An insured was stung or bit by an insect while driving and went into anaphylactic shock. They blacked out and crashed into a tree. The agency filed a property damage claim, but the carrier is stating that there is no coverage as the insured is not legally liable for the loss. “We have no duty to defend any suit or settle any claim for 'bodily injury' or 'property damage' not covered under this policy," the carrier said.

The carrier also gave two other examples. In the first, in which a perfectly healthy insured—with a recent physical exam in which no issues were noted—had a fatal heart attack while driving and hit a person's house. The carrier denied coverage for the damage to the house.

In the second example, if an insured followed routine car maintenance, the car had a current inspection sticker, and there was no evidence of any brake trouble, and if the insured's brakes were to fail and cause them to hit something or someone, the liability claim would be denied as an unforeseen catastrophic mechanical failure.

The agency does not agree with this position. There is no applicable exclusion under the insured's Part A—Liability Coverage in their ISO personal auto policy, and liability insurance is purchased by a driver in the event there is an unforeseen issue.

Q: Is a car crash caused by an insect sting excluded from the PAP liability coverage?

Response 1: Based on your description and assuming there were no other facts that would trigger an exclusion, there certainly is coverage for this loss. However, for it to be a covered loss, the owner of the tree would have to sue the insured, or at least threaten to sue, for the damage to the tree. The insurance company has no obligation to make a voluntary payment to the owner of the tree, of course. It's apparently their position that the damage was not the result of the insured's negligence, thus their defensive position on the claim. 

I agree that they have no obligation to make a voluntary payment, but if there's a lawsuit, I believe they have an obligation to defend the lawsuit and pay the judgment if the tree's owner wins in court.

Response 2: For a liability policy to respond, you must first trigger the insuring agreement. The insurance company is correct: The driver is not legally liable for the damage based on the information you provided. If you can't trigger the insuring agreement, whether an exclusion exists or not is a moot point.

Response 3: You do not state whether a property damage claim has been made against the insured. While I agree with the insurer's position as to legal liability, I do believe it has a contractual duty to defend the insured if there is a claim made against the insured for property damage.

Response 4: You can look all you want, but you won't find a policy-specific inclusion or exclusion for the type of claim and circumstances you mentioned. There are two primary types of law that govern insurance policy coverage. One is contract law and the other is tort law.

The policy states: “We will pay damages for 'bodily injury' or 'property damage' for which any 'insured' becomes legally responsible because of an auto accident."

I believe “legally responsible" is the key here. Unless there is a specific exclusion or limitation in the insurance policy for what happened—contract law—tort law would apply. Obviously, the insurance carrier feels that the cause of the accident is not covered because the driver was incapacitated, and thus not legally liable.

Response 5: The insurance company is asserting the sudden medical emergency defense. Roman v. Estate of Gobbo is one instance of this. If a motorist becomes incapacitated and causes injury to a third party, the defense is raised. 

Consider a motorist who loses control of a vehicle due to a fainting spell or sudden loss of consciousness. The incapacitation typically causes the defendant motorist to violate some type of traffic regulation that the plaintiff claims to be negligence per se. However, the violation may be excused if the defendant can prove that the cause of the incapacitation was unforeseeable. This means that the affected motorist did not have any history of an illness causing fainting or loss of consciousness.

Check out this chart from Matthiesen, Wickert & Lehrers S.C. that outlines case law in all 50 states.

Response 6: The insurer owes a defense until liability is adjudicated or agreed upon. All that's required to trigger defense is that the allegations of the claim or suit be otherwise covered if there is legal liability.

The insurer needs to go to court and file for a declaratory judgment. In the meantime, its refusal to respond could result in it being held responsible for a judgment in excess of policy limits. This is claims adjusting 101, so go higher up in the claims hierarchy until you find someone who understands this.

Response 7: I recently had a conversation with a lawyer about a catastrophic motor vehicle accident and the potential for the at-fault party and their insurer to employ that defense. The lawyer told me that, while available, it does not play well in front of a judge or jury for an insurer to deny liability coverage to the policyholder and to deny payment of damages to the injured party.

Like you, I believe the carrier should step up to the plate and pay the claim. Has it gone to court to have a judge or jury determine that there is no legal liability for this incident? If not, then legal liability has not been adjudicated—only asserted by the claim adjuster.

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

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