torts 2 deck 9 insurance Flashcards
Ambiguities
The rule (from contract law): Ambiguities are construed against the drafter (the insurance company).
The Issue
The policies required the insurance companies to defend their insured in claims that are covered under the policies.
Is this claim covered?
How can we tell?
The “eight corners rule”
“If the pleading contains allegations that, when fairly and reasonably construed, state a cause of action that is potentially covered by the policy, then the insurer has a duty to defend the insured in the underlying lawsuit.”
Extent of Duty to Defend
Does insurer have to defend claims that would be not be covered under the policy?
The scope of the defense obligation extends to all claims, not only the valid or strong ones.
Obligation to Settle in Good Faith
Where does the money come from?
Insurer pays its $10,000
Landlord left to come up with the remaining $91,000.
Transferred to tenant her right to sue the insurer.
Who should pay the $91,000?
An insurer should not be permitted to further its own interests by rejecting opportunities to settle within the policy limits unless it is also willing to absorb losses which may result from its failure to settle.
Always?
At least here, where the defendant “knew that there was a considerable risk of substantial recovery beyond said policy limits.”
Rules for Interpreting an Insurance Contract
Ambiguities are construed against the drafter
Here, in favor of the insured
Ordinary and common usage
Language should be given its plain and ordinary meaning
Avoid redundancy
Each word has its own meaning
No-Fault Systems
workers comp
Liability without fault
Is a “no-fault” system the same as a strict liability system?
No, because . . .
Defenses based on Plaintiff’s conduct are abolished or restricted
Employers are liable for injuries “arising out of and in the course of employment.”
Do not need a causal link between a particular act of defendant employer and employee’s harm.
Liability without fault
Is a “no-fault” system the same as a strict liability system?
No, because . . .
Defenses based on Plaintiff’s conduct are abolished or restricted
Employers are liable for injuries “arising out of and in the course of employment.”
Do not need a causal link between a particular act of defendant employer and employee’s harm.
workers comp
An “exclusive” remedy
Employees may not sue an employer in court.
Administrative scheme provides the exclusive remedy.
Benefits Under A Workers’ Compensation Scheme, p. 894
Lost earnings and medical expenses
Limitations
Injury that does not affect ability to earn is not compensable
Pain and suffering not compensable
Mental distress damages are compensable.
Punitive damages not compensable
Statutes impose strict limitations on the amount of compensation recoverable
Loss defined in terms of “average weekly wage”—subject to minimums and maximums
Look at individual statutes
The Scope of Coverage
Clodgo v. Industry Rentavision, Inc. (Vt. 1997), p. 883 The case of the firing staple gun A guy is hurt while at work What can he do? What does he have to show?
Scope of Coverage (2)
Workers’ compensation benefits may be awarded for injuries “arising out of and in the course of” employment. What does this mean? Are there two separate elements? “arising out of” “in the course of”?
How do we determine?
What is “arising out of” employment?
What is the cause and origin of the injury?
Is the person at work?
Is he performing work activities?
What is “in the course of employment”?
Look at the time, place, and circumstances of the injury.
Did it occur within the period of time the employee is at work?
Was the employee fulfilling his/her job duties?
“Arising out of and in the course of employment”
Where does horseplay fit in?
Commission held that claimant could recover.
What would support this decision?
That injury arose out of and in the course of employment.
Does the court agree?
