The employee of the insured company could not pursue breach of contract and bad faith claims against his employer’s insurer after being injured by an uninsured motorist. Travelers Prop. Cas. Co. of Am. v. Kelly, 2026 U.S. Dist. LEXIS 134948 (D. S.C. June 15, 2026).

Kelly was an employee of Kale’s Truck and Heavy Equipment. Kelly was using one of Kale’s tow trucks when assisting a disabled vehicle. He was out of the tow truck for about twenty minutes before being struck by an unknown driver. Kelly filed suit against” John Doe, Uninsured Driver.” Kelly alleged the driver was operating his vehicle in a grossly negligent, willful, reckless and wanton manner.

Kale’s held a Business Auto Coverage policy with Travelers. The policy included uninsured motorist coverage of $1,000,000 per accident. Kelly made a claim with Travelers claiming he was entitled to uninsured motorist coverage benefits provided under the policy. Travelers denied coverage because Kelly did not meet the definition of an “insured” under the policy.

Travelers filed this federal court declaratory judgment action against Kelly asserting that the uninsured motorist coverage did not provide coverage since Kelly was not “insured” under the policy. Travelers reasoned that Kelly was not “occupying” the vehicle at the time of the accident. “Occupying” a vehicle under the policy meant “in, getting in, on, out or off” the vehicle.

Kelly asserted breach of contract and bad faith counterclaims. He alleged he was operating a covered vehicle and was an insured under the policy for purposes of uninsured motorist coverage. Travelers filed a motion for partial judgment on the pleadings on the counterclaims.

Travelers argued it was entitled to judgment on Kelly’s breach of contract counterclaim because Kelly was not a party to the policy. Kelly responded that he was a third-party beneficiary able to bring his counterclaim because he qualified as an insured under the policy.

The court found Travelers was entitled to judgment on Kelly’s breach of contract counterclaim because Kelly was not a party or intended third party beneficiary to the policy. Kelly was not a third-party beneficiary because there was no indication that the contracting parties intended to create a direct benefit for him. Further, Kelly had not yet established the liability of the at-fault driver in the state court proceeding, Therefore, Travelers could not have breached its contract with Kelly by refusing to pay benefits

The bad faith claim also failed. A mutually binding insurance contract between Travelers and Kelly was a prerequisite for bringing a bad faith claim. Kelly was not a named insured under the policy, but was a third party to the policy.