“…THE RIGHT AND DUTY TO DEFEND…”

“Ours is a litigious society.” So goes an over-used phrase we’ve heard for years. Everyone has the right to sue anyone for just about anything. Whether they win in court is another matter. Still, if you injure someone in a traffic accident, there’s a good chance they will get an attorney and file suit against you. When it happens to someone else, we can feel sorry for them and wish them luck in defending against the suit. When it happens to us, our first thought is likely to be “Will my insurance pay to defend me?” The best answer to this question, as in so many other insurance questions, is found in your policy. For most of our customers, that means reading the MOTOR CARRIER COVERAGE FORM (MCCF), CA 00 20. Here is the section of that policy form (quoted in pertinent parts)* that applies to our question “will my insurance pay to defend me?”

• SECTION II – COVERED AUTO LIABILITY COVERAGE, A. Coverage…We will have the right and duty to defend any “insured” against a “suit” asking for…damages…However, we have no duty to defend any “insured” against a “suit” seeking damages for “bodily injury” or “property damage” or a “covered pollution cost or expense” to which this insurance does not apply. (page 3 of 18 of the MCCF)

WHAT DOES NOT APPLY?

The obvious question immediately arises, what sort of damages don’t apply to this insurance? The answer is found in the Exclusions section. A few examples should be enough to illustrate.

• B.1. (page 4 of 18) Expected or Intended Injury. For example, you can’t use your truck to commit a crime and expect us to defend you against a lawsuit filed by a pedestrian you struck while committing the crime.
• B.3. (same page) Workers’ Compensation. If you have employees, you are probably required by law to carry Workers’ Compensation insurance on them. The coverage includes Employer’s Liability in case an employee sues you for their work related injury. In that case, your Workers’ Compensation insurance company should defend you.
• B.11. (page 5 of 18) Apart from exceptions noted in this lengthy exclusion, any actual pollution loss you sustain should be covered by a separate Pollution Liability policy and the insurance company issuing that policy would have your defense. You would know if you need a pollution policy because Eastern Atlantic does not insure motor carriers for hire who haul such things as toxic waste, gasoline, etc. These very real pollutants generally require specialized coverage forms issued by insurance companies who tend to focus their business on such risks.

WHAT DOES APPLY?

So, what does that leave? Well, if you or your driver rear-end a private passenger car at a stop sign and there is no doubt about who is at fault, we are going to defend you against the lawsuit that will likely be filed. In fact, any auto related accident where you or one of your drivers appears to be even partly at fault can lead to a lawsuit and it is likely that we’ll have to defend you. While there are frivolous suits, that does not mean we won’t defend you. Sometimes the circumstances are not clear. In such cases, insurance companies may investigate the accident under a reservation of rights letter. This simply states that we don’t know if our policy applies in this case or not. We’re reserving our right to make that determination until all the facts are known. There are also cases where courts require insurance companies to provide a defense even when coverage seems doubtful. To an extent, whether to defend or not often depends on each individual set of circumstances.

THE PERILS OF DOING NOTHING

If you receive suit papers in person by way of a process server, or through the mail, DON’T DELAY. Forward these to your agent or to us immediately. Many lawsuits have time limit demands making it imperative that we respond to the suit as soon as possible. Failing to meet the deadline could result in a “default judgement” in which we could be forced to pay the amount demanded regardless of fault or any other circumstances.

HOW MUCH COVERAGE DO I HAVE FOR DEFENSE?

Whatever we pay to defend you does NOT come out of your coverage limit. Sometimes defense costs can be substantial reaching well into six figures. In such instances, your policy limit remains available to pay for the judgments or settlement.

(* The portions of the MCCF quoted herein deal only with the matter of legal defense provided by the MCCF. For a complete list of coverages provided, please refer to the entire MCCF or discuss your coverage needs with a licensed insurance producer.)