For both personal and business reasons, be careful to make sure you keep your insurance carrier or agent well apprised of any changes in status or circumstances that you think may affect the kind of insurance coverage you have or need. The failure to do so can have serious adverse consequences that can prevent recovery under coverage you believe you have. This is the message which the recent case of Christy v. Traveler’s Indemnity Company of America, No. 13CV281 WJ/CG. (U.S. Dist Ct. N.M. 2014) delivers.
The case arose when a bicyclist, Corey Christy, sustained personal injuries on July 8, 2010 when he was struck on his bicycle by an uninsured motorist. In 2007, Christy purchased a commercial general liability insurance policy (“the Policy”) from Defendant Travelers Indemnity Company of America (“Defendant”). The Policy designated “K & D Oilfield Supply” (“K & D”) as the named insured and listed the “Form of Business” as “Individual” to reflect that the business was a sole proprietorship. Essentially Christy secured the policy for his sole proprietorship. However, in April of 2008 Christy decided to incorporate K & D. Even after receiving an annual letter from his insurance agent requesting any material changes of circumstances concerning his business, Christy failed to make Traveler’s aware of the incorporation of his business.
Traveler’s refused to cover Christy’s personal injuries because it determined that Plaintiff had violated the policy’s provision entitled “Concealment, Misrepresentation or Fraud” which relieved the duty of the insurance company to cover a claim where the insured had either misrepresented or concealed a material (or significant) development. Ultimately, the District Court in New Mexico, the state where the accident occurred, agreed with Traveler’s view and entered an order effectively barring the Plaintiff from the opportunity to recover under this policy.
Since the Plaintiff did have other coverage from other insurance policies, he did obtain some – albeit limited – recovery for the personal injuries he sustained. However, he could not secure a full recovery in this accident caused by this uninsured motorist although he purportedly sought to prepare for such a contingency. The problem derived from his failure to tell the insurance company about the incorporation of his business.
People seeking and maintaining insurance coverage need to recognize that most insurers have earned their reputation as companies which go to great lengths to assert their rights up to the very limits of the law. Insurance companies commonly include every and all provisions enforceable under the law to protect their interests. Often this includes language which will cause an insured party to be denied coverage. Insured parties need to ensure they inform their insurance agents of significant changes, such as the incorporation of a separate entity needing coverage, so benefits will be paid when an event triggering coverage occurs.
The lawyers at Giddens & Gatton Law, PC represent injured individuals in personal injury suits in New Mexico, including those caused by motor vehicle accidents. Giddens & Gatton Law, PC is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico. Call the office at (505) 633-6298 to set up an appointment or visit the firm’s website at giddenslaw.com for more information