In Case of Car Injury, Punitive Damages Not Covered Under Automobile Policy

After being hit by a car, one pedestrian filed a lawsuit against the driver for negligence and gross negligence. The driver's insurance refused to pay punitive damages, so the pedestrian took them to trial.
By: | January 19, 2019

Jennifer Zuniga was walking on the sidewalk when a vehicle struck her from behind, injuring her. Zuniga sued the driver, Christopher Medina, for negligence and gross negligence. The court found Medina guilty on both accounts, and Zuniga was awarded $93,250 in damages and $75,000 in punitive damages.

Medina was insured by Farmers Texas County Mutual Insurance Company and so sought coverage under the policy. Noting that Medina was a “covered person,” Farmers agreed to pay damages and gave Zuniga the $93,250 awarded to her. However, Farmers said it was not responsible for the punitive damages and did not pay them.

Farmers filed a petition against Medina and Zuniga for declaratory judgement, seeking a declaration that punitive damages were not included in the policy. They moved that the insurer had “no further duty to defend or indemnify Medina; that Zuniga is not entitled to recover or collect any additional monies from Farmers; and, that Farmers has no further duty with respect to the Final Judgment” in Zuniga’s suit against Medina.

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In the interim, Zuniga filed a petition seeking to recover punitive damages from Farmers. Under a turnover order, Zuniga was assigned all of Medina’s rights against Farmers, which led her to asserting additional claims against the insurer.

The trial court denied Farmers’ claims. In review, the court determined that “the punitive damages are covered under the automobile policy in question,” granting Zuniga’s motion. Farmers appealed, arguing that the policy’s plain language, which states that it would “pay damages for bodily injury,” did not cover punitive damages. It further said that even if the policy did cover punitive damages, public policy would bar its policy from covering such damages.

Zuniga argued punitive damages fell into the definition of “damages for bodily injury.” She noted that in similar cases, other courts concluded that the average insured would interpret the term ‘damages’ to include punitive damages.

However, the appellate court reversed the trial court’s decision, stating that Farmers was not responsible for punitive damages.

Scorecard: Farmers Texas Mutual Insurance Company does not have to pay for punitive damages in the underlying Zuniga v. Medina case.

Takeaway: In order to avoid lengthy court battles, insurers should clearly define what is and is not covered under their policies, especially if covered items could be split into subcategories. &

Autumn Heisler is the digital producer and a staff writer at Risk & Insurance®. She can be reached at [email protected]

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