Newsletters

Impact of Riders/Endorsements on Auto Insurance Policies

A rider is a paper attached to a document that amends the document. In an automobile insurance policy, a rider can modify the conditions of the insurance policy. It can increase or decrease the policy's benefits. It can add exclusions from coverage, like a crime exclusion clause. The use of the rider means that the entire policy does not have to be rewritten if a change needs to be made. Riders are also known as endorsements, slips, or rubber stamps.

Business Use Exclusion in Motorist Insurance

Some motorist insurance policies exclude coverage for injuries and damages if they occur while a vehicle is being used for a business purpose. For example, if a driver is using his or her personal van to make deliveries for the driver's home-based business and causes a collision with another vehicle, the driver's insurance company would refuse to pay for the damage caused to the other vehicle and for any injuries to those riding in it. In effect, the exclusion causes a vehicle to drive in and out of insurance coverage depending on its driver's particular mission.

Settlement Obligations under Automobile Insurance Policies

An automobile insurance policy can contain a clause that requires an insured to obtain the consent of the insurance company before settling a lawsuit with an uninsured motorist. Some states require the consent-to-settle clause by statute. In the absence of a statutory requirement, many courts have upheld consent-to-settle clauses. Those states that do not enforce such clauses often cite public policy. They fear that an insurance company will be able to avoid paying its share of uninsured motorist coverage by failing to consent to a settlement. Other courts find that such clauses can reduce settlements by creating another step for the insured take.

Subrogation in Underinsured/Uninsured Motorist Cases

When an insurer pays a benefit under a policy provision for underinsured motorist coverage or uninsured motorist coverage, it is in effect paying a debt owed by the underinsured or uninsured driver, the person who is actually liable for the damages arising as a result of the event that led to the insurer having to make the payment. An insurer who makes such payments has a right, the right of subrogation, by which it is permitted to take legal action against the underinsured or uninsured motorist in an attempt to recover as much as possible of the amount the insurer has paid out. The insurer's subrogation right will only have value, as a practical matter, to the extent that the underinsured or uninsured driver has assets that can be seized by legal process to satisfy the judgment that the insurer obtains against the underinsured or uninsured driver in its subrogation action.

Crashworthiness Issues in Automotive Products Liability Cases

In order to succeed in a products liability action against the manufacturer or seller of a motor vehicle, a plaintiff has to show that the vehicle as sold contained a defect that created an unreasonable risk of death, personal injury, or property damage when used for its intended purpose and that the defect caused an accident or similar occurrence, such as a vehicle fire, that resulted in the loss for which the plaintiff seeks to recover damages. Automotive products liability cases may involve allegations that a car or truck was defective in some aspect of the way in which it was designed, in the manner in which its parts were manufactured and assembled into a complete vehicle, or due to a failure to warn the purchaser or user of the vehicle of some danger inherent in its use and operation. Cases involving the doctrine of crashworthiness (which is sometimes referred to as enhanced injury or second collision) constitute a subset of those cases in which it is alleged that a design defect in a vehicle was the cause of the injuries complained of.