In New York, waste haulers commercial insurance isn’t always purchased for the correct limits or exposures, nor is it always properly applied. Consider how the driver of this delivery truck created a risk issue by leaving the tail of his truck “stuck” in the road – and how many times a day one of your vehicles creates a similar situation, collecting and hauling waste.
David Smith, 14 years old, was seriously injured when struck by a car as he crossed the street. It was shown that the boy’s view of oncoming traffic was blocked by a delivery truck parked in front of a bagel shop. It had been parked by its driver with the rear of the truck extending into the street. Smith was hospitalized and in a coma for eight days, having sustained serious injuries plus permanent cognitive impairment.
A liability policy had been issued to the driver, Mr. Brody, with a limit of $500,000. The jury found that he was 50% liable for the boy’s injuries, but the most the insurance company ever offered to settle was $300,000. Smith offered to settle for the policy limit.
The jury returned a verdict in favor of Smith for $1.1 million. The driver assigned any cause of action which he, as insured, might have against the insurance company to Smith, and he pursued this action for damages for the company’s bad faith in handling the claim.
In this case, Brody testified that his insurance company did not keep him informed of settlement negotiations and never told him that Smith had offered to settle for the policy limits. Furthermore, the company’s claims manual instructed its representatives to keep its insureds aware of negotiations in cases where the insured’s liability could exceed the policy limits, and the company’s attorneys had recommended settlement.
The court found that the company’s failure to keep Brody informed of settlement negotiations could be considered in this action to show bad faith. It is the practice in the insurance industry for insurance companies to notify their insureds of settlement negotiations where liability could exceed coverage.
The order of the intermediate court was reversed, and the judgment entered in the trial court in favor of Smith was reinstated.
This actual event is meant to illustrate of the kinds of things that can go wrong if your insurance policy has not been clearly explained to you. If you’d like to get your questions answered about your New York waste haulers insurance program, feel free to call, and we’ll use our years of experience in your industry to discuss your concerns .
David Smith, et al., Appellants v. General Accident Insurance Company–Court of Appeals of New York–June 11, 1998–697 North Eastern Reporter 2d 168.