You only Get What You Pay For
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In Auto-Owners Insurance Company v. Michael Cook, Michael Schuster, and Highland Auto Glass, Inc., No. 21-cv-348-JPG, United States District Court, S.D. Illinois (March 9, 2023) Auto-Owners Insurance Company’s motion for summary sought declarations that its policy owed neither defense, indemnity nor uninsured motorist coverage to the defendants.
BACKGROUND
Schuster and Cook on one side and Devin Dahmer on the other were involved in an auto accident. Schuster, president and sole shareholder of Highland, was driving a van he and Highland jointly owned with Cook as his passenger. Both Schuster and Cook were injured in the accident. Cook sued Highland, Schuster, and Dahmer for negligence.
Auto-Owners seeks declarations regarding a “Tailored Protection” insurance policy. Auto-Owners argued that the Auto-Owners Garage Policy does not cover vehicles owned by Highland or Schuster like the vehicle involved in this accident.
FACTS
Schuster was driving a Ford Econoline van he and Highland owned jointly; Cook was his passenger. Dahmer pulled his van into the roundabout in front of the Highland van, nearly missing the van. Down the road, Dahmer pulled over, and Schuster pulled the Highland van to the side of the road several car lengths in front of Dahmer’s van. Schuster got out, and then Dahmer drove his van into the Highland van, injuring Schuster and Cook. Dahmer’s insurance paid its limits to Schuster, and then Schuster made a claim for a defense, indemnity, and UIM coverage under Highland’s Garage Policy.
The Garage Policy
When obtaining insurance from Auto-Owners, Highland paid premiums for coverage under Division II only which limited the available coverage.
ANALYSIS
To determine if the underlying suit alleges a situation potentially within the insurance coverage, the Court is required to compare the complaint to the relevant provisions of the insurance policy. If any theory of recovery in the underlying complaint falls within the insurance coverage, the insurer will have a duty to defend.
The Garage Policy is clear that the policy covers bodily injury arising out of an automobile “not owned, hired leased, rented, or registered by the insured or an officer, if it is a corporation.”
Highland was the insured and Schuster was an officer of Highland, and they both owned the Econoline van so there was no coverage under that section for bodily injuries arising from the Econoline van, including from the collision between Dahmer and the van. The only identified Garage Policy provision that would potentially cover bodily injuries arising out of automobiles owned by the insured is Division I coverage, which Highland did not purchase. Since there is no coverage of the Econoline van under Section II, there is also no underinsured motorist coverage arising from an accident with that van.
Schuster agreed but claimed that the “exclusion,” at least to the extent it precludes UIM coverage, violates public policy. The insured bears the heavy burden of showing an insurance provision violates public policy. Schuster pointed to nothing in the Garage Policy that violates Illinois public policy. Rather, he asked the court to award him the coverage he declined to purchase. It does not violate public policy to exclude coverage an insured expressly declined to purchase when it was available.
The court also noted that Schuster was not being left without a remedy for injuries caused by an underinsured motorist. Schuster maintained a separate personal automobile insurance policy from Owners Insurance Company, an affiliate of Auto-Owners, as required by the Financial Responsibility Law and Owners paid the UIM coverage under that policy.
The court granted Auto-Owners’ motion for summary judgment and directed the Clerk of Court to enter judgment accordingly, including declarations that: Auto-Owners owed no duty to defend or indemnify defendants Highland Auto Glass, Inc. and Michael Schuster in connection with the lawsuit Cook v. Highland, in the Circuit Court for the Third Judicial Circuit, Madison County, Illinois; and Plaintiff Auto-Owners Insurance Company owes no underinsured motorist coverage to Michael Schuster under the Auto-Owners policy.
ZALMA OPINION
A person seeking insurance is faced with the obligation to determine what coverage to buy before an accident occurs where the coverage is needed. The insureds chose a limited coverage, declined to buy a more extensive coverage, and after an accident tried to get the court cure the error and – with an argument that the policy violates public policy – and give them the coverage they refused to buy. Courts are required to interpret insurance contracts they are not required to, nor will they ever, rewrite a policy.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and [email protected]
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Write to Mr. Zalma at [email protected]; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.
Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://lnkd.in/gfFKUaTf.
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Barry Zalma, Esq., CFE is available at http://www.zalma.com and [email protected]
Follow me on LinkedIn: https://lnkd.in/gYRSCfzn.
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Interpleader Protects All Claimants Against Life Policy and the Insurer
Who’s on First to Get Life Insurance Proceeds
Post 5184
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Interpleader Protects All Claimants Against Life Policy and the Insurer
In Metropolitan Life Insurance Company v. Selena Sanchez, et al, No. 2:24-cv-03278-TLN-CSK, United States District Court, E.D. California (September 3, 2025) the USDC applied interpleader law.
Case Overview
This case involves an interpleader action brought by the Metropolitan Life Insurance Company (Plaintiff-in-Interpleader) against Selena Sanchez and other defendants (Defendants-in-Interpleader).
Key Points
Plaintiff-in-Interpleader’s Application:
The Plaintiff-in-Interpleader...
A Claim by Any Other Name is not a Claim
Post 5182
It is Imperative that Insured Report Potential Claim to Insurers
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In Jeffrey B. Scott v. Certain Underwriters At Lloyd’s, London, Subscribing To Policy No. B0901li1837279, RLI Insurance Company, Certain Underwriters At Lloyds, London And The Insurance Company, Subscribing To Policy No. B0180fn2102430, No. 24-12441, United States Court of Appeals, Eleventh Circuit (August 25, 2025) the court explained the need for a claim to obtain coverage.
Case Background:
This appeal arises from a coverage dispute under a Directors & Officers (D&O) insurance policy. Jeffrey B. Scott, the plaintiff-appellant, was terminated from his role as CEO, President, and Secretary of Gemini Financial Holdings, LLC in October 2019. Following his termination, Scott threatened legal action against Gemini, and ...
A Claim by Any Other Name is not a Claim
Post 5182
It is Imperative that Insured Report Potential Claim to Insurers
Read the full article at https://lnkd.in/gfbwAsxw, See the full video at https://lnkd.in/gea_hgB3 and at https://lnkd.in/ghZ7gjxy, and at https://zalma.com/blog plus more than 5150 posts.
In Jeffrey B. Scott v. Certain Underwriters At Lloyd’s, London, Subscribing To Policy No. B0901li1837279, RLI Insurance Company, Certain Underwriters At Lloyds, London And The Insurance Company, Subscribing To Policy No. B0180fn2102430, No. 24-12441, United States Court of Appeals, Eleventh Circuit (August 25, 2025) the court explained the need for a claim to obtain coverage.
Case Background:
This appeal arises from a coverage dispute under a Directors & Officers (D&O) insurance policy. Jeffrey B. Scott, the plaintiff-appellant, was terminated from his role as CEO, President, and Secretary of Gemini Financial Holdings, LLC in October 2019. Following his termination, Scott threatened legal action against Gemini, and ...
Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit
© 2025 Barry Zalma, Esq., CFE
When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.
On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit
© 2025 Barry Zalma, Esq., CFE
When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.
On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive and became a consultant and expert witness for lawyers representing insurers and lawyers ...
APPRAISAL AWARD SETS AMOUNT OF DAMAGES RECOVERED FROM INSURER
Post 5180
See the full video at https://rumble.com/v6yd2z0-evidence-required-to-prove-breach-of-contract.html and at https://youtu.be/2ywEjs3hZsw, and at https://zalma.com/blog plus more than 5150 posts.
It’s a Waste of Time to Sue Your Insurer if You Don’t Have Evidence
Evidence Required to Prove Breach of Contract
Read the full article at https://www.linkedin.com/pulse/evidence-required-prove-breach-contract-barry-zalma-esq-cfe-rfelc, see the full video at https://rumble.com/v6yd2z0-evidence-required-to-prove-breach-of-contract.html and at https://youtu.be/2ywEjs3hZsw, and at https://zalma.com/blog plus more than 5150 posts.
It’s a Waste of Time to Sue Your Insurer if You Don’t Have Evidence
In Debbie Beaty and Jonathan Hayes v. Homeowners Of America Insurance Company, No. 01-23-00844-CV, Court of Appeals of Texas, First District (August 26, 2025) Debbie Beaty and Jonathan Hayes filed a claim under their homeowner’s insurance policy with Homeowners of ...
