Maryland Car Accident Victims Sue Insurer After Claim Denied Under Policy Exclusion

Disagreements between victims and an insurance company regarding coverage for a car accident are common.  In some instances, legal action is taken to address the dispute.  In a January 8, 2018 case, the plaintiffs brought suit against their insurance company for denying their claim.  After the trial court ruled in favor of the plaintiffs, the insurance company appealed to the Court of Special Appeals of Maryland.

The plaintiffs in the case owned two vehicles, which were insured by two different insurance companies.  One car was insured by the defendant with uninsured/underinsured limits of $100,000.  Their van was insured by a different company under a policy with uninsured/underinsured limits of $50,000.

The plaintiffs were driving the van when another car collided with them.  The other driver was determined to be at fault for the accident.  Accordingly, the driver’s insurance company settled with the plaintiffs for the full amount of the driver’s policy limit of $50,000.  The plaintiffs then filed a uninsured/underinsured claim under their policy with the defendant on their other car, seeking coverage in excess of the $50,000 settlement.  The defendant denied the plaintiffs’ claim for uninsured/underinsured coverage, based on the owned-but-otherwise-insured exclusion.

On appeal, the issue was whether the defendant could use the exclusion to deny the plaintiffs’ claim as applied under the facts of the case.  In Maryland, the Insurance Code authorizes the exclusion of uninsured motorist coverage for a named insured if he or she is occupying an uninsured motor vehicle owned by the named insured.  In subsequent caselaw, Maryland courts have held that uninsured includes underinsured by definition.  The exclusion arises out of public policy concerns that multi-vehicle families could insure one vehicle to excess while leaving others either underinsured or uninsured, and they could still receive the benefit of full coverage should one of the other cars become involved in an accident.  In theory, the policy advances the state’s interest in encouraging families to obtain coverage for all of their vehicles.

On appeal, the plaintiffs contended that the exclusion to uninsured/underinsured coverage under the Maryland Insurance Code is actually the owned-but-uninsured exclusion.  Since the plaintiffs had insurance on their car, they argued that it was not uninsured.  The Court of Special Appeals acknowledged the statute as written did logically support the plaintiffs’ position.  However, the court went on to find that the clear holding of prior cases is that, despite the absence of express statutory authority, Maryland law does permit insurance carriers to exclude coverage for vehicles owned-but-otherwise-insured.  Explaining that it would be inappropriate to reject the mandatory precedent of those cases, the court ruled in favor of the defendant.

At Foran & Foran, P.A., our Maryland car accident attorneys can navigate you through the insurance claims process and any legal proceedings following a car crash.  We have handled many cases involving auto accidents, slip and falls, medical malpractice, and other injuries caused by negligence.  To explore your legal recourse after an accident with one of our knowledgeable attorneys, call (301) 441-2022 or contact us online.

More Blog Posts:

Maryland Court Orders Insurance Company to Cover Loss for Wrongful Death Claims Arising Out of Car Accident, Maryland Personal Injury Blog, published August 17, 2016

Maryland Court of Appeals Upholds “Gap” Insurance Policy in Pedestrian Accident Case, Maryland Personal Injury Blog, published October 31, 2015


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