clients for decades. Please contact us to discuss how we can help you in a new lawsuit or provide a "second opinion" about your pending lawsuit. There is no obligation for the initial consultation. |
