UM Not Triggered by Denial of Insured's Fault in Accident
In Estate of Anderson v. Safeco Ins. Co. of Illinois, 2009 WL 1491520 [C.A.8 ( Mo. )], Buford Anderson was riding in a car driven by his ex-wife, Janice Anderson, when flood waters swept the car off a private drive. Mr. Anderson died after being thrown from the vehicle. At the time of the incident, the vehicle was insured by Sagamore Insurance Company. The estate sought damages under the policy, stating Ms. Anderson was at fault for the accident. Sagamore disputed that Ms. Anderson was at fault for the accident as required to trigger liability under the policy. Sagamore denied the claim, stating that the main contributing factor to the accident was poor repairs to the driveway and that the contractor that repaired the driveway was the liable party.
Mr. Anderson had an auto insurance policy with Safeco that included uninsured motorist coverage. After Sagamore's denial, the estate filed a claim with Safeco. It submitted Sagamore's response as evidence that Safeco was now responsible for payment under Mr. Anderson's UM policy provisions.
Safeco denied coverage, finding that the Sagamore denial letter clearly indicated the host vehicle was insured at the time of this loss and that the estate had failed to present sufficient documentation that the death was the result of an auto accident caused by an uninsured motor vehicle. The estate responded to Safeco's denial of coverage by asserting Safeco's liability under Part C.4 of the policy, which specifically provided that an uninsured motor vehicle included, as being within coverage, “a tortfeasor whom has liability insurance, but the underwriter of which denies liability.” Safeco refused payment and the estate then filed suit for breach of contract and vexatious refusal to pay.
Sagamore did not dispute the fact that Ms. Anderson was covered by its policy. Rather, it denied payment because it contested her liability for the accident. Regardless, the estate argued that Sagamore's denial of liability was, in effect, a denial of “coverage” under Part C.4(a) of the Safeco policy. Safeco countered that the definition of “coverage” in Part C.4(a) did not include instances in which an insurer denied that the insured was at fault and refused payment for a claim on a liability-related basis.
The appeals court agreed with Safeco, stating that the policy did not specifically define the term “coverage.” According to the court, it would be unreasonable in the context of UM insurance to define “coverage” to include a denial by the liability insurer of the insured's fault in the accident. Because Sagamore denied payment on the basis that Ms. Anderson was not at fault but did not dispute that the accident was generally covered by the policy, the court found that there was no denial of coverage within the meaning of Safeco's definition of uninsured motor vehicle, thus Safeco had no obligation to pay the estate for its claim.
The estate further argued that Safeco was estopped from claiming that Ms. Anderson did not meet the definition of uninsured motor vehicle under Part C.4(a) of the Safeco policy because Safeco failed to reference this provision in its letter denying coverage. The court also found this argument without merit, stating that Safeco properly informed the estate that it did not believe that the accident involved an uninsured motor vehicle within the meaning of Part C because Ms. Anderson had an insurance policy in place.
Further, even assuming that Safeco erred in failing to inform the estate that it was denying coverage specifically under Part C.4(a), its failure to raise this defense in its denial letter did not change the meaning of “coverage” in the policy so as to allow the estate to prevail.
Finally, because the estate had neither established that UM coverage existed nor alleged that Safeco engaged in inappropriate tactics when seeking to avoid payment, it could not establish Safeco's liability for vexatious refusal to pay.
The court therefore affirmed the judgment of the district court granting summary judgment in favor of Safeco.