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Pennsylvania Appellate Decision Reviews Home Insurers’ Right to Disclaim Liability in Teenage Auto Accident Case

Teenage Auto Accidents

As a Pennsylvania driver or home owner, it is important to know what you should expect from your insurance policy if an accident happens.  When you sign up for insurance, you likely understand that you can file a claim with the insurance company and receive compensation if the accident or incident is covered under your policy.  An insurance company’s responsibilities go beyond the payment of claims.  Companies are also responsible for defending in addition to indemnifying the insured.  Pennsylvania law guides the duties contracted in insurance policies so that all parties have a better understanding of what is expected when accidents occur and claims are filed. 

Insurance is either required by statute or encouraged so that the injured party can be quickly compensated and the at-fault party can avoid extensive litigation and personal liability.  Many policy holders would not be able to provide the cost of medical expenses as readily as an insurance company, so it is often in the financial best interest of the injured person as well as the insured for the insurance company to defend and indemnify the insured that is responsible for the accident.  It may also benefit any co-defendants that share in the liability, since they may bear a larger portion of the cost until they recoup expenses through another suit. 

In a recent Pennsylvania appellate decision, Erie Insurance Exchange v. Lobenthal (2015 PA Super 78), the Superior Court considered whether the insurance company for one of the at-fault parties had to defend the teenage daughter on the policy.  The events leading to this suit began with an auto accident that severely injured the passenger in the front seat of the car.  The car was driven by another young man  who had consumed alcohol provided by a female friend at her home.  The at-fault parties filed an appeal after the trial court held that the insurance company that insured the home was not obligated to defend the female friend.  The defendants’ main arguments turned on whether the insurance company provided notice that they were refusing to defend and indemnify the female friend.

The home insurance policy sent a letter to the parents of the friend, advising that the company would not defend or indemnify their daughter because the policy excluded claims that involved controlled substances.  The insurance company did not mail any notice to the daughter.  The Superior Court first looked at the duties of an insurance company under the statute, which creates a broader duty to defend than indemnify.  The court then looked to the policy, which required that the right to disclaim liability be sent to all named insureds under the policy.  While still a teenager, the daughter was of the age of majority at the time the letter was sent out, as well as a named insured, so the insurance company was required to provide her with notice.  The appellate court pointed out the daughter was specifically named in the original pleadings, with allegations that she provided marijuana and Xanax to her friends at the home.  The court felt the insurer had notice that it needed to provide notice to the teenage daughter on the policy. Since it failed to do so, the original order of the trial court was reversed, and the case was remanded in favor of the female friend.

The Pennsylvania auto accident attorneys at Needle Law Firm aggressively seek all available avenues of relief to maximize the recovery you deserve.  For a free consultation today, contact our office at 570-344-1266.

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