Cincinnati Ins. Co. v. Estate of Chee – Seventh Circuit Requires Excess Insurer to Indemnify in Wrongful Death Lawsuit

Minimum auto insurance levels in Florida require all drivers are $10,000 in personal injury protection, $20,000 in bodily injury liability coverage and $10,000 for property damage.

Closeup of yellow line on cracked asphalt.

We all know that barely scratches the surface of losses incurred in a serious Miami car accident. That’s why a lot of motorists and vehicle owners choose additional insurance to cover themselves (uninsured/ underinsured motorist coverage) and to cover other parties’ losses if they are sued. One form of additional liability insurance that may be available is called excess insurance. Excess policies provide specific coverage above an underlying limit of primary insurance. Excess policies don’t broaden the scope of the underlying coverage, but they do increase the amount of coverage available to compensate for a loss.

The recent case of Cincinnati Ins. Co. v. Estate of Chee, before the U.S. Seventh Circuit Court of Appeals, is a case in which the applicability of one’s $5 million excess insurance policy is at issue. This case was made even more complex by the fact that it involved a wife’s estate suing her surviving husband for negligence and doctors for medical malpractice. The doctors then filed a third-party action against the husband, seeking contribution should they be deemed liable. Then the husband sought indemnification from the excess insurance policy held by both himself and his wife. 

It’s important to point out it is not all that unusual for spouses, relatives, friends and other loved ones to sue each other in court following a car accident. The goal is not actually to collect money or assets from that individual, but rather to stake claim to corresponding insurance benefits.

According to court records, the crash at issue occurred in August 2010. Decedent wife was in the passenger seat. She had just given birth three weeks earlier. Her husband was behind the wheel. He crashed into a tree.

The wife reportedly told paramedics her husband, a radiologist, had purposely removed her seat belt and crashed into a tree. While she was hospitalized, she recanted that statement. However, after she was transported to the hospital, the 39-year-old computer programmer’s condition deteriorated. She went into cardiac arrest and was on a ventilator. She ultimately died a week later when a blood clot from her left leg traveled to her lung. Police investigated, but later found no evidence of husband’s wrongdoing.

Wife’s estate filed two lawsuits in Illinois (where all this happened) — one against the husband for negligent driving and another against the hospital and attending physicians, accused of medical malpractice. Defendants filed a third-party action against husband and husband sought indemnification from excess insurer. The excess insurer sought a declaratory judgment that its policy did not apply. The district court did not agree, and ordered the insurer to indemnify the husband. The Seventh Circuit affirmed.

The excess insurer had argued it did not receive prompt notice of its potential involvement. In fact, the wife’s estate notified the insurer after 16 months via broker while the husband’s legal team notified the insurer after 26 months. The court conceded this was not “as soon as practicable” after decedent died, but the insurer did not identify any concrete prejudice that resulted. That meant the delay did not affect insurer’s duties.

The excess insurer also argued that the primary insurer in this case was already defending the insured and it was entitled to sit on the sidelines — with no involvement in the legal proceedings — until the primary insurer writes a check. However, the court found this was not what the policy promised.

Now the two cases will proceed.

If you have been a victim of a traffic accident, call Chalik & Chalik at (954) 476-1000 or 1 (800) 873-9040.

Additional Resources:

Cincinnati Ins. Co. v. Estate of Chee, June 13, 2016, U.S. Court of Appeals for the Seventh Circuit

More Blog Entries:

Tire Tread Blamed in Crash that Killed Four Sisters, June 14, 2016, U.S. Court of Appeals for the Seventh Circuit