Ninth Circuit Considers When Death By Drunk Driving Is “Accidental”

Is death “accidental” when a person gets in a fatal car crash while over the legal alcohol limit? Courts have had a hard time answering this question. A recent Ninth Circuit ruling provides some clarity.

In Wolf v. Life Insurance Company of North America, the Ninth Circuit held that death resulting from drunk driving was “accidental” for purposes of insurance policy coverage.

In that case, the insured died after driving 65 miles per hour going the wrong way on a one-way road with a 10 mile per hour speed limit. An autopsy found he had a blood-alcohol level of 0.20%.

His family made an insurance claim with Life Insurance Company of North America (LINA). LINA had sold the deceased an insurance policy covering “accidental” death.

LINA denied the claim. It determined that death under these circumstances was not “accidental” because it was foreseeable that driving with a 0.20% blood-alcohol level would result in death or serious injury.

The family filed a lawsuit contesting the denial under ERISA. The Seattle federal court sided with the family. The court ruled that the decedent’s behavior was “extremely reckless” but did not make death so certain as to render it not “accidental”. LINA appealed to the Ninth Circuit Court of Appeals.

The Ninth Circuit agreed with the lower court. It acknowledged that courts have applied different tests to determine whether death under these circumstances is “accidental.” It decided that the most appropriate question is whether death was “substantially certain” to occur: if death is substantially certain, it can’t be accidental.

Applying that test, the Ninth Circuit agreed that death was accidental. Although the insured’s behavior was reckless, it did not make death substantially certain. The court emphasized: “there is no doubt that drunk driving is ill-advised, dangerous, and easily avoidable.” But death was still accidental.

The court concluded with the truism that insurers who don’t want to cover death resulting from drunk driving should just add an explicit exclusion to their policies:

The solution for insurance companies like [LINA] is
simple: add an express exclusion in policies covering
accidental injuries for driving while under the influence of
alcohol, or for any other risky activity that the company
wishes to exclude….This would allow policyholders to form reasonable expectations about what type of coverage they are purchasing without having to make sense of conflicting bodies of caselaw that deal with obscure issues of contractual interpretation.

Court of Appeals Confirms Insured Can Reform Policy Language to Provide The Coverage The Insured Purchased

The Washington Court of Appeals recently answered an important question for policyholders: what if your agent sells you coverage but the insurance policy fine print fails to reflect the coverage you thought you purchased?

On November 4, 2019, the Washington Court of Appeals decided Digitalalchemy, LLC v. John Hancock Insurance Company (USA). The court held Digitalalchemy could sue John Hancock for denying coverage under a life insurance policy because, even though the policy language supported John Hancock’s denial, Digitalalchemy had purchased broader coverage than the policy reflected.

Digitalalchemy bought John Hancock’s life insurance policy to cover its key executives. When buying the policy, John Hancock’s agent agreed to backdate the insurance coverage’s start date. That means the policy would effectively begin providing coverage before the date Digitalalchemy purchased the policy. However, due to a mistake, the policy language failed to reflect the backdated start date.

One of the covered executives died by suicide, and Digitalalchemy made a claim under the policy. John Hancock denied coverage under the policy’s suicide exclusion. The policy excluded coverage if the insured died by suicide within two days of the “issue date.” Because the parties agreed to backdate the policy start date, the insured died after the two-year exclusion period, and John Hancock should have paid the claim. But because the policy failed to reflect the backdating, John Hancock denied coverage under the suicide exclusion.

The court agreed with John Hancock that the policy language did not backdate the start date. However, the court also found that Digitalalchemy sufficiently alleged the parties had agreed to backdate the policy and that the failure to reflect the backdating in the policy was a mistake. Accordingly, the court agreed Ditigalalchemy could argue the policy should be reformed to reflect the backdated start date because that was what both parties had intended.

That ruling is important because it is another recent case confirming insureds can still obtain recourse if they purchase coverage but the insurer writes a policy failing to accurately reflect the purchased coverage.