In Achenbach v. Atlantic Specialty, the plaintiff was a passenger in a rental car being driven by her co-worker, when the vehicle she was traveling in was rear-ended by a truck driver.  The rental car was rented through the plaintiff’s employer, while the plaintiff and her co-worker were on a work trip in Wisconsin.  Plaintiff suffered injuries as a result of the accident, and the truck driver was uninsured.  As a result, the plaintiff sought uninsured motorist benefits through the car rental agreement, which offered coverage of up to $25,000.00.  Plaintiff settled with the rental car insurer for the policy limit.  As the plaintiff’s claimed damages exceeded that amount, she also sought secondary coverage through her employer’s insurance policy with Atlantic Specialty.  In attempts to recover from Atlantic Specialty, plaintiff’s counsel and Atlantic Specialty exchanged email communications about her eligibility from July 2013 to October 2015.  Plaintiff then demanded payment of the full amount of Atlantic Specialty’s policy as settlement for her outstanding claim, which was denied.  Atlantic Specialty claimed she was not eligible for uninsured motorist insurance under the policy.

Plaintiff then brought suit for breach of contract, bad faith and promissory estoppel.  Atlantic Specialty removed the matter to federal court and filed a motion to dismiss.  The Court, finding that Wisconsin law applied, dismissed plaintiff’s bad faith claim, as Wisconsin law did not support a viable claim for bad faith based on failing to investigate her claim and making misrepresentations during the claim adjustment process.

Plaintiff argued that defendant breached its contract with her employer by denying the claim.  Defendant responded that the policy did not provide coverage for uninsured motorist benefits to rented vehicles.  The Court found that the plain language of the policy limited uninsured motorist coverage to owned vehicles and excluded rental vehicles.  Plaintiff’s reliance on the alleged assurances from the defendant that the policy covered rental vehicles did not change the plain and unambiguous language of the policy.  This claim was dismissed as well.

Finally, plaintiff brought a promissory estoppel claim based on the representations made by the defendant’s employees as to the availability of uninsured motorist coverage during the claim adjustment process, and that she relied on those representations to her detriment.  The Court agreed that plaintiff plead sufficient facts to support this claim, as the emails between the parties supported the assertion that the defendant made an “express promise” that the uninsured motorist coverage was available to plaintiff, which was reasonable. Therefore, this claim was allowed to proceed.

This is a cautionary tale to avoid making any promises or representations to claimants during the adjustment process before making coverage decisions.

Thanks to Alexandra Perry for her contribution to this post.