Texas Supreme Court Case Threatens Car Insurance as We Know It
A case before the Texas Supreme Court will determine whether or not a family injured by a fleeing felon can recover from that driver’s automobile insurance company. On the surface, the case looks like a personal one, and it’s attracted enough attention simply for the impact on the victims: a man fleeing from police at speeds of up to 100 mph and disregarding traffic signs leaves a 7-year-old boy in a coma for a week, and his insurance company refuses to pay for the child’s medical expenses.
Obviously, the driver was at fault. But, Nationwide Insurance says, that’s not enough. Their policy, like most automobile insurance policies, excludes “intentional acts”. But what, exactly, constitutes an “intentional act” in the insurance world?
That may vary from state to state, but a lower Texas court has already determined that the driver’s actions were intentional, because driving at such high rates of speed and disregarding traffic signals made an accident “inevitable”. The company, and the court, hang this interpretation on three little words in the insurance policy, originally purchased in Ohio: “ought to know”. The driver, they argued, should have known he’d cause an accident, and thus his actions were “intentional” under their definition.
Clearly, there’s more at stake than this one case: if the court rules that simple knowledge that driving at high speeds and/or running stop signs is enough to constitute an “intentional” act for insurance purposes, the likely extension of that ruling is a move toward denying payment in any reckless driving scenario. In fact, an attorney for Nationwide admitted when questioned by the court that he did not believe there would be coverage if an insured intentionally ran a red light.
If that interpretation prevails, liability insurance as we know it could be significantly limited. While it makes sense from a contractual perspective that companies wouldn’t compensate their insureds for intentional acts, everyone involved would do well to remember that mandatory car insurance exists specifically to protect victims..and those victims are no less at risk and no less injured when a driver “intentionally” runs a red light than when he reaches to change the radio station and doesn’t see it.
But wait. Changing the radio station is an “intentional” act, isn’t it…?
