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Federal Court Interprets Insurance Contract in Favor of Insurance Company, Limiting Settlement Amount

Posted in Firm News

The United States Court of Appeals for the Tenth Circuit recently published an opinion that reversed a federal district court’s decision in a wrongful death case that had been filed based on a fatal New Mexico semi-truck accident involving a tractor-trailer. The appellate court ruled that, for the purpose of determining insurance policy limits, the tractor and detached trailer involved in the accident are a single vehicle. The lower court had previously determined that the policy limits for both the insured vehicles involved in the accident could be accumulated to cover the plaintiff’s damages, but the appellate court disagreed. Based on the most recent appellate ruling, the insurance company will only be required to cover the policy limit of a single vehicle.

A Disconnected Trailer Results in a Deadly Crash

The plaintiffs in the case of Ace v. Romero are the surviving family members of a man who was killed in a New Mexico accident involving a semi-truck and trailer insured by the defendant on a dark night in March 2011. According to the facts discussed in the appellate opinion, the deceased was driving on the dark highway and crashed into an unlit trailer that was in the middle of the road. The trailer had been attached to a tractor but somehow became disconnected, and the crash occurred before the truck driver was able to turn around and reconnect it to the rig. The plaintiffs later filed a wrongful death lawsuit against the truck driver and his insurance company, alleging over $2 million in total damages.

The Parties Reach A Settlement Based on the Policy Limits

Before the family’s lawsuit went to trial, the parties reached an agreement to settle the case for the insurance policy limit, although the court needed to decide exactly what the policy limit was. Both the tractor being operated by the truck driver and the detached trailer that caused the accident were insured by the defendant, and each had a bodily injury liability coverage limit of $1 million. The plaintiffs agreed to settle their claim for the combined coverage limit of the two vehicles and requested a total of $2 million in damages. The defendant agreed to honor the policy limit but argued that each policy contained a total limit of $1 million in liability per accident, capping the total damages that could be awarded at $1 million. The federal district court found that the language of the insurance policies was ambiguous and ruled in favor of the plaintiffs, declaring that the total coverage limit was $2 million.

The Defendant Claims the Policy Language Was Not Ambiguous

On appeal, the defendant attacked the district court’s determination that the language of the insurance policies was unclear. Specifically, the insurance company pointed to language within the policies stating that the total coverage limit per accident was $1 million, regardless of how many vehicles were involved or what the individual limits were for each covered vehicle involved in an accident. The appellate court agreed with the defendant’s position, reducing the plaintiff’s total award to the per accident limit of $1 million.

Ambiguous Policy Language Is Construed Against the Insurance Company

New Mexico accident victims are often at the mercy of an insurance company offering coverage to the at-fault party involved in the crash. As in the case of Ace v. Romero, the amount of damages received by a plaintiff can vary based on different interpretations of the language of an insurance policy. State and federal courts in New Mexico follow a general rule of contracts that ambiguous or unclear language in an insurance policy should be construed against the insurance company. Because of this rule, a plaintiff who successfully argues that policy language is ambiguous can receive a substantially larger award than they would otherwise be entitled to receive.

New Mexico Semi-Truck Accident Attorneys

If you or a loved one has been injured or killed in an accident involving a semi-truck or another large commercial, agricultural, or industrial vehicle, it can be difficult to hold insurance companies to the promises they make. The skilled New Mexico semi-truck accident attorneys at the Fine Law Firm are experienced in both state and federal courts and can help you seek the damages that you deserve. Insurance companies have experienced and disciplined legal teams that fight their hardest to avoid responsibility for the actions of their clients, and you need a qualified legal team on your side to help you pursue what’s fair. Contact the Fine Law Firm today at (585) 989-3463 or sign up online to schedule a free consultation with a qualified New Mexico semi-truck accident attorney.

More Blog Posts:

Determinations of Fault in New Mexico Truck Accidents, New Mexico Personal Injury Lawyer Blog, August 4, 2016.

Truck Accidents Occurring in Parking Lots, New Mexico Personal Injury Lawyer Blog, July 13, 2016.