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Insurance policy v. public policy

October 7, 2015

A starkly divided Indiana Court of Appeals opinion over whether insurance should be in play after a bicyclist was killed by an unauthorized motorist may be appealed to the Indiana Supreme Court.

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The majority reversed a trial court judgment in favor of the bicyclist on a matter of first impression. The question as stated by majority writer Judge Margret Robb was: “Does an insurer which has no duty to provide coverage benefits to its insured pursuant to the plain terms of the insurance contract nonetheless have to pay damages to an injured third party who has no independent source of insurance?”

Judge Paul Mathias joined the majority opinion that ruled the estate of bicyclist Brian Hoke could not pursue a claim against the insurer. Hoke’s fatal crash involved the policyholder’s unlicensed girlfriend who took his truck without permission. Robb wrote that the plain language of the insurance contract excluded coverage in these circumstances and that the policy terms were clear, unambiguous and didn’t violate public policy.

“Obviously, it’s something we’d like to change in terms of where the law is in Indiana,” said Jennifer Risser, a Blackburn & Green attorney who represented the estate in Founders Insurance Company v. Mark May, Pamela Coomer, and Roger W. Hoke as the Personal Representative of the Estate of Brian Hoke, deceased, 49A02-1501-PL-8.

Risser said a petition for transfer to the Supreme Court is likely, particularly on the strength of a pointed dissent from Judge Melissa May. The majority’s opinion, May wrote, “would lead to harsh and unfair outcomes, because it would result in protection for drivers injured in motor vehicle accidents but would leave no remedy for pedestrians, bicyclists, or other persons who need not or cannot prove financial responsibility.”  

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Attorney Ryan Duffin of Duffin & Hash LLP represented Founders Insurance and did not reply to messages seeking comment.

Hoke died after his bike was hit by a truck driven by Pamela Coomer. Hoke’s estate sued her, Founders Insurance Co., and policyholder Mark May, with whom Coomer was in a relationship.

Marion Superior Judge Thomas J. Carroll granted Founders’ motions for summary judgment as it related to May and Coomer, but Carroll denied Founders’ summary judgment motion as it related to Hoke’s estate.

“Here, the insurance contract excluded liability coverage for someone using the vehicle without a reasonable belief that he or she is entitled to do so,” Robb wrote in reversing the trial court. “The insurance contract further included the condition that no coverage would be afforded under the contract if the vehicle is being operated by a person who is an unlicensed driver for any reason. ... These are clear and unambiguous provisions of the insurance contract reasonably limiting Founders’ risk to liability for the conduct of an insured who should and legally could be driving the vehicle.

“There is nothing inherent in the exclusions in the Founders insurance contract that make them against public policy, it is only the particular circumstances of this case that make enforcing them seem unjust,” Robb continued in the opinion. “However, it is neither logical nor consistent with the law of contracts that the enforceability of a contract of insurance depends upon the status of the person with whom the insured is involved in a collision.

“We have great sympathy for the Hokes and their loss.  However, ‘a third party’s right to recover through liability insurance is not absolute,’” Robb wrote, citing Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664 (Ind. 1997). “The dissent would base its decision on the public policy ‘that persons who suffer loss due to the tragedy of automobile accidents shall have a source and means of recovery,’ ... and require Founders to be that source for Hoke’s Estate. However, the source and means of recovery is grounded in the insurance contract itself. The general policy of making insurance available to compensate for losses arising from motor vehicle collisions does not trump the long-standing precedent allowing an insurer to reasonably limit its liability, nor should the recompense of one victim take precedence over the importance of providing affordable insurance to all motorists.”

In her dissent, May noted Guzorek left unsettled the question of whether a liability insurer can deny coverage when the third party does not have protection against uninsured motorists. Risser said, “We’re hoping this is our day.”

“I believe a more useful statement of our public policy in this case is that ‘it is the policy of this state that persons who suffer loss due to the tragedy of automobile accidents shall have a source and means of recovery,’” May wrote, citing the language of Am. Underwriters Grp., Inc. v. Williamson, 496 N.E.2d 807, 810 (Ind. Ct. App. 1986), which was disapproved on other grounds in Guzorek.

“This policy typically guides courts in other jurisdictions who face fact situations like ours, and I believe that analysis strikes a better balance between protection of insured motorists and that of accident victims who are not motorists.”

Georgia is an example of where the state Supreme Court has found a public policy favoring insurance coverage in nearly all circumstances where parties are injured in crashes. The Peach State’s Motor Vehicle Accident Reparations Act has been interpreted to stand for the proposition that innocent people injured in car wrecks should have a resource for recovery of their damages, typically from any insurance policies of parties involved.

Risser said the majority holding tends to treat motorists differently than pedestrians or bicyclists injured in accidents. Because bicyclists aren’t required by law to carry bike insurance, even if it were available, they’re left uncovered in an event such as the one that claimed Hoke’s life. She said even if Hoke’s estate had prevailed, the limit of Founders’ uninsured/underinsured motorist policy involved in this case was $25,000.

“I cannot join the majority opinion to the extent it would, in order to protect insurance companies from perceived ‘disparate treatment,’ deprive non-motorist accident victims of recovery that is available to accident victims who are motorists,” May wrote.•

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