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Auto-Owners Insurance Company v. Harvey 813, N.E.2d 1190 (Ind. Ct. App. 2004) – Intentional Acts Auto-Owners appealed the denial of its motion for summary judgment
in defense of a declaratory judgment action. Specifically, the trial
court was asked to decide whether there was an “occurrence,” which
is defined as “an accident” in the insurance policy. The Court of Appeals reversed the trial court’s decision and ordered the trial court enter summary judgment in favor of Auto-Owners finding there was no “occurrence” as defined by the policy. Specifically, since Gearheart pled guilty to a charge of involuntary manslaughter, which implies proof of intent, there was no genuine issue of material fact regarding whether Gearheart’s actions were intentional. Therefore, since Gearhart’s actions were intentional as a matter of law, there could be no insurance coverage.
Smith v. Cincinnati Ins. Co., 790 N.E.2d 460 (2003)—Permissive Use Cincinnati’s insured was 18 and was out with a 15 year old friend. The insured became intoxicated and asked the 15 year old friend to drive home. The 15 year old only had a learner’s permit and ran off of the road, injuring the insured. The insured sued the driver for her injuries. The driver filed a declaratory judgment action against Cincinnati, contending she was a permissive user, and therefore covered by the policy. The Supreme Court held the driver did not have a reasonable belief that she was entitled to drive since she was not licensed, and therefore she was not covered. The Supreme Court also indicated the insured’s intoxicated state did not eliminate her ability to give a designated driver permission to drive.
Allgood v. Meridian Security Ins. Co. 836 N.E.2d 243 (Ind. 2005) - Diminution in Value Plaintiff’s auto was damaged while insured by Meridian. Meridian paid the cost of repairs under its collision coverage, but did not compensate plaintiff for any diminution in value. Plaintiff argued unless a repair to the automobile restored it to its fair market value the defendant must pay for the decline in market value after the repair to fully indemnify plaintiff for the loss. The Indiana Supreme Court considered whether an insurance policy that provides coverage for loss limited to the lesser of the actual cash value of the amount necessary to repair or replace property obligates the insurer to compensate for diminution in value after adequate repairs have been made. Here, the court reviewed the “limit of liability” policy language determining it to unambiguously provide for either repair of the vehicle or replacement of the vehicle with that of like kind and quality, but found no obligation to restore the value of the vehicle. The court noted to the extent individual parts were replaced, those parts must be replaced with those of like kind or quality. Therefore, the court held an insurance policy that provides coverage for loss limited to the lesser of the actual cash value of the amount necessary to repair or replace the property with other property of like kind and quality does not obligate the insurer to compensate for diminution in value of the property after adequate repairs have been made.
Dunn v. Meridian Mutual Ins. Co., et al. 836 N.E.2d 249 (Ind. 2005) - Diminution in Value The plaintiff was involved in a motor vehicle accident with an uninsured driver. Plaintiff’s insurer paid for the repairs to his motor vehicle, but did not compensate for any diminution in value of the car based on the “limit of liability” in the collision section of his insurance policy. The plaintiff argued his claim was not subject to the “limit of liability” contained in the collision section of his insurance policy, but rather he claimed a right to indemnity under his UIM coverage giving him the right to recover from his own insurer the total amount for which an uninsured motorist would be liable. Notwithstanding the Indiana Supreme Court’s prior ruling regarding diminution in value in Allgood v. Meridian Security Ins. Co., here the Supreme Court determined the plaintiff would be entitled to recover diminution in value for his vehicle in this case. The Court distinguished this case from Allgood noting the uninsured tortfeasor has no “limit of liability” comparable to the limitation in the plaintiff’s collision coverage. Therefore, the court determined the plaintiff would be entitled to recover the full amount of his damages from the accident, including the diminution in value of his car after its repair. Stated differently, the Supreme Court held if an insured’s vehicle is damaged by an uninsured motorist and the insurer chooses to repair the vehicle, the insurer must pay any diminished value of the insured’s vehicle, in addition to any cost of repair up to the policy limits.
Monroe Guaranty Ins. Co. v. Magwerks Corp. 829 N.E.2d 968 (Ind. 2005) - Bad Faith The Supreme Court was asked to decide whether a good faith dispute concerning insurance coverage automatically precludes a punitive damages claim for bad faith when coverage is denied. The plaintiff’s business suffered damage after a period of heavy rain and snow causing several sections of its roof to fall to the floor. As a result, water and moisture caused damage to several pieces of plaintiff’s equipment. The insurance carrier ultimately denied the plaintiff’s claim citing several exclusions and limitations in the insurance policy as a refusal to pay for the loss. Specifically, the insurer cited exclusions for damage caused by wear and tear, decay, deterioration, and defective design, but did not reference at all the policy provision concerning “collapse.” Thereafter, plaintiff filed a complaint alleging both breach of contract and bad faith, with the primary issue in dispute being whether the plaintiff’s loss was due to a “collapse” of the roof. The Indiana Supreme Court reviewed this case on the issue of whether a punitive damages claim for bad faith can even proceed where a good faith dispute regarding coverage exists. The Supreme Court determined apart from the insurance carrier’s denial based on a good faith dispute regarding whether or not coverage exists, the true question is whether the insurance carrier’s conduct leading up to and including the denial rose to the level of bad faith. The Supreme Court determined, based on the facts of this case, the jury’s conclusion that the insurance carrier’s conduct amounted to an unfounded refusal to pay policy proceeds was reasonable in the circumstances. Therefore, based on the facts of this case, the Supreme Court held a good faith dispute concerning insurance coverage does not automatically preclude a punitive damages claim for bad faith when coverage is denied.
Liberty Mut. Ins. Co. v. OSI Industries, Inc., 831 NE 2d 192 (Ind. Ct. App. 2005) – Duty to Defend A declaratory judgment action was filed against Liberty Mutual alleging it breached its duty to defend OSI in an underlying lawsuit. The trial court determined Liberty Mutual breached its duty to defend and granted summary judgment on the declaratory judgment action in favor of the insured. The insured then claimed Liberty Mutual was subsequently estopped from raising any policy defenses in the subsequent litigation. However, the Court of Appeals determined where an insurer violates its duty to defend it is not thereafter collaterally estopped from raising policy defenses in litigation between itself and its insured.
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