Court Rejects Claim That Insurer Was to Blame for Crash Costs

Article

A lower court was right to dismiss a man’s claim that his auto insurance company should pay his costs in a wrongful death case for a crash he caused because the insurer didn’t push him to have more coverage, the Nebraska Court of Appeals ruled.

Dennis Rath, 64, of Holdrege was driving recklessly on Sept. 10, 2010, when he caused a crash that killed 51-year-old Dana Peterson, investigators said. He was convicted of a misdemeanor count of reckless driving and ordered to pay a $500 fine.

A settlement with Peterson’s estate was reached before a lawsuit was filed. Rath’s insurance carrier, State Farm Mutual Automobile Insurance Co., paid his policy limit of $50,000, and Rath personally paid $25,000.

Rath then sued State Farm and an insurance agent to recover the $25,000 and attorney fees, arguing that State Farm and its agent should have pressed him to carry more than the $50,000 coverage for bodily injury liability on the policy he obtained in 1995.

Testimony in Rath’s lawsuit showed that Rath switched to State Farm for auto insurance in 1995 because State Farm quoted him a cheaper rate with similar types of coverage — including bodily injury liability limits of $50,000 per person and $100,000 per accident — he had with another company.

Rath argued, among other things, that State Farm and the agent failed to warn him of the risk associated with purchasing a lower amount of liability coverage.

But the Nebraska Court of Appeals said neither State Farm nor the agent had a duty to suggest what Rath’s level of liability coverage should be.

“Rath knew higher limits were available, but he elected to stay with his policy that had a lower premium,” Judge Riko Bishop wrote for the appeals court.

Rath also argued that State Farm was obligated to provide an attorney to defend his interest. But the appeals court noted that under his policy, State Farm was not obligated to pay attorney fees unless the insured was sued for damages.

“Here, the claim was settled before a lawsuit was filed,” Bishop wrote. “Accordingly, State Farm had no contractual duty to pay Rath’s attorney fees.”