$1.8M Coverage Claim Successfully Litigated
On November 16, 2015, a liability insurer was absolved of coverage for a $1,800,000 judgment in an underlying lawsuit. The plaintiff and defendant were door-to-door vacuum cleaner salesmen. They were traveling together for sales calls and involved in an accident. The insurer had issued a commercial auto policy to the vacuum distributor with a $2,000,000 limit. The insurer initially provided a defense under reservation of rights but was discharged by the defendant, who entered a Section 537.065 agreement with the plaintiff.
Facing no defense, the plaintiff obtained an $1,800,000 judgment against the defendant, and he then sought coverage under the distributor’s policy. On briefing and evidence presented during a bench trial, the court found the insurer’s reservation of rights was proper and effective and, therefore, the insurer had not waived its coverage defenses. The court further found no coverage because the named insured distributor did not own, hire, or borrow the vehicle defendant was driving at the time of the accident. The plaintiff argued the distributor and defendant were operating as a joint venture or that the defendant was an agent of the distributor for purposes of borrowing the accident vehicle from the defendant’s parents. The court rejected both of those theories following the bench trial.
The suit was litigated in Laclede County, Missouri, and the ruling is subject to appeal.
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