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Liability Insurance Policy Issued To An Interstate Motor Carrier Must Be Interpreted Consistently With The FMCSR

Jeff Friedman and Jess Boone obtained summary judgment in favor of a commercial automobile liability insurer in a coverage dispute involving whether the insurer had to defend or indemnify an interstate motor carrier for catastrophic personal injury claims asserted by a truck driver. The driver was severely injured when some floating boat docks fell on him while he was unstrapping the docks on his trailer. He sued the interstate motor carrier with whom he had a lease and the company that manufactured and loaded the docks. The motor carrier tendered the case to its commercial automobile liability insurer for defense and indemnity.

The district court held that the insurer did not have a duty to defend or indemnify the motor carrier because the policy exclusions for claims by employees applied to bar coverage for the driver's claims against the motor carrier. Our client contended that the policy, which was issued to the motor carrier so it could comply with the liability insurance obligations imposed by the Federal Motor Carrier Safety Regulations (FMCSR), should be interpreted consistently with the FMCSR. Because the Alabama legislature and the Alabama Department of Public Safety intended that the federal statutory scheme prevail in Alabama, the district court found the interpretation of an insurance contract designed to comply with the FMCSR must be informed by the federal regulations and the body of federal case law interpreting those regulations. Although the driver and motor carrier were parties to an independent contractor agreement, the district court found that the driver was a statutory employee by operation of 49 C.F.R. §390.5. As a result, the district court held that the employee exclusions applied to bar coverage, which negated any duty for the insurer to defend or indemnify the motor carrier for the driver's claims. Accordingly, the district court granted summary judgment in favor of the insurer. The opinion is available at: Lancer Ins. Co. v. Newman Specialized Carriers, Inc., 903 F.Supp.2d 1272 (2012).

Contributing Author:

Jess S. Boone
Jess. S. Boone, Shareholder
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