What Happens When 2 Insurance Policies Cover the Same Auto Accident?

If you are injured in a car accident, you may just assume that the negligent driver’s insurance company will pay for your losses. But things are often not so simple. Depending on the circumstances, there may be multiple insurance policies–and insurance companies–who may share financial responsibility for a given accident. This can lead to situations where the insurers fight amongst themselves over what coverage takes priority, leaving accident victims caught in a litigation crossfire.

Indiana’s “Bailee” Law Puts Mechanic’s Insurer Ahead of Customer’s Insurer

A recent case from Indiana, Erie Insurance Exchange v. State Farm Mutual Automobile Insurance Company, illustrates how complicated these situations can become. In this case, a man named Tinsley took his Dodge truck to a local auto mechanic named Ricketts for repairs. But as Ricketts drove the truck to another repair shop to complete his work, he was struck by a driver who failed to check for oncoming traffic before entering the intersection.

Ricketts filed a personal injury lawsuit against the negligent driver. His injuries were quite substantial, however, and recognizing the negligent driver’s auto insurance would likely not be enough to fully compensate him, Ricketts also sought underinsured motorist (UIM) coverage.

But this led to a legal question that ultimately made its way to the Indiana Court of Appeals: Which UIM policy took priority? In this case, Ricketts sought UIM coverage under two different policies. The first was Ricketts’ personal auto insurance policy issued by State Farm. The second was a policy issued by Erie Insurance to Tinsley for his truck, which Ricketts was driving at the time.

Both Erie and State Farm took the position that the other company was the “primary” UIM insurer for purposes of this accident. Indeed, both insurance policies contained language stating it would not pay any UIM coverage until all other available insurance had been exhausted.

So how did the Court of Appeals resolve the deadlock? In this case, the answer came from an Indiana law known as the “Bailee Coverage Statute.” Basically, this law deals with a situation where a person is injured in an accident while entrusted with someone else’s vehicle. As previously noted, Tinsley entrusted his truck to Ricketts to make repairs. In legal terms, Ricketts was Tinsley’s “bailee.”

Under the Indiana Bailee Coverage Statute, the bailee’s insurance coverage is considered the “primary” coverage. This meant that State Farm, Ricketts’ personal auto insurer, was first in line to provide UIM coverage for his accident. Only if Ricketts’ damages exceeded the limits of the State Farm policy would Erie be on the hook for any further UIM coverage.

Contact a Madisonville Car Accident Attorney Today

Even in a state like Kentucky, where your own insurance company is expected to pay for your losses under a “no-fault” policy, legal disputes can still arise. After all, insurance companies are in the business of making money, which often puts them into conflict with their own policyholders. If you find yourself in such a situation and need to speak with a qualified Madisonville car accident lawyer, contact Whitfield Crosby & Flynn to schedule a consultation. We have offices in Madisonville, Kentucky; Chattanooga, Tennessee; and Indianapolis, Indiana.

Source:

scholar.google.com/scholar_case?case=12162018219644523687