Did Driver’s Knowing Risk Void Policy?

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A criminal flees the police at speeds topping 100 mph, crosses into oncoming traffic and smashes into a car.  Sounds like a nightmare?  It gets worse.  His insurance company doesn’t want to pay up on his $300,000 auto insurance policy.

The Texas Supreme Court will soon decide who deserves the law’s protection - the family whose car was in the wrong place at the wrong time (the 1999 wreck left 7-year old Roney Tanner comatose for a week, in the hospital for a month and in physical therapy for five years) or an insurance company (Nationwide) with a reckless and irresponsible client.

Nationwide has taken the position that the fleeing driver (Richard Gibbons) violated his insurance contract by leading police on a wild chase all but guaranteed to end in a horrific wreck, relying on a starndard “intentional acts exclusion” clause to void coverage - and two courts have agreed with them so far.  Welcome to Texas where the insurance companies rarely pay for their insured’s mistakes.

Nationwide argues that Gibbons ought to have known that disregarding stop signs, traffic signals and lane markings during a protracted high-speed police chase would eventually lead to the type of accident that critically injured Roney Tanner.

But Don Cotton, the Tanners’ lawyer, said the accident was not inevitable. ,
The most dangerous parts of the chase were over by the time Gibbons hit the Tanners on lightly traveled roads surrounded by farmland, he said.

Significantly, Cotton said, pursuing police officers noted that Gibbons slammed on his brakes in an attempt to avoid hitting the Tanners’ 17-yearold Honda Accord with his Ford F-350.

“It is nonsensical to say that somebody intentionally caused harm when the only evidence in the record is that he was trying to avoid causing that harm,” Cotton told the nine justices. “The test is not reckless (acts). The test is ‘intentional.’ ”

If this isn’t a good reason not to carry Nationwide insurance than I don’t know what is.  It’s also all the more reason (as I always say) to carry high uninsured/under-insured coverage.

Drive Less, Save on Insurance

A Dallas-based company is offering Texans auto insurance by the mile.

MileMeter, which is targeting people who drive fewer than 12,000 miles a year, is the only company offering mileage-based insurance in Texas despite a law passed in 2001 that encourages such a plan.

MileMeter charges from 3 to 20 cents per mile, depending on coverage options chosen, and it takes the driver’s word on the odometer reading.  The policies are for six months, whether or not the driver has reached the mileage limit.

The company can offer low rates for low-mileage drivers because “it’s very difficult to get into an accident when your car is parked,” said MileMeter chief executive Chris Gay.  “The less you drive, the less risk you’re exposed to.”

Federal statistics put the average number of miles driven in 2006 at 14,768, but many Americans have driven less this year because of higher gas prices.  According to Gay, roughly half the population drives around 12,000 miles a year.

Progressive is planning to introduce a mileage-based plan in 2009 which uses GPS technology to track usage.

The problem, though, is that MileMeter’s limits top out at $50,000 per person and $100,00 per accident which is not nearly enough.  Also, the insurance automatically ends when the odometer has registered the number of miles purchased or six months have elapsed, whichever comes sooner.

Something to Think About

Here is a reprint of a Dear Abby column:

Recently, a man ran a stop sign, rammed my car and left me with a broken back.  From that I learned what a dim view insurance companies have of homemakers.  When asked if I was losing time at work, I answered with an honest “yes.”  Then came the question, “What do you do?”  When I replied that I am a housewife, I learned there was no coverage because what I do isn’t considered “work.”

Abby’s answer goes on to explain how the founder of USA Today wrote an article on the value of stay-at-home moms concluding that stay-at-home moms work “an average of 91.6 hours a week … worth $143,121 annually” based on their roles as housekeeper, laundry machine operator, janitor, computer operator, facilities manager, psychologist, and family CEO.

Of course, from a legal point of view, Abby’s answer falls far short.  The question really is what is her lost earning capacity and how much did they have to pay to replace her.  In other words, she could make a claim by hiring someone to do all the work she does and asking for reimbursement.