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Bar News - August 20, 2014

Workers Comp & Personal Injury: Safeguarding Insurance in Personal Injury Cases


Doreen F. Connor
Every personal injury claimant should be concerned about how his or her claim is going to be paid. To ensure your client’s damages will be paid under an insurance policy issued to the defendant, consider the following tips.
1. Avoid pleading intentional torts and/or enhanced damages as a matter of routine.
Auto and homeowner insurance coverage is available for a defendant’s accidental, injury-producing conduct. The ad hoc decision to assert a claim for intentional torts or enhanced compensatory damages based on wanton, malicious conduct should be reserved for the truly exceptional case, or the case in which the defendant has sufficient assets to pay the verdict on his own if his insurer denies coverage.

Even if an attorney pleads intentional and negligent conduct in the alternative, the inclusion of an intentional cause of action based upon the same facts as the negligence count may result in a denial of coverage for both. See e.g., State Farm Ins. Co. v. Bruns (2008).
2. Remember the six month declaratory judgment statute of limitations.
If coverage is in doubt, file a complaint for declaratory judgment within six months of the suit giving rise to the coverage question (RSA 491:22). Your six-month window, within which to seek declaratory relief, is not stayed pending the receipt of a formal declination of coverage. See Binda v. Royal Ins. Co. (2000). Although RSA 491:22 contains a discovery rule exception, you are well served to file in all cases of doubt. If coverage is accepted, you may always non-suit the declaratory, whereas failure to file timely could preclude your relief.
3. If your client’s damages are auto-related, do not allow your client to enter into a settlement with the responsible party before you obtain consent from all potential underinsured motorist insurers.
If your client accepts the tortfeasor’s liability settlement offer without his or her underinsured motorist carrier’s written consent, the client forfeits his or her underinsured motorist benefits. Charest v. Union Mut. Ins. Co. (1973).

In Stevens v. Merchants Mut. Ins. Co. (1991), the insured obtained consent from one uninsured motorist insurer, but not the second. Although the first insurer consented to the settlement and, presumably, the second would have also consented, the plaintiff-insured’s failure to obtain the second carrier’s consent in advance of releasing the underinsured tortfeasor was held to be a violation of the policy and a forfeiture of coverage.

The court’s strict enforcement of the “consent to settlement” clause requires that counsel obtain written consent and/or denials from all potential underinsured motorist insurers before extinguishing the insurers’ rights against the responsible defendant.
4. The definition of an “underinsured” motorist is changing.
Historically, the courts have interpreted the Financial Responsibility Act and motor vehicle insurance language to mean that a motor vehicle is underinsured if the liability insurance coverage available to the tortfeasor is less than the uninsured motorist coverage purchased by the injured plaintiff (RSA 259:117; Concord Gen. Ins. Co. v. Mitchell (1994)).

This means you must compare the liability policy limits with the underinsured motorist limits and not the amount of money the injured plaintiff actually received. In Allstate Ins. Co. v. Armstrong (1999), multiple parties were injured and most received far less than the $25,000 in liability limits available to the responsible tortfeasor. Janeen Armstrong, the defendant, had her own $25,000 underinsured motorist policy, but she could not assert an underinsured motorist claim, as the limits of her policy equaled the tortfeasor’s liability limits, and thus the tortfeasor was not underinsured.

Effective Jan. 2, 2015, the New Hampshire Legislature is amending RSA 259:117 to overrule Armstrong. The 2015 definition of an “underinsured motor vehicle” will allow plaintiffs in Armstrong’s position to recover the difference between the $5,000 recovered from the tortfeasor and the plaintiff’s own $25,000 policy limits, i.e. $20,000. Although most policies will still contain the Armstrong definition of an “underinsured motorist,” such policy provisions cannot be enforced as they will be in conflict with the coverage mandated under the Financial Responsibility Act. Peerless Ins. Co. v. Vigue (1975).
5. Is your client entitled to medical payment coverage?
Every auto policy issued in New Hampshire must contain $1,000 in medical payment coverage and most policies contain more (RSA 264:16). Such coverage is limited to insureds, i.e., occupants of the insured vehicle.

Be sure you request the medical payment coverage. Most homeowner policies also extend medical payment coverage to those injured upon the insured premises. The limits of medical payment coverage under most homeowner and/or business policies are significantly higher than the mandated auto coverage and many plaintiffs fail to request such coverage.
6. When determining who to sue, remember that combining a negligent entrustment or supervision claim with the underlying negligence action will not trigger additional coverage under the same policy.
The policy limits under an auto and homeowner insurance policy are identified as an aggregate occurrence limit, i.e. $300,000. Most aggregate limits are then subject to a lower per-person limit, i.e. $100,000.

The per-person limit is triggered when there is more than one injured party filing suit. The aggregate limit is the most coverage that will be provided, regardless of the number of claims brought or insured defendants. This means that bringing an action against both the at-fault teenage driver and his parents will not increase the amount of coverage available to satisfy your client’s damages, if the parents and their child are both insured under the same policy.

Loss of consortium and loss of familial relationship damages also fail to trigger a second bodily injury occurrence limit, though these actions increase the amount of recoverable damages and should be pled. NH Ins. Co. v. Bisson (1982); Guilfoy v. USAA (2006).

Doreen Connor is a shareholder at Primmer Piper Eggleston & Cramer and is based in Manchester. She represents individuals, business owners and insurance companies in insurance coverage trial litigation and has an active insurance defense and appellate litigation practice. She is a fellow of the American Academy of Appellate Lawyers.

Supreme Court Rule 42(9) requires all NH admitted attorneys to notify the Bar Association of any address change, home or office.

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