| Q&A of the Week |
Adopted Child Causes Damage in Auto Accident
A Vermont subscriber recently asked the following question:
I am working on a complaint that involves an adopted child with a driver's permit only and need some assistance as to whether or not the auto liability should pay for damages to a third party. The insured states that her adopted son, age 15 and holding a driver's permit only, took the family car without permission and then he was involved in an accident. The adjuster is denying coverage stating that there is no coverage as the car was taken without the parents' permission. My feeling is that the child, a minor, had access to the keys so the parents should be liable for the damages that were caused by their son. I would like to know what your thoughts are.
ANSWER: We cannot answer whether the parents should be liable in this situation since that is a legal question for an attorney to answer. However, according to the wording in the PAP, the child was certainly a family member and certainly an insured. There is an exclusion on the PAP for using a vehicle without a reasonable belief that that insured is entitled to do so. But that exclusion goes on to state that it does not apply to a family member using the named insured's covered auto that is owned by the named insured. This exception to the exclusion is meant to apply in situations such as this since family members, especially children, often use the family car with or without the expressed permission of the named insured.
It may be that the adjuster is relying on a differently-worded PAP, but if the wording on your policy is the same as on the standard PAP, there is coverage for this claim. |
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| Litigation Watch |
Validity of a Waiver of UIM Coverage
The insureds seeks to compel their insurer to provide underinsured motorist (UIM) coverage on the grounds that their waiver was invalid. This case is Lieb v. Allstate Property and Casualty Insurance Company, 2016 WL 66544.
The Liebs purchased an insurance policy on their car from Allstate. As part of that transaction, the Liebs signed a waiver of UIM coverage. The waiver form, which Allstate provided, included lines for a signature and a date. The Liebs signed the form but did not date it. Ed Lieb faxed the form to Allstate and Allstate noted the fax had a timestamp on it.
One year later, the Liebs were in an accident; they were rear-ended by another car. They then sought UIM coverage, claiming permanent and disfiguring injuries. Allstate denied UIM coverage and the Liebs sued. The trial court granted Allstate's motion to dismiss and this appeal followed.
The United States Court of Appeals, Third Circuit, noted the Liebs' assertion that the waiver was invalid under Pennsylvania law because the Liebs never dated the waiver. Pennsylvania law states that precise language must appear in a waiver form and that the form must be signed by the first named insured and dated to be valid. Moreover, any form that does not specifically comply with these requirements is void. The Liebs read these rules to require that a waiver form be signed and dated by the insured and so, since the date was not put in by the insureds, the waiver was void. Allstate countered that the law only requires a waiver form to be dated in some way, not necessarily by the insured and insists that the fax written timestamp that appears on the form should suffice.
The Court of Appeals said that as a matter of plain reading, the state law does not say that a waiver form must be signed and dated by the first named insured to be valid; rather, it says that the form must be signed by the first named insured and dated to be valid. So, the court concluded, the only logical purpose for a date is to eliminate disputes about when such a waiver was effective. The Liebs' reading would allow wily insureds to file undated waiver forms in the hope of duping an inattentive insurer, only to later demand coverage if an accident were to occur.
The court stated that the issue in this case is not whether to apply the waiver statute strictly, but rather how to interpret that law in the first instance. In its view, the court ruled that the machine-written timestamp on the waiver form suffices for the form to have been dated in accordance with Pennsylvania law. The judgment of the district court was affirmed.
Editor's Note: The U.S. Third Circuit Court interprets the Pennsylvania UIM statute and rules that the fact that the insured did not date the UIM waiver form would not invalidate the waiver. The insured had no UIM coverage in this instance. |
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| Fraud of the Week |
Auto Fraud – California
AMOUNT: $19,625
A Sacramento couple have pled no contest to felony insurance charges. The man had an accident rear-ending another vehicle. He drove off without providing a license or insurance information. The owner of the vehicle reported it stolen the next day, claiming she had the only key and did not know who took her vehicle. The vehicle was recovered a half mile from the residence; the vehicle had significant front-end damage, but no sign of forced entry. The man was identified as the hit-and-run driver and cell phone records show that he, not a nephew, drove the insured to work as had been claimed. The driver was sentenced to three years in jail, and the insured and car owner was sentenced to 150 days in jail and five years' probation. They were ordered to pay $19,625 in restitution to the victim and the insurance company.
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