Insurance Company Seeks to Limit Liability for Jeep Accident

When you file a personal injury lawsuit against a negligent driving following an auto accident, in most cases this means you are really seeking compensation from the driver’s insurance company. Unfortunately, insurance companies are quite adept at asserting their own legal rights. This includes taking legal action to void a policy if they believe the policy holder–i.e., the negligent driver–did not strict comply with its terms.

American Family Insurance Company v. Almassud

A recent case before a federal judge in Atlanta, American Family Insurance Company v. Almassud, offers a cautionary example. This case involves a 2012 accident in Cumming, Georgia. The defendant was driving his Jeep. According to court records, the Jeep “veered into oncoming traffic and struck a vehicle driven” driven by a woman who sustained serious injuries.

The victim later filed a personal injury lawsuit and won a $30 million jury verdict. The Georgia Court of Appeals later overturned the verdict and returned the case for retrial. Meanwhile, the defendant’s insurance company filed its own lawsuit in federal court, asking a judge to declare it was not liable for covering any new judgment the victim might obtain at the retrial.

The crux of the insurance company’s argument for non-coverage was that the defendant “failed to cooperate” with its investigation into the accident, and that he also provided “false and incomplete” information on his original insurance application.

In that application, the defendant said he planned to use the jeep to travel to and from work. He also represented that the Jeep had not been “customized or altered” in any way. But as it turned out, the defendant had made several aftermarket alterations to the Jeep. Eight days before the accident, the defendant had a new steering kit installed on the Jeep. The insurance company’s investigators believed that a defect in this steering kit is what led to the accident.

What the insurance company did not know was that the defendant had taken the Jeep to another service center just two hours after getting the new steering kit installed. The service center performed an alignment on the Jeep as well as a “complete steering, suspension evaluation.” The insurer insisted the failure to report this service center visit was designed to thwart its investigation into the accident.

The judge did not see it that way. He noted the insurer never directly asked the defendant if he had “maintenance performed on the Jeep during the underlying litigation.” There was no evidence the defendant intentionally withheld that information. The insurer could therefore not cite this as grounds for refusing to continue defending the plaintiff at the retrial of the personal injury lawsuit.

The judge did find there was evidence the defendant “misrepresented” his intended use of the Jeep on his insurance application. Specifically, there was evidence the defendant engaged in regular “off-roading” activities. If true, this could limit the insurer’s liability to the “minimum coverage amount required” under Georgia law.