The Insurance Institute of Indiana, the National Association of Mutual Insurance Companies, and the Property and Casualty Insurers of America have filed a joint friend of the court brief with the Indiana Supreme Court on a case that sets a potentially serious precedent for emotional distress claims in the insurance industry.

In the case of State Farm Mutual Automobile Insurance Company v. Jakupko, an appellate court ruling stated that physical manifestations of emotional distress or suffering can be classified as bodily injuries, a significant change from what is typically covered under an insurance company's standard automobile policy.

The case involved victim Richard Jakupko, who suffered spinal cord fractures and mental ailments after an auto accident. His wife and two children had witnessed the accident, which led them to make a claim of emotional distress. State Farm paid the Jakupkos $1 million under the umbrella policy and another $100,000 in under-insured motorist auto policy.

The plaintiffs pursued legal action against State Farm for an additional $200,000 because they believed it was available under the UIM coverage provided. The limits under the UIM coverage were $100,000 per person and $300,000 per accident.

“The impact of this ruling is broader than this single case, as it has the potential to be damaging to insurers writing business in Indiana,” said PCI Counsel Robert Hurns. “This case could dramatically increase costs by expanding coverage beyond what the contract states,” he concluded.

“While we certainly sympathize with the Jakupko family, the policy in question simply does not cover this kind of claim,” said Indiana Insurance Institute President Stephen Williams. “We believe the court overreached in this instance.”

At press time, the Indiana Supreme Court had not yet scheduled a date to hear arguments concerning this ruling.

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