Damages that Are Not Covered

Not all types of losses are covered by automobile bodily injury liability coverage. First, as the name suggests, this coverage is for “bodily injury” and those elements of damages that may result from physical injuries, such as medical bills, wage loss, pain and suffering from those injuries, etc. But even among those type of damages that do result from a bodily injury, there are some type of damages and some types of liability that are not covered by liability insurance.

Losses Not Resulting from Bodily Injury

Bodily injury liability coverage -- and the uninsured motorist coverage that may take its place in cases where the negligent driver has no insurance -- does not cover all common losses from incidents. It doesn’t cover damage to an automobile or other property. It doesn’t cover rental car charges. It doesn’t pay a towing bill.

For these non-injury damages there are other specific coverage types that apply, such as property damage liability, collision, and/or comprehensive coverage.

Punitive Damages

The element of injury-related damages that is most commonly seen that is not covered by liability insurance is “punitive damages.” Sometimes also known as “exemplary damages” these are intended for exactly what their names suggest – to punish or make an example of someone who has caused injury. And the most common application of punitive damages in personal injury liability cases is for drunk driving.

The California Civil Code allows for an award of punitive damages in cases where a defendant has acted with “malice,” “fraud,” and/or “oppression,” and there is specific case law describing the action of knowingly operating a motor vehicle while intoxicated or impaired as a form of “malice.” In personal injury cases resulting from drunk driving incidents, it is common practice to include an “exemplary damages attachment” with lawsuits filed in court asking for an award of punitive damages for the defendant’s “malice.” It is also common practice to claim these damages in pre-litigation settlement demands.

Liability insurance policies, however, are specifically written so as to exclude coverage of punitive damages awards. If a jury verdict in a drunk driving case includes an award of punitive damages, compensation for this comes directly from the defendant, not from his or her liability insurance. Although it may be difficult for a plaintiff who has received a jury verdict for punitive damages to collect directly from a defendant’s personal assets or income – and it may seem unfair to the injured plaintiff that they have to do so – there is a very important aspect of public policy served by this rule: We do not want to make it easier for drunk drivers to escape responsibility for their despicable behavior by allowing them to have this element of damages covered for them by insurance.

Other types of behavior that may qualify for punitive damages are situations of extremely reckless driving – not “ordinary” levels of negligence that might cause an accident, but driving at extreme rates of speed or in such a grossly improper manner that it would be commonly obvious that serious injury to others is likely to result. The very definition of “malice” that allows for punitive damages in these incidents says this: “Despicable conduct which is carried on by the defendant with a willful and conscious disregard for the rights or safety of others.”

Intentional Acts

Most personal injury claims are based upon negligent acts or omissions that result in injury. A driver who negligently fails to observe a stopped vehicle and hits it or a homeowner who fails to close their front door, making it possible for a dog to run outside and bite someone, are examples of negligent behavior resulting in injury. In these cases, the bodily injury liability coverage for the negligent driver or the negligent homeowner would step in to provide coverage for the damages resulting from those injuries.

Some injuries – and some injury claims – however, result not from negligence but from intentional actions. A “road rage” incident, for example, in which a driver becomes so enraged that they intentionally cause a vehicle collision is an “intentional act.” Likewise, a situation where an argument devolves into a fistfight and one person hits another with the intent to cause injury would be another example of an “intentional act.”

Personal injury claims and lawsuits resulting from these acts would also likely argue for punitive/exemplary damages, with “malice” in these instances being defined as “conduct which is intended by the defendant to cause injury.”

Damages resulting from intentional acts are excluded from coverage under bodily injury liability policies for exactly the same reason that punitive damages for drunk driving are excluded: We don’t want to make it possible for defendants to escape direct, personal responsibility for paying for their actions by making these situations “insurable.”

But We Still Argue for Coverage

Although the incidents described above include types of damages and situations where bodily injury liability coverage may not apply – and where an insurance company could possibly make this argument – an experienced personal injury attorney will know to submit these claims under liability insurance coverage anyhow.

In the first place, collecting damage awards directly from defendants can be very challenging. Locating a defendant’s personal assets to collect against or an income source for wage garnishment can be difficult, time consuming, and expensive. And the relative ease of declaring bankruptcy can make it an attractive escape route for a defendant who may be facing a major award or verdict that is not covered by insurance. It is to a plaintiff’s advantage to try to have all their losses be coverable under the available insurance.

The second consideration is that many of these liability situations result from a combination of both intentional behavior – intending to injure someone, or intentionally becoming intoxicated and then driving – and negligent behavior. A drunk driver doesn’t intend to cause a collision. This component of negligence does cause the injury claim to be insurable under a liability insurance policy.

And the final consideration is the obligation of the insurance company to try to resolve claims against their insured. A well-crafted settlement demand for a personal injury claim resulting from a drunk driving case will not only discuss the ordinary negligence of the insured driver – something which their insurance absolutely does cover – but also the facts of the driver’s despicable behavior that will result in a punitive damages claim being included with any lawsuit that must be filed should the claim not be resolved. This puts the insurance company in the more challenging position of either having to allow for a greater claim valuation that takes into account their driver’s bad behavior or setting themselves up for an argument directly with their policyholder if their failure to settle results in a lawsuit and potential punitive damages award later on directly against the policyholder.

For more information on insurance companies, their claim tactics, and how an experienced personal injury attorney should deal with them, see:

• Insurance Company Tactics: Dirty Tricks Insurance Companies Play in Accident Claims
• Our Tools: How an Experienced Personal Injury Attorney Deals with Insurance Company Tactics
• The Insurance Industry and Individual Companies: Huge and Hugely Profitable

Image by PublicDomainPictures from Pixabay 

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