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COA: Insurance company can't deny coverage

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The Indiana Court of Appeals upheld a trial court's decision that an insurance company was estopped from denying coverage to the suspected driver of a car because the company failed to properly preserve its right to deny the driver coverage.

In Founders Insurance Co. v. Virginia Olivares, Linda M. Vara, Daniel R. Farley, AAA Chicago Motor Club Insurance Co., No. 45A04-0712-CV-743, Founders appealed the trial court's declaratory judgment in favor of Virginia Olivares and other appellees, which ruled the insurance company was barred from denying coverage to Daniel Farley because he was an "excluded driver" under the car insurance policy of his mother, Linda Vara.

Vara insured a 1992 Oldsmobile Cutlass with Founders, which she co-owned with Farley, who was specifically listed under the policy as an excluded driver. Also included in the policy is liability coverage that extended to any "family member," under which coverage for Farley would fall.

Virginia Olivares was in a car accident in which the driver of the other vehicle - the Cutlass owned by Vara and Farley - was unidentified because he or she fled the scene. Farley later reported the car as stolen. Olivares believed Farley was driving the vehicle at the time and filed suit against Vara, Farley, and AAA. As a result, Founders provided defense counsel to Vara and Farley but later sent unsigned letters without Founders' letterhead to Vara and Farley saying if Farley was found to be driving the Cutlass, defense and indemnification would be withdrawn for him. The letter also misidentified Farley as David Farley instead of Daniel.

After Olivares filed an amended complaint adding a count against Founders, the company filed a counterclaim seeking declaratory judgment that it wasn't obligated to provide coverage to Farley for the accident because he wasn't insured under the policy.

Founders was estopped from raising the defense of non-coverage because it had sufficient knowledge of facts that would have permitted it to deny coverage, Founders assumed the defense of Farley without obtaining an effective reservation of rights agreement, and Farley suffered some type of harm or prejudice as a result, wrote Judge Carr Darden.

Founders claimed the unsigned letters it mailed to Vara and Farley properly preserved its right to later rely on the "excluded driver" defense, but the company provided no evidence to confirm Vara or Farley ever received the letters, wrote the judge.

And, because there was no proper reservation of rights by Founders as to the "excluded driver" defense, Farley wasn't aware at the time he accepted defense counsel from Founders that the company would later deny coverage if it found he were the driver of the Cutlass. As such, Farley couldn't make an intelligent choice between retaining his own counsel and accepting Founder's defense counsel, Judge Darden wrote.

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  1. Video pen? Nice work, "JW"! Let this be a lesson and a caution to all disgruntled ex-spouses (or soon-to-be ex-spouses) . . . you may think that altercation is going to get you some satisfaction . . . it will not.

  2. First comment on this thread is a fitting final comment on this thread, as that the MCBA never answered Duncan's fine question, and now even Eric Holder agrees that the MCBA was in material error as to the facts: "I don't get it" from Duncan December 1, 2014 5:10 PM "The Grand Jury met for 25 days and heard 70 hours of testimony according to this article and they made a decision that no crime occurred. On what basis does the MCBA conclude that their decision was "unjust"? What special knowledge or evidence does the MCBA have that the Grand Jury hearing this matter was unaware of? The system that we as lawyers are sworn to uphold made a decision that there was insufficient proof that officer committed a crime. How can any of us say we know better what was right than the jury that actually heard all of the the evidence in this case."

  3. wow is this a bunch of bs! i know the facts!

  4. MCBA .... time for a new release about your entire membership (or is it just the alter ego) being "saddened and disappointed" in the failure to lynch a police officer protecting himself in the line of duty. But this time against Eric Holder and the Federal Bureau of Investigation: "WASHINGTON — Justice Department lawyers will recommend that no civil rights charges be brought against the police officer who fatally shot an unarmed teenager in Ferguson, Mo., after an F.B.I. investigation found no evidence to support charges, law enforcement officials said Wednesday." http://www.nytimes.com/2015/01/22/us/justice-department-ferguson-civil-rights-darren-wilson.html?ref=us&_r=0

  5. Dr wail asfour lives 3 hours from the hospital,where if he gets an emergency at least he needs three hours,while even if he is on call he should be in a location where it gives him max 10 minutes to be beside the patient,they get paid double on their on call days ,where look how they handle it,so if the death of the patient occurs on weekend and these doctors still repeat same pattern such issue should be raised,they should be closer to the patient.on other hand if all the death occured on the absence of the Dr and the nurses handle it,the nurses should get trained how to function appearntly they not that good,if the Dr lives 3 hours far from the hospital on his call days he should sleep in the hospital

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