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.
Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://lnkd.in/gV9QJYH; Go to Barry Zalma on YouTube- https://lnkd.in/g2hGv88; Go to the Insurance Claims Library – https://lnkd.in/gWVSBde.
Notice of Claim Later than 60 Days After Expiration is Too Late
Post 5089
Injury at Massage Causes Suit Against Therapist
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Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.
In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.
FACTUAL BACKGROUND
Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...
ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma
Post 5087
See the full video at and at
Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf
Zalma’s Insurance Fraud Letter – June 1, 2025
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ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at ...
No Coverage if Home Vacant for More Than 60 Days
Failure to Respond To Counterclaim is an Admission of All Allegations
Post 5085
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In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.
BACKGROUND
On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.
Plaintiff filed suit ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...
