No Insurance Coverage Available Because LLC Was Not A Named Insured

No Insurance Coverage Available Because LLC Was Not A Named Insured

No coverage was available to a limited liability company when it was not named as an insured in the liability insurance policy. An individual by the name of Kouk owned multiple businesses. One of the companies, Brown and Kouk Rentals, LLC, owned and rented apartments and mobile homes to people. Another business was Vernon & Sons Construction, LLC, involved in the construction trade. The businesses maintained separate bank accounts and no funds were commingled between the businesses. Vernon & Sons Construction obtained commercial liability insurance coverage through Columbia National Insurance. Vernon & Sons Construction was the only company listed on the insurance policy.

Mr. Kouk went out one evening to a renter's home to collect the rent. When he arrived, there was a party taking place in the front yard and he was invited to share a beer. Kouk joined the gathering around a burning fire and drank a beer with those present. When he finished, he put the bottle into a metal bucket that was in the fire. Several minutes later, the bottle exploded with a piece of the glass striking a young child of the renter causing him to lose sight in one eye. The father of the injured boy filed suit against Kouk for negligence.

Kouk notified Columbia National Insurance who provided an attorney to defend the case. Columbia retained separate counsel to conduct an investigation as to whether or not there would be coverage under the policy for the incident. The coverage investigation showed that Kouk was not conducting any business on behalf of Vernon & Sons Construction when the incident happened. Columbia determined there was no coverage from the loss and withdrew the defense of the injured boy's lawsuit.

Kouk proceeded to defend the lawsuit using his own personal attorney. The jury returned a verdict against Kouk in the sum of $427,000. The minor Plaintiff then filed suit against Columbia to recover the benefits of the insurance policy.

The Oklahoma Court of Civil Appeals ruled:

1. The injured child could proceed directly against the insurer and without the requirement of a garnishment based upon the language in the policy allowing a party to recover a final judgment against an insured;

2. Mr. Kouk was not insured under the policy because he was not conducting business or performing duties as part of the business of the construction company when the accident occurred;

3. Columbia National was not estopped from denying coverage because Mr. Kouk had been timely informed there was a coverage question many months before the lawsuit was even filed.

Insurance - Automobiles

A vehicle insured by Shelter Mutual Insurance Company was permissively being driven by an individual who was insured by American Farmers and Ranchers Mutual Insurance Company . The driver was involved in a collision that occurred when he turned left in front of another vehicle which resulted in injuries to the passengers of the second vehicle. The passengers of the other vehicle made claims for property damage and personal injury against the driver for his negligence and submitted claims to both insurance companies.

American Farmers’ policy contained an "other insurance" clause that stated: "provided, however, the insurance with respect to a . . . non-owned automobile shall be excess insurance over any other valid collectible insurance. . . ."

Shelter’s policy also contained an "other insurance" clause which stated: "if there is other insurance which covers the insured’s liability with respect to a claim also covered by this policy, coverages a and b (i.e., bodily injury and property damage liability) of this policy will apply only as excess to other insurance."

The two insurance companies jointly settled the claims and prorated the amount of the settlement based on the liability limits in the respective insurance policies. The Shelter insurance policy contained an "other insurance" exclusion which limited insurance coverage only to claims only in excess of other insurance which covered an insured’s liability. American Farmers reserved the right to recover from Shelter in the event Shelter’s "other insurance" clause was deemed invalid.

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Ultimately, American Farmers’ filed suit arguing that Shelter’s insurance policy declaring the auto liability insurance as excess insurance violated 47 O.S. §§ 7-600 to 7-612, the Oklahoma Compulsory Insurance Law ("OCIL"), which required the insurance policy of the vehicle owner to provide primary insurance up to the minimum limits required by law. American Farmers believed its policy was not required to pay the claims until Shelter had paid policy limits on the claims since the vehicle in the Shelter policy was involved in the accident.

Shelter contended that the "other insurance" clauses cancelled each other and were mutually repugnant and should be, therefore disregarded, with the loss shared on a prorated basis. The trial court agreed and entered judgment in favor of Shelter resulting in the appeal by American Farmers.

Upon appeal, the Oklahoma Court of Civil Appeals affirmed the trial court’s ruling and held:

. . . the OCIL does not constrain an insurer from declaring its coverage as excess when there is other insurance which covers its insured’s liability with respect to a claim also covered by its policy. The statutory policy of the OCIL is implicated only if the insurer denies liability. It does not control a dispute between insurers as to which provides primary coverage. Such a dispute is a matter of contract. The trial court properly resolved the dispute when it determined the policies contained mutually repugnant other- insurance clauses and prorated their coverages.

American Farmers & Ranchers Mut. Ins. Co. v. Shelter Mut. Ins. Co., 267 P.3d 147, 2011 OK CIV APP 118.

UM Insurance Coverage

A lawsuit arose from a claim presented by the Plaintiff to the insurance company for uninsured motorist coverage. In the claim, Plaintiff stated that he was injured while riding his motorcycle. A red car passed him and cut-off a beige car traveling in the lane in front of him causing the beige car to brake suddenly. As a result, Plaintiff locked his brakes and was forced to lay down his motorcycle to avoid a collision. Plaintiff collided with the center barrier wall at a high speed and sustained significant injuries.

Upon investigation, the insurance company found the Plaintiff to be 100% at fault. Since the beige car had been able to safely slow down without striking the red car, the insurance company reasoned the Plaintiff also should have been able to safely slow down unless he was following too closely. In addition, the police officer recorded Plaintiff’s blood alcohol level at 0.09 which is above the legal limit for operating a vehicle in Oklahoma. It was also noted Plaintiff was traveling at speeds 5-10 miles per hour above the speed limit. As such, the insurance company denied the claim concluding that UM coverage is not available when the insured was more than 50% at fault.

As a result of the denial of the claim, Plaintiff filed suit against the insurance company alleging breach of contract (a cause of action which was later dropped just before trial) and "bad faith".

The jury returned a verdict in favor of the Plaintiff agreeing that the insurance company had acted in bad faith by denying the claim. Shortly thereafter, the insurance company filed a motion for judgment as a matter of law arguing that it acted reasonably and relief upon legitimate reasons for denying the claim. Ultimately, the trial court granted the insurance company’s motion and ruled in favor of the insurer. Plaintiff appealed.

The Tenth Circuit Court of Appeals affirmed the trial court’s judgment in favor of insurance company agreeing that based upon the facts known, a reasonable jury could not find that the insurance company failed to act reasonably in denying the claim. Further, there was no evidence showing the insurance company failed to properly investigate the claim. Bannister v. State Farm Mut. Automobile Ins. Co.,692 F.3d 1117, (10th Cir. 2012).

Insurance - Liquor Liability

A golf course was insured by an insurance policy which included "Liquor Liability Coverage". The parents of a 17-year-old girl working at a golf course brought a lawsuit against the golf course and its manager for allegedly providing alcohol to their daughter following a golf tournament. The girl attempted to drive after consuming a substantial amount of alcohol, crashed her vehicle into a tree, and sustained serious injuries to her spinal cord resulting in paraplegia.

The insurance policy provision obligated the insurance company to pay sums owed by the golf course if they were incurred "by reason of the selling, serving or furnishing of any alcoholic beverage." The insurance policy liability limits were set at $2 Million for the "Aggregate Limit" and $1 Million for "Each Common Cause Limit".

The insurance company subsequently filed a declaratory judgment action in Federal court asking the court to establish the maximum insurance coverage available to the golf course. A summary judgment was filed requesting the court rule that $1 Million was the applicable limit since all claimed damages arose from the injuries to one person and fell under "Each Common Cause". The girl’s parents argued the limit should be $2 Million.

The Federal court granted summary judgment in favor of the insurance company finding the maximum limit of liability was established at $1 Million for the pending county district court case and reasoned that an insurance policy is considered a contract governed by the rules for interpretation of contracts. The plain language of the policy set the limit in this circumstance at $1 Million. The court further declared that, since it did not have the ability to rewrite the policy, it must proceed based on the agreement therein. American Economy Ins. Co. v. Rutledge, et al., 833 F.Supp.2d 1320 (W.D. Okla. 2011).

Choice of Law Governing The Liability Under An Insurance Contract

A product distributor in the oil-drilling industry was sued by several individuals claiming they were exposed to asbestos in the products distributed. The distributor subsequently filed claims with its multiple insurance companies seeking liability coverage. The insurers disagreed there was coverage for the liability claims under the policies. A series of declaratory judgment actions ensued in which the parties requested the Court to determine which party(ies), if any, were responsible for the cost of the extensive asbestos litigation the distributor was defending.

In one of the declaratory judgment actions in Federal court, the distributor/insured filed a counterclaim adding the parent company of the insurer as a separate party even though there was no contract with the parent company. It was argued by the distributor that the parent insurance company was responsible for the claims of its subsidiary which was merely an alter ego of the parent company. The parent insurance company filed a motion to dismiss the action alleging it was not liable for the subsidiaries obligation as it was a separate corporation.

The Court decided Oklahoma law did not apply to the issue of liability as to the parent company since the subsidiary was incorporated in the state of Indiana. Despite being filed in an Oklahoma Federal court, the court was required to look to the laws of the state of incorporation of the subsidiary insurance company as to whether to pierce the corporate veil. The court granted the parent company’s motion to dismiss. Canal Ins. Co. v. Montello, Inc., et al., 822 F.Supp.2d 1177 (Okla. 2011).

Named Driver Exclusion From Coverage

As a result of a collision between a car and a motorcycle, a lawsuit was filed in which a judgment was rendered in favor of the motorcycle driver and his passenger and against the driver of the car for bodily injuries and property damage. A garnishment action was subsequently filed against the car driver’s insurance company for liability insurance policy limits in the amount of $25,000.00 for each of the two people riding on the motorcycle.

The driver of the car was precluded from coverage under the car owner’s insurance policy which contained a named driver exclusion. As a result of the exclusion, the insurance company claimed exemption from garnishment. The trial court awarded summary judgment to the motorcycle passenger for the minimum amount of liability coverage required by law finding that the named driver exclusion left an innocent third-party without insurance coverage, thereby violating Oklahoma public policy. The insurance company appealed.

The Oklahoma Court of Civil Appeals reversed the trial court’s ruling holding that the Oklahoma insurance statutes allow named driver exclusions and that the Oklahoma Supreme Court continuously expresses the validity of the named driver exclusion. Therefore, based on the validity of the named driver exclusion, no coverage was available to the motorcycle passenger under the car owner’s insurance policy. Rodriguez, et al. v. Gutierrez-Perez, et al., 273 P.3d 69, 2012 OK CIV APP 14.

This area of law continues to evolve and change as the legislature revises and changes the Oklahoma statutes and the courts continue to interpret and articulate Oklahoma law.

Foster Care Liability Insurance Coverage

The State of Oklahoma requires liability insurance for licensed or certified foster parents. In 2002, the Oklahoma Department of Human Services ("DHS") placed a six-month-old baby in a foster home and liability insurance was provided to the foster mother by two insurers at the expense of the State. Less than one month later, the baby was found lying in her crib dead as a result of child neglect, specifically untreated illnesses and lack of personal care. In 2003, the Estate of the deceased child filed a wrongful-death lawsuit against the foster mother, the Oklahoma DHS, and two employees of the DHS.

During the litigation of the wrongful-death suit, the Estate filed an insurance claim with the liability insurer for benefits which was subsequently denied due to an exclusion for injuries resulting from physical abuse.

Just days before the trial, the insurance companies proposed a combined settlement offer which was rejected by the Estate. The case proceeded to trial and a $20 Million verdict was returned in favor of the Estate. The foster mother appealed.

In 2007, one of the two insurance companies filed a declaratory judgment action in Federal court requesting the court to find it had no responsibility to defend the foster mother or pay the damages under the liability coverage of the insurance policy. The other parties filed numerous cross-claims and counterclaims including breach of contract and bad faith. Most of the claims were settled in a compromise resolution. However, following the partial settlement, two issues remained to be decided by the Federal court.

The court ruled that:

1. the Estate of the deceased child did not demonstrate a contractual relationship existed in such a way that the foster child as a third-party claimant could assert a claim against the insurance policy. Likewise, the insurance company did not owe a duty to the Estate as a third-party claimant, and

2. the Estate could not seek garnishment against the foster mother in excess of the available liability policy limits.

The Estate appealed the rulings of the Federal court. On appeal, the Tenth Circuit Court of Appeals affirmed the District Court. Colony Ins. Co. v. Burke, 698 F.3d 1222 (10th Cir. 2012).

Liquor Liability Exclusion

An insurance company provided liquor liability coverage to a restaurant/tavern including coverage for injuries "imposed" on the insured resulting from "selling, serving or furnishing of any alcoholic beverage".

The club was sued in an underlying state court action by the parent/guardians of three minor Plaintiffs who were purportedly injured as bystanders to a fight which broke out in the insured bar. As part of the state court lawsuit, the minors never presented evidence that showed their injuries resulted from "selling, serving or furnishing alcoholic beverages", nor were any allegations made that alcohol was a factor in the injuries sustained.

The insurance company filed a declaratory action in Federal court requesting the court to determine if the insurance policy covered the injuries in the state court action and required the insurance company to defend in the underlying lawsuit.

The Federal court ruled that since the injuries did not arise out of "selling, serving or furnishing of any alcoholic beverage", coverage did not exist, and, as such, there was no duty to defend the lawsuit. The court also noted that although there was an "assault and battery" endorsement in the insurance policy, the endorsement did not apply since the loss was not covered under the liquor liability policy. Mount Vernon Fire Ins. Co. v. Olmos, 808 F.Supp.2d 1305 (Okla. 2011).

Exclusion For Inverse Condemnation Held Valid

An insurer sold a liability insurance policy to a municipality which specifically excluded coverage for inverse condemnation. The municipality was sued in an inverse condemnation action and filed a claim under the insurance policy after a verdict was returned against the municipality. The claim was denied under the insurance policy exclusion for inverse condemnation. As a result of the denial of the claim, the municipality sued the insurer seeking coverage under the policy.

The trial court granted summary judgment for the insured and the insurance company appealed.

The Oklahoma Supreme Court reversed and remanded the summary judgment entered by the trial court and instructed the trial court to enter summary judgment in favor of the insurer holding that: (1) the insurance policy contained an exclusion for claims of inverse condemnation; (2) the insurance company was not estopped from denying coverage; and (3) the municipality only obtained coverage for losses under the Governmental Tort Claims Act, and (4) a "cause of action grounded on inverse condemnation is not governed by the Governmental Tort Claims Act." City Of Choctaw v. Oklahoma Municipal Assurance Group, 2013 OK 6.

Insurance Agent Responsible For Failing To Obtain Coverage

An insurance agent was held responsible for failure to obtain workers' compensation coverage.  In a blog post by Tred Eyerly, a summary of the decision is set forth.  Essentially, the agent held herself out as an expert on insurance for certain types of automotive dealerships.  The plaintiffs purchased insurance without specifying any particular type of coverage needed and allowed the agent to select the coverages purchased.

Although the agent was aware California required mandatory workers' compensation coverage, the initial policy provided no such coverage.  One year later, the policy was renewed with another insurer and again no workers' compensation coverage was obtained.

Later, an employee was severely burned in a fire at the dealership.  When he learned there was no workers' compensation coverage available, he sued and obtained a judgment for $11 Million, $6.8 Million of which the dealership was responsible.

The dealership then sued the insurance agent for negligence.  There was a factual dispute over whether or not workers' compensation coverage was discussed and the documentary evidence tended to show the conversation never happened.  Judgment was entered against the insurance agency for $5.8 Million, the outstanding amount of the judgment after one insurer tendered payment of $1 Million in partial satisfaction simply to extricate itself from the situation.

Cancellation Of Homeowners' Policy

Cancellation of a homeowners' insurance policy requires compliance with terms and conditions of the policy. It may sound simple, but we have seen several full blown lawsuits arise over the years where the manner in which the policy was cancelled before a loss occurred was challenged. The starting point is a review of the requirement and the procedure for cancellation inside the insurance policy as well as a review of the Oklahoma statutes. The statutory fire policy provides five days' written notice of cancellation with or without tender of the excess premium pro rated for the remaining time not used. The notice of cancellation is required to state that the excess premium (if not tendered) will be refunded on demand.

Some insurance policies provide for a greater notice period than the statutory five days. An insurance company should comply with its own policy terms and conditions for cancellation and provide the additional time per the policy. Some policies prescribe notice of cancellation by registered mail which is not the same as certified mail. In these cases, the insurer should use the procedure for registered mail.

We saw an interesting blog not long ago by Jason W. Anderson commenting on a Washington Supreme Court decision.  The insurer attempted to cancel a policy by using certified mail as opposed to regular mail. The State of Washington has a statutory requirement for notice of cancellation and the question was whether certified mail was the equivalent of mailing under the statute.

The court decided certified mail was not the equivalent of regular mail and the policy was never actually cancelled. The court found there were some practical differences between regular mail and certified mail in that there is a greater imposition placed upon the insured as it requires the policy holder to be at home to receive the letter or actually travel to the post office to retrieve it. A cancellation notice sent by regular mail would arrive without the hassle and aggravation of signing for the certified envelope or going to the post office to pick it up.

In summary, when there is an issue of cancellation involved, the insurer should follow the applicable regulations as well as the insurance policy guidelines. When the applicable regulation and the policy provide different notice requirements, then the insurer should follow the insurance policy (provided it doesn't attempt to give less notice than the statute).  If in doubt, consult with an attorney who practices in areas of insurance coverage.

Coverage Questions - A 19 Year Veteran's Experience

Coverage decisions tend to be expensive one way or the other.  If an insurance company determines coverage exists, then it has to pay for the underlying claim.  If the claim was not really covered by the terms of the insurance policy, then the company has incurred an expense that was unnecessary and which adversely impacts the year end financial picture.  Decisions to deny coverage, when in fact it exists, is even more expensive.  There is the litigation expense plus the potential bad faith claim. 

Christopher J. Boggs wrote a commentary about what his 19 years of experience in the insurance industry had taught which he was kind enough to share

  • Only good lawyers realize they don't know everything about the law
  • Someone who truly understands insurance can explain its concepts in simple language.  The person with no idea how it works masks his ignorance with $10.00 words and legalese
  • There is ALWAYS more than one possible answer to a coverage question.  One is just more correct than the others based upon the particular situation
  • Only "newbies" know everything about insurance
  • Regardless of how much I know (or think I know) about insurance, there is always MUCH more to learn.  It is NEVER okay to guess at the answer to a coverage question
  • It's perfectly acceptable to say, "I don't know", as long as you follow it up with "but I'll find out and get right back to you."

The only other thing I have to add from my 25 years of coverage analysis is the answer is always simple - just ask either side!  They always know the answer!

Appraisal Clause In Homeowner's Policy Is A Useful Tool

Most homeowners' insurance policies provide disputes over the value of the claim can be taken to appraisal and the amount determined by disinterested parties. The appraisal clause has its roots in the statutory fire policy addressed in earlier posts. The statutory provision provides for appraisal upon the request of either party to the claim. The insurer can request appraisal or the insured can request it. The process is one in which each side selects a competent and disinterested appraiser to determine the extent of the loss. Before the appraisers ever meet to appraise the damage, they select a competent and disinterested third person to serve as an umpire for the resolution of any disputes between the appraisers. If the two appraisers cannot agree upon an umpire, there is a provision made for appointment of the umpire by the court.

Initially, it is the job of the appraisers to try to reach an agreement as to the amount of the claim. The umpire is supposed to resolve any dispute upon which an agreement cannot be reached by the appraisers.  In many cases, the umpire is never actually utilized as the two appraisers are able to reach an agreement. In other situations, the dispute is so contentious that the decision of the appraisers and the umpire is rejected by one or both parties and suit filed.

It is important to remember in Oklahoma that the party invoking the appraisal process is usually bound by the decision of the appraisers, while the non-requesting party has the right to litigate the amount of the award.  You will want to carefully consider the aspect of the appraisal provision before actually making demand for the procedure.

Insurance Fraud In An Application Can Result In Rescission Of The Policy

Oklahoma insurance law attorneys agree there are a number of reasons why a policy may be voided by an insurance company.  Fraud by the applicant or policy holder is the most common reason an insurance company would rescind or void an insurance policy.  Rescission is defined as:

1. A party's unilateral unmaking of a contract for a legally sufficient reason, such as the other party's material breach, or a judgment rescinding the contract; voidance.  Rescission is generally available as a remedy or defense for a nondefaulting party and is accompanied by restitution of any partial performance, thus restoring the parties to their precontractual positions. -- Also termed avoidance.  Black's Law Dictionary (8th ed. 2004)

According to Oklahoma statute 15 O.S. § 235, a party seeking to rescind or void a contract (which includes an insurance policy) must:

  • act promptly upon discovering facts which entitled him to do so
  • restore to the other party everything of value

In other words, experienced Oklahoma insurance attorneys advise their insurance company clients wanting to rescind a policy on the grounds of fraud to act quickly and also to return all premiums paidSneed v. State ex rel. Department of Transportation, 1983 OK 69, 683 P.2d 525 and Berlands's Inc., of Tulsa v. Northside Village Shopping Center, 1972 OK 152, 506 P.2d 908.

As a caveat fancy legal wording for caution or warning), accusing a policyholder of fraud needs to be done carefully.  In Oklahoma, an insurer really should consult with competent legal counsel before doing so.

The Statute Of Limitations For Filing Suit On A Homeowners' Fire Policy Is One Year

It has come as a surprise to many an attorney that Oklahoma has a one year statute of limitation in which to file a lawsuit for a claim involving a fire loss. The one year limitation is set forth by statute in the statutory fire policy. This rule is a significant exception to the typical five year statute of limitations for a written contract. The one year time period has been given the approval of the Oklahoma Supreme Court since 1916 in the case of Wever v. Pioneer Fire Ins. Co., 1915 OK 1046, 153 P. 1146. www.oscn.net/applications/oscn/deliverdocument.asp

Legal writers have observed over the years this one year statute of limitation may not be valid under Oklahoma’s Constitution. The Supreme Court has held in other cases that special legislation designed to protect a certain industry or class of individuals is unconstitutional. The one year requirement in which to file a suit involving a fire loss under a homeowners’ policy has been considered the law for close to 100 years and is recognized by most Oklahoma attorneys as the required time period.

Oklahoma Has A Statutorily Mandated Fire Insurance Policy

The Oklahoma legislature in 36 O.S. § 4803 has adopted a statutory version of a fire policy sometimes referred to as the "New York Standard Fire Policy". The statute requires all insurance companies issuing homeowners' policies in Oklahoma to have the minimum coverage required by the statute unless special approval has been received from the insurance commissioner allowing them to sell something less than the minimum requirement. Typically, obtaining the commissioner's approval for a nonstandard policy form is difficult unless the insurer is enlarging or expanding the available coverage.

Section 4803 provides for many of the defenses that are normally used by insurers in denying claims.  Fraud by insureds upon Oklahoma insurance companies is a valid concern.  There is provision for denial for fraud or concealment on the part of the insured. The statute also provides that bills, currency, deeds, evidences of debt, money, or securities are not covered by the insurance policy unless specifically provided by the insurance contract.

The statutory insurance policy provides there is no coverage for certain types of perils such as military invasions, rebellions, insurrections, civil war, neglect on the part of the insured to use all reasonable means to save and preserve property, and further that the insurer is not responsible for theft losses.

The statute sets minimum time periods in which the policy can be cancelled and the type of notice that must be given to an insured as well as a mortgage company before coverage is actually cancelled. In the event of a claim, it requires the insureds to tender a proof of loss within 60 days of the event and allows the mortgage company to submit the proof of loss if the policy holder does not take timely action.

The statute also makes provisions Oklahoma insurance attorneys use in taking examinations under oath, inspection of damaged property, and require preparation of a complete inventory detailing the quantities, cost, and actual cash value of the items claimed.  

Most homeowners' policies provide more coverage than the statutory minimum. For instance, the typical homeowners' policy will have coverage for theft, wind storm, liability coverage, and contain other clauses that give greater protection to a homeowner than the statutory framework enacted many years ago.  Questions about the minimum required coverages under a homeowners' policy should be reviewed by a competent attorney knowledgeable about Oklahoma insurance laws.

Under Oklahoma Law An Insurance Policy Is A Contract

Some people, including insurance adjusters, forget an insurance policy is a legally binding contract.  Claim representatives who adjust a lot of liability and third-party claims sometimes tend to confuse the issue of coverage under a policy with liability for the accident.  These issues are not related.

One reason insurance policies don't seem like binding contracts is because the insurance policy is signed with a preprinted signature by an officer of the company. The policy holder or insured does not have to sign the agreement so it is not what people typically think of as a contract. 

Another reason maybe that insurance policies are contracts the courts call “contracts of adhesion”. In other words, the terms of the agreement are usually not negotiated like a typical business deal. The insurance company drafts and prepares the policy and the insured either buys the coverage or does not.

Regardless of whether people think of insurance polices as contracts, courts consider them valid and binding to the extent the agreement does not violate regulations of the insurance department, statutes of the jurisdiction where the policy is issued, and controlling case law interpreting insurance policies. As such, the first step in trying to decide whether there is coverage for any given situation is to read the policy.