I recently read a new court decision that illustrates whose insurance company can be required to pay for an injured person’s damages in certain truck accidents.
In an important unpublished decision decided on January 10, the 4th Circuit United States Court of Appeals resolved a dispute between two insurance companies. Insurance coverage is an issue that very often has to be resolved by the courts. The case arose from a truck accident in April, 2003. The driver of the truck was an owner-operator. An owner-operator (sometimes called an independent contractor) is a truck driver who owns and operates his own tractor (and sometimes the trailer) and is leased to a motor carrier or a private carrier. The insurance company for the owner-operator and the insurance company for the trucking company (the carrier) were fighting over who would be responsible for paying the damages for injuries from the accident. (I know that you must be shocked to learn that the insurance companies wanted to collect premiums, but not pay claims).
In this case, the owner-operator leased his tractor to the carrier. The lease said that the carrier had exclusive control of, and complete responsibility for, the tractor when it was being used for the carrier. The owner-operator was permitted to drive the tractor to work. When the accident occurred, the owner-operator was driving the tractor to the carrier’s terminal to pick up his first load of the day.
After the wreck, the insurance company for the owner-operator’s personal vehicles filed a lawsuit. That company said that it didn’t have to pay for the damages because the tractor was being used for the carrier’s business when the accident happened. On the other hand, the carrier’s insurance company said it didn’t have to pay for the damages because the tractor was NOT being used for the carrier’s business when the accident happened.
The trial judge agreed with the carrier. It ruled that the owner-operator’s tractor was not being used for the carrier’s business when the wreck happened. So, the owner-operator’s insurance company filed an appeal.
The 4th Circuit Court of Appeals overturned the trial judge’s decision. It held that a D.O.T. regulation (49 C.F.R. § 376.12(c)(1)) mandates that the carrier has exclusive possession and control of the tractor throughout the term of the lease. Furthermore, the carrier’s own lease allowed the owner-operator to drive the truck to and from work, so the owner-operator was a “permissive user” when the accident happened. This means that insurance coverage for the driver’s negligence was provided under the trucking company’s policy.
Too many times, legal wrangling between insurance companies can unecessarily delay compensation to injured victims in truck accidents. Hopefully, this case can serve as an example to prevent some litigation between insurance companies who could otherwise seek to delay paying a legitimate claim by an injured person.
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