Underinsured Motorist Coverage & You, knowing the ins and outs of the law to maximize your personal injury recovery
by Mark J. Kovack, Senior Attorney, Westport, Connecticut office.
Recently, the personal injury attorneys at Urban Thier & Federer convinced a nationally-known insurance company (“the Insurer”) to entirely reverse course, rescinding its denial of underinsured motorist insurance coverage and tendering the full six-figure amount of underinsured motorist benefits to our client (“the Plaintiff”) available under the policy owners’ automobile liability policy. Not only was this a vindication for the Plaintiff, helping to make her whole for bodily injuries she sustained when struck by a car while crossing the street as a pedestrian, but it also allowed for us to use our analytical skills and familiarity with insurance law to write such a compelling position paper that the Insurer agreed that its reading of its own policy was incorrect and at risk under Connecticut insurance law. How we were able to cause the Insurer to reverse course, and pay the Plaintiff’s underinsured motorist claim, is set forth below.
The Plaintiff was a German citizen who was residing in Connecticut as a full-time participant in a professional au pair program on a J-1 au pair visa. As part of their employment as an au pair with the Plaintiff, the Plaintiff’s host family caused the Plaintiff to be named as an “additional driver” on the host family’s automobile liability policy (“the Policy”). While employed as the host family’s au pair, the Plaintiff was struck by a motor vehicle registered in Connecticut when she was crossing the street as a pedestrian. As a result, the Plaintiff sustained serious personal injuries.
The insurer of the vehicle that struck the Plaintiff tendered the policy limits ($100,000) available under the insured driver/owner’s automobile liability policy in settlement of the underlying first-party claim. Thereafter, in an effort to make the Plaintiff whole to the extent that an award of monetary damages could do it, we made claim for the underinsured motorist benefits under the host family’s automobile liability policy. The Insurer, however, took the position that the Plaintiff was not an insured under the plain language of the Policy and, therefore, that no benefits were available to her. We disagreed.
II. The Denial
The Insurer denied any and all liability or obligation to the Plaintiff under the Policy. This disclaimer was made because the Insurer believed that the Plaintiff did not meet the definition of Insured as defined by the Policy.
The Policy included the following definitions under its uninsured motorist and underinsured motorists coverage section:
(b) your spouse if a resident of your household;
(c) any relative of (a) or (b) above who resides with you …
(d) any other person while occupying an insured auto; or …
(e) any employee of the named insured while occupying an insured auto in the course of employment.
8. Relative means a person related to you who resides in your household with you.
13. You and your mean the policy holder named in the declarations or his or her spouse if a resident of the same household. the policy holderThe Insurer denied underinsured motorist coverage, as follows: “Your client was an Au Pair to our insured and is not a relative or spouse of our named insured. In addition, she was not occupying an insured auto as she was a pedestrian at the time of the accident. Therefore, your client does not meet the definition of Insured as defined by our policy.”
Given that the underlying assertions behind the Insurer’s declination of coverage were all correct—the Plaintiff was not a relative or spouse, she was not occupying an insured auto, she was a pedestrian—we knew that we would need a reasonable basis on which to challenge the Insurer’s conclusion that the Plaintiff did not meet the definition of Insured as defined by the Policy. We found that basis by applying basic principles undergirding Connecticut insurance law to the terms and conditions of the Policy. By doing so, we were able to uncover an arguable inconsistency within the Policy and thereby convince the Insurer that its understanding of the Policy was at risk and incorrect under Connecticut insurance law.
III. Statutory Policy and Provisions Re: Underinsured Motorist Insurance
Connecticut’s underinsured motorist statute is remedial in nature and is intended to make underinsured motorist protection available to the broadest number of accident victims. In addition, Connecticut’s common law regarding construction of insurance policies is clear that policy language must be construed as a layperson would understand it and not according to the interpretation of sophisticated underwriters. Any ambiguities in an insurance policy must be construed in favor of coverage. Applying these public policies standards to the Policy, we convinced the Insurer that the Plaintiff fell within the Policy’s coverage provisions.
Connecticut General Statute § 38a-336(a)(1) provides in relevant part: “Each automobile liability insurance policy shall provide insurance, herein called uninsured and underinsured motorist coverage … for the protection of persons insured thereunder who are legally entitled to recover damages because of bodily injury … from owners or operators of uninsured motor vehicles and underinsured motor vehicles …” “Thus, by its terms, § 38a-336(a)(1) requires that each automobile liability policy provide uninsured and underinsured motorist coverage to class of persons that is coextensive with the insured under the liability section of the policy. Middlesex Ins. Co. v. Quinn, 225 Conn. 257, 267 (1993).” Gomes v. Massachusetts Bay Ins. Co., 87 Conn.App. 416, 425-26 (2005). As the Supreme Court itself stated in Middlesex Ins. Co. v. Quinn, 225 Conn. 257, 267 (1993):
The public policy behind uninsured motorist coverage, therefore, requires an insurer to provide uninsured motorist benefits to any insured under the automobile liability policy. “Once an automobile liability policy is issued extending [liability] coverage to a certain class of insureds … uninsured motorist coverage must be offered to cover the same class of insureds”; State Farm Automobile Ins. Co. v. Reaves, 292 Ala. 218, 223, 292 So.2d 95 (1974); except as expressly excluded by statute or regulation. Streitweiser v. Middlesex Mutual Assurance Co., 219 Conn. 371, 377, 593 A.2d 498 (1991).
Id.; see also, Gohel v. Allstate Ins. Co., 61 Conn.App. 806, 815 (2001) (the purpose of the uninsured and underinsured motorist coverage statute is to protect people injured by uninsured and underinsured motorists by providing “equivalent” of automobile liability coverage proscribed by law); Harvey v. Travelers Indem. Co., 188 Conn. 245, 250 (1982) (“an insured’s status at the time of the injury, whether passenger, pedestrian, or driver of an uninsured or underinsured vehicle, is irrelevant to recovery under the statutorily mandated coverage.”).
Furthermore, § 38a-336(a)(1) “is remedial in nature and designed to protect people injured by [under]insured motorists.” (Citations omitted; internal quotation marks omitted.) Gohel v. Allstate Ins. Co., supra, 61 Conn.App. at 815. Connecticut’s Supreme Court has stated that “remedial statutes should be construed liberally in favor of those whom the law is intended to protect.” Dysart Corp. v. Seaboard Surety Co., 240 Conn. 10, 18 (1997). “The public policy embodied in these statutes favors the indemnification of accident victims.” Gohel v. Allstate Ins. Co., supra, at 816.
Accordingly, the legislative intent underlying the uninsured and underinsured motorist statute is to provide broad coverage to victims of underinsured motorists:
The public policy established by the uninsured motorist statute is that every insured is entitled to recover for the damages he or she would have been able to recover if the uninsured motorist had maintained a policy of liability insurance. Insurance companies are powerless to restrict the broad coverage mandated by the statute. … “Uninsured motorist coverage … is statutorily intended to provide the reciprocal or mutual equivalent of automobile liability coverage prescribed by [law] …. To achieve this purpose, no policy exclusions contrary to the statute of any of the … insureds are permissible since uninsured motorist coverage is intended by the statute to be uniform and standard motor vehicle accident liability insurance for the protection of such insureds thereunder as ‘if the uninsured motorist had carried the minimum limits’ of an automobile liability policy….The public policy embodied in these statutes “favors indemnification of accident victims unless they are responsible for the accident.”
(Citations omitted; internal quotation marks omitted.) Harvey v. Travelers Indem. Co., supra, 188 Conn. at 249-50. Under Connecticut law, the statutes and regulations applicable to uninsured motorist coverage also apply to underinsured motorist coverage. McGlinchey v. Aetna Casualty & Surety Co., 224 Conn. 133, 134-35, n. 1 (1992).
Thus, in determining the relevant merits of the competing positions in this matter respecting underinsured motorist benefits coverage under the Policy, we argued that the Insurer must be mindful of the fact that it is the public policy of Connecticut, as embodied in the underinsured motorist statute and articulated by the courts, to provide insurance protection to compensate for damages that would have been recoverable from the motorist at fault in an accident if that motorist had maintained an adequate policy of liability insurance. This policy, we advocated, weighed heavily in favor of underinsured motorist coverage for the Plaintiff, as did the standards of review applicable to insurance contracts.
IV. Insurance Law
The standard of review of the terms of an insurance contract is well settled. As the Connecticut Supreme Court reiterated in Allstate Ins. Co. v. Barron, 269 Conn. 394, 406 (2004):
Under our law, the terms of an insurance policy are to be construed according to the general rules of contract construction…. The determinative question is the intent of the parties, that is, what coverage the … [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy…. If the terms of the policy are clear and unambiguous, then the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning…. However, when the words of an insurance contract are, without violence, susceptible of two [equally reasonable] interpretations, that which will sustain the claim and cover the loss must, in preference, be adopted…. This rule of construction favorable to the insured extends to exclusion clauses.” (Citation omitted; internal quotation marks omitted.) Travelers Ins. Co. v. Namerow, 261 Conn. 784, 796, 807 A.2d 467 (2002).
Id. at 406 (reversing trial court’s denial of insurance coverage).
When interpreting an insurance contract, the courts “must look at the contract as a whole, consider all relevant portions together and, if possible, give operative effect to every provision in order to reach a reasonable overall result.” O’Brien v. U.S. Fidelity and Guar. Co., 235 Conn. 837, 843 (1996). Moreover, in construing contracts, courts must give effect to all the language included therein, as “the law of contract interpretation … militates against interpreting a contract in a way that renders a provision superfluous.” (Internal quotation marks omitted.) Wesley v. Schaller Subaru, Inc., 277 Conn. 526, 546 (2006). Every provision in a contract must be given effect if it is possible to do so. United Illuminating Co. v. Wisvest-Connecticut, LLC, 259 Conn. 665, 671 (2002). “The law prefers an interpretation which gives effect to all parts of the contract rather than one which leaves a portion of the contract ineffective or meaningless.” 11 S. Williston, Contracts (4th Ed. Lord 1999) §32:9, p. 440.
It is a basic principle of insurance law that policy language will be construed as laymen would understand it and not according to the interpretation of sophisticated underwriters, and that ambiguities in contract documents are resolved against the party responsible for its drafting; the policyholder’s expectations should be protected as long as they are objectively reasonable from the layman’s point of view…. The premise behind the rule is simple. The party who actually does the writing of an instrument will presumably be guided by his own interests and goals in the transaction. He may choose shadings of expression, words more specific or more imprecise, according to the dictates of these interests…. A further, related rationale for the rule is that [s]ince one who speaks or writes, can by exactness of expression more easily prevent mistakes in meaning, than one with whom he is dealing, doubts arising from ambiguity are resolved in favor of the latter.
(Citations omitted; internal quotation marks omitted.) O’Brien v. U.S. Fidelity and Guar. Co., 235 Conn., supra, at 843.
The circumstances of the insured in seeking insurance coverage is also determinative:
The provisions of the policy issued by the defendant cannot be construed in a vacuum. Chmielewski v. Aetna Casualty & Surety Co., 218 Conn. 646, 670, 591 A.2d 101 (1991). They should be construed from the perspective of a reasonable layperson in the position of the purchaser of the policy. Travelers Ins. Co. v. Kulla, 216 Conn. 390, 402, 579 A.2d 525 (1990); Allstate Ins. Co. v. Ferrante, 201 Conn. 478, 487, 518 A.2d 373 (1986); Cody v. Remington Electric Shavers, 179 Conn. 494, 497, 427 A.2d 810 (1980). This analysis is necessarily fact oriented and is not based solely upon general propositions. A determination of the meaning of the term “family member” in the context of the National Indemnity policy requires careful consideration of the “‘situation [of the parties] to that policy and the circumstances connected with the transaction.’” Leonard Concrete Pipe Co. v. C.W. Blakeslee & Sons, Inc., 178 Conn. 594, 598, 424 A.2d 277 (1979), quoting Ives v. Willimantic, 121 Conn. 408, 411, 185 A. 427 (1936).
Ceci v. National Indemnity Co., 225 Conn. 165, 173–74 (1993). The rules of insurance policy construction are “consumer oriented,” and any “claimed ambiguity should be construed from the stand point of the reasonable layperson in the position of the insured and not according to the interpretation of trained underwriters.” (Citation omitted.) Id. at 175. When construing an ambiguous provision of an insurance policy, “we look to the expectation of the purchaser of the policy.” Travelers Ins. Co. v. Kulla, 216 Conn. 390, 401 (1990).
It is also the express statutory policy of Connecticut that insurance coverage shall be “readily understandable.” Ceci v. National Indemnity Co., supra, 225 Conn. at 175; Conn. Gen. Stat. §§ 38a-297 through 38a-299.
The Policy at issue, we argued, pursuant to which the au pair host family intended to have the Plaintiff insured under their “Connecticut Family Automobile Insurance Policy,” i.e., that she would obtain coverage under the underinsured motorist provisions of the Policy that is “coextensive” with the insured under the liability section of the policy; see, Middlesex Ins. Co. v. Quinn, supra, 225 Conn. at 267, contains provisions that, when construed from the stand point of the reasonable layperson in the position of the insured and not according to the interpretation of trained underwriters, accorded underinsured motorist insurance benefits to the Plaintiff.
V. The Policy
We asserted that the host family took action to have the Policy amended to name the Plaintiff in view of her engagement as the family’s au pair and need to operate the host family automobiles. We asserted that the policy owners’ expectation of coverage for the Plaintiff, including underinsured motorist coverage, was fully supported by the provisions of the Policy, particularly when construing the language of the Policy as a layperson would understand it and/or resolving ambiguities in the Policy against the drafter of that Policy and in favor of insurance coverage.
The Policy consisted of different parts, starting with the self-entitled “Declarations Page,” which consisted of two pages.
A. Declarations Page.
Page “1” of the “Declarations Page” provides:
|Named Insured||Additional Driver|
|Host family husband||The Plaintiff|
|Host family wife|
Three (3) vehicles are thereafter identified and listed, followed by:
|Coverages*||Limits and/or Deductibles||Vehicle 1||Vehicle 2||Vehicle 3|
Each Person/Each Occurrence
After the “Declarations Page” of the Policy was the substantive policy itself, entitled “Connecticut Family Automobile Insurance Policy,” which was divided into six (6) sections. Section I was entitled “Liability Coverages,” and included, inter alia, a “definitions” part. Certainly, we asserted, the expectations from the perspective of the reasonable layperson who expressly caused the Plaintiff to be added to and named in the Policy were that the Plaintiff was “insured” within the meaning of that term as used in the Policy. Construing the provisions of the Policy as laymen would understand them and/or resolving ambiguities in the Policy against the drafter of that Policy is, we argued, consistent with that expectation and afforded insurance coverage for the Plaintiff, both under the liability section of the Policy, as well as the uninsured motorists and underinsured motorist section of the Policy, Section IV.
B. Section I- Liability Coverages.
The Policy defined “Insured” to “mean a person or organization described under persons insured.” “Persons insured” is not defined. Nowhere did the Policy expressly designate or identify “persons insured.” There was merely page one of the Declarations Page of the Policy, listing “[host family husband by name] and “[host family wife by name]” under the heading, “Named Insured,” and listing the Plaintiff by name directly next to them under the heading, “Additional Driver.” The Insurer did not contest that the Plaintiff was in fact insured under Section I – Liability Coverages of the Policy. Indeed, why else name her in the Policy? Thus, the objectively reasonable expectation from the perspective of the layperson causing the Plaintiff to be added to and named in the Policy was that the Plaintiff was insured under the Policy.
Therefore, we concluded that the layperson reasonably could assume that “persons insured” included both the “Named Insured” and the “Additional Driver” listed on the Declarations Page, because, otherwise the Policy should have unambiguously stated that “insured” means the “Named Insured” and/or the “Named Insured” only. Thus, we argued that “[t]his is the kind of case that has been described as ‘one where no principle of law is involved, but only the meaning of careless and slovenly documents’…. Having caused the problem, [the Insurer] cannot now ignore it.” (Citation omitted. Internal quotation marks omitted.) Ceci v. National Indemnity Co., supra, 225 Conn. at 176.
Further, if the Plaintiff was not an “insured” by virtue of her being listed and named as an “Additional Driver,” then what did it mean to name her as such? Nothing? Obviously not, as it is axiomatic that “in construing contracts, courts must give effect to all the language included therein.” Wesley v. Schaller Subaru, Inc., supra, 277 Conn. at 546. Unquestionably, therebefore, the intent from the perspective of the reasonable layperson to cause the Plaintiff to be added to and named in the Policy was to cause her to be “insured” under the Policy.
In addition, “you” and “your” were defined to mean “the policy holder named in the declarations or his or her spouse if a resident of the same household.” “Policy holder” is not a defined term. The verbiage “policy holder” does not appear and is not used in the so-called “Declarations Page” of the Policy. The only persons identified and named in the Policy were the host family husband, the host family wife, and the Plaintiff. The reasonable layperson would certainly assume that the host family husband, the host family wife, and the Plaintiff were insured under the Policy; that the naming of them meant as much; that the insurance provided to one is coextensive with the insurance provided to the others.
Under the “exclusions” provisions of Section I of the Policy, it was stated in the affirmative that, “We cover bodily injury to an insured’s domestic employee unless benefits are payable or are required to be provided under a worker’s or workman’s compensation law.” There was no dispute that the host family husband and the host family wife (although not expressly identified as “persons insured”) were “insureds” under the Policy, or that the Plaintiff was their “domestic employee” at the time of the accident. Thus, we argued, under this affirmative coverage provision of the Policy, although located within the “exclusions,” the Plaintiff was provided coverage regardless of whether she was listed as an “Additional Driver” in the Declarations Page. Surely, however, the listing of “[the Plaintiff by name]” as an “Additional Driver” intended something, otherwise the provision is rendered entirely superfluous in contravention of the laws of contract construction. Wesley v. Schaller Subaru, Inc., supra, 227 Conn. at 546.
The express naming of the Plaintiff in the Policy declarations is consistent with a layman’s objectively reasonable expectations that in doing so, the Plaintiff was afforded the same coverage benefits provided to the host family husband and the host family wife under the Policy. A reasonable policy holder would conclude that the Plaintiff was insured equally with the host family husband and the host family wife. See, Middlesex Ins. Co. v. Quinn, supra, 225 Conn. at 267 (holding that §38a-336(a)(1) of the General Statutes requires that each automobile liability policy provide uninsured and underinsured motorist coverage to class of persons that is “coextensive” with the insured under the liability section of the policy). This expectation was objectively reasonable from a laymen’s point of view in light of the language used in the Policy, including Section IV’s coverage provisions for underinsured motorist insurance.
C. Section IV- Uninsured Motorist and Under Insured Motorist Coverage
Section IV of the Policy contained its own definitions section which stated that “[t]he definition of terms for Section I apply to Section IV, except for the following special definitions,” which include: “2. Insured means: (a) you.” Thus, Section IV used the same ambiguous definition stated in Section I, since the host family husband, the host family wife, and the Plaintiff were all insureds under Section I of the Policy although not identified as “the policy holder” and/or not all listed under the heading “Named Insured.” It was reasonable, therefore, for a layperson to understand and expect the term “you” to include the same persons listed in the Declarations Page, especially when construing the provisions of the Policy as the layperson would understand them and not according to the interpretation of sophisticated underwriters and when resolving ambiguities in the Policy against the Insurer.
We noted that the Insurer drafted the Policy and could have readily avoided this ambiguity by using precise and consistent terms; e.g., by defining “insured” to mean the “Named Insured” and/or the “Named Insured” only. Instead, the Insured chose to add the Plaintiff by name to the Policy and list the Plaintiff by name as an “Additional Driver,” although she already would have been covered as a “domestic employee” under the Policy, giving rise to the reasonable lay impression that the Policy included the Plaintiff as an “insured” in the definitional sense. Any ambiguity on this issue is precisely the problem that the rules of insurance policy construction were designed to avoid. See, Conn. Gen. Stat. §§ 38a-297 through 38a-299 (insurance coverage shall be “readily understandable”). Construing the Policy in favor of insurance coverage, a reasonable policy holder would conclude that the Plaintiff was insured under Section IV of the Policy – just as she was under Section I.
Moreover, the “exclusions” provision of Section IV furthers evidenced an intent to provide underinsured motorist coverage to the Plaintiff. The Section IV coverage does not apply to “a named insured … when occupying, or struck as pedestrian by, an uninsured or underinsured motor vehicle or motorcycle that is owned by the named insured.” Notably, this express example of when a “named insured,” a term which is not defined and is used solely with regard to listing “[the host family husband by name]” and “[the host family wife by name]” on the Declarations Page, is on its face inapplicable to the Plaintiff. The Plaintiff was not occupying, or struck as a pedestrian by, an uninsured or underinsured motor vehicle owned by a named insured. The Plaintiff was struck as a pedestrian by an underinsured motor vehicle owned by a third-party. Thus, unless the Insurer accepted that the Plaintiff is a “named insured,” which obligates the Insurer to provide her with the coverage benefits under Section IV, the Insurer must concede that the Plaintiff would be covered under Section IV in the event that she was “struck by as pedestrian by, an uninsured or underinsured motor vehicle or motorcycle that is owned by” the host family husband and/or the host family wife.
Accordingly, applying the principles underlying Connecticut insurance law to the express terms of the Policy allowed us to conclude: The objectively reasonable expectations from the perspective of the layperson causing the Plaintiff to be added to and named in the Policy were that the Plaintiff was insured under the Policy. Any ambivalence on that issue arises from imprecise language used by the Insurer in drafting the Policy and must be construed in favor of providing underinsured motorist benefits to the Plaintiff. The Policy, when construed from the perspective of a reasonable layperson in the position of the purchaser of the policy, afforded coverage to the Plaintiff that is co-extensive with the underinsured motorist benefits afforded to and paid for by the host family husband and the host family wife.
Pursuant to the foregoing analysis, we convinced the Insurer that the Plaintiff fell within the coverage provisions of Section IV of the Policy and was entitled to the underinsured motorist benefits listed on page 1 of the Declarations Page in their entirety.
VI. Lessons Learned
Do not give up even when the Insurer’s reasons for declining coverage appear applicable on their face.
Scour the policy provisions for any possible inconsistencies arguably in your favor.
Approach the insurance coverage provisions from the perspective of the layperson paying for the policy and under the circumstances for which the policy owner was seeking coverage.
Don’t be afraid of submitting, what in essence, was a summary judgment brief by means of a letter to the Insurer’s law department, advocating vigorously your client’s position. By doing so, we saved the client the considerable time delays and costs inherent in initiating litigation against the insurance company. It also worked: the insurer reversed course and tendered the underinsured motorist coverage benefits in full.
Finally, if you are an au pair, be sure to ask to see your host family’s automobile liability insurance policy and potentially have an attorney review it to make sure that you are not only an insured driver thereunder, but that the policy also provides you with underinsured motorist coverage benefits applicable to your host family, both as a motor vehicle driver and as a pedestrian.