Uninsured-motorist coverage after the insured died in an auto accident was the issue in Estate of Anderson v. Safeco Ins. Co. of Illinois, No. 08-3452 (8th Cir. May 29, 2009) [here].
Anderson was riding in a car driven by his ex-wife when flood water swept the car off a driveway. Anderson died after being thrown from the vehicle. The vehicle was insured by Sagamore Insurance Company. Sagamore denied the Estate's claim because the cause of the accident was not the fault of Ms. Anderson, but the contractor's poor repairs to the driveway.
Anderson had an auto policy with Safeco. The Estate filed a claim with Safeco, arguing the policy's uninsured-motorist provisions applied. Safeco's policy provided,
A. Safeco will pay damage which an insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury:
1. Sustained by the insured; and
2. Caused by an accident.
. . .
C. "Uninsured motor vehicle" means a land motor vehicle or trailer of any type:
1. To which no bodily injury liability applies at the time of the accident . . . [or]
4. To which a bodily injury liability bond or policy applies at the time of the accident, but the bonding or insuring company:
a. denies coverage. . . .
Relying on Part C.1 of its policy, Safeco denied coverage. Although the Sagamore letter indicated the vehicle was insured under its policy, the Estate failed to present sufficient documentation that the death was the result of an auto accident caused by an uninsured motor vehicle. The Estate argued Safeco should provide coverage under Party C.4(a) because Sagamore denied coverage. The district court granted summary judgment to Safeco.
The Eighth Circuit affirmed. Sagamore did not dispute that Ms. Anderson was covered by its policy; it denied payment because it contested her liability for the accident. It would be unreasonable in the context of uninsured motorist insurance to define "coverage" to include a denial by the liability insurer of the insured's fault in the accident. "Coverage" related to whether the policy was intended to apply to a particular claim, whereas "liability" addressed the viability of the claim on the facts. Because Sagamore denied payment on the basis that the insured, Ms. Anderson, was not at fault but did not dispute that the accident was generally covered by the policy, there was no denial of "coverage" within the meaning of Safeco's definition of "uninsured motor vehicle."
The court also rejected the Estate's argument that Safeco was estopped from arguing that Ms. Anderson did not meet the definition of an "uninsured motor vehicle" under Part C.4(a) of the policy because Safeco failed to reference this provision in its declination letter. Safeco was not required to anticipate the Estate's erroneous argument that it was asserting liability under Part C.4 because the definition of "coverage" encompassed a tortfeasor with liability insurance but whose underwriter denied liability in that particular instance.
