The meaning of “accident” under an insurance policy

Drunk driving

Drunk Driving Accident

On July 2, 2019, the Fifth Circuit Court of Appeals issued its opinion in Frederking v. Cincinnati Insurance Company in which the court found it necessary to rule that “yes, a car wreck caused by a drunk driver is an accident.”

The facts of Frederking.

Carlos Sanchez was driving under the influence of alcohol when he hit another car and injured Frederking.

At the time, Sanchez was driving a truck assigned to him by his employer, Advantage Plumbing which, in turn, was insured by Cincinnati.

Frederking sued Sanchez and Advantage. The jury returned a verdict against both for $137,000 of compensatory damages and against Sanchez alone for $207,000 of punitive damages.

Cincinnati paid the compensatory award but refused to pay the punitive damages, arguing that, under Texas law, a collision caused by a drunk driver was not an accident.

Frederking sues Cincinnati.

Taking the position that he was a third-party beneficiary of Advantage’s insurance policies (a position with which the Fifth Circuit agreed), Frederking sued Cincinnati for breach of contract and a declaratory judgment.

The district court granted Cincinnati summary judgment.

Frederking appeals to the Fifth Circuit.

The Court began its opinion by stating “only an insurance company could come up with the policy interpretation advanced here.”

Both insurance policies covered accidents, but neither defined the term. “So we are left to give this undefined term its “generally accepted or commonly understood meaning.’ ”

The Court took the time to examine prior case law defining the term “accident” before concluding “as a matter of plain meaning and common usage, the term ‘accident’ plainly includes the drunk driving collision that gave rise to this dispute.”

Finally, the Court noted that under Cincinnati’s theory of interpretation, it is not just drunk driving collisions that would be excluded from coverage.

“As counsel acknowledged during oral argument, a collision caused by texting while driving would also not be an accident. A collision caused by eating while driving would not be an accident. And a collision caused by doing makeup while driving would not be an accident.”

“In each of these scenarios, after all, a driver has made an intentional decision that contributes to an accident. But this is implausible on its face.”

“Indeed, it would defeat the widely held expectations of the countless insureds who purchase automobile insurance precisely to protect against these kinds of ‘accidents.’ ”

Imagine how much time Frederking’s attorneys had to spend to get a court to make a common sense ruling

Panter Law Firm, PLLC, 7736 Old Canton Road, Suite B, Madison, MS 39110