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Insurance Industry Gets Assurance From Court
Maryland Auto. Ins. Fund v. Baxter, No. 0530 (Md. Ct. Spec. App. June 9, 2009)
(June, 2009) By Gregory L. Arbogast, Summer Associate.
For more information, contact Paul Farquharson.
In Maryland Auto. Ins. Fund v. Baxter, the Maryland
Court of Special Appeals helped the insurance industry by limiting the number of
people to whom it must provide uninsured motorist coverage ("UMC"). This case
held that an insurance company does not have to provide UMC to a pedestrian
struck by an uninsured driver of an insured car. Despite the Maryland Automobile
Insurance Fund’s (MAIF) attempt to shirk liability and force private insurance
companies to carry a greater load, the Court of Special Appeals properly placed
the burden of supplying UMC squarely on the shoulders of MAIF.
On January 21, 2007, William Palugi struck and killed a
pedestrian, Stephanie Scott, while he was driving his Jeep Grand Cherokee.
Interstate Automobile Insurance Company ("Interstate") insured the vehicle.
Interstate, however, explicitly excluded William Palugi from coverage because he
did not have a valid driver’s license. Ms. Scott was uninsured, since she was
walking down the street and did not intend to get into any car.
Ms. Scott's mother and her estate filed a Complaint in the
Circuit Court for Baltimore City to determine whether they could recover UMC
from either Interstate or MAIF. Both MAIF and Interstate filed dueling Motions
for Summary Judgment. The Circuit Court dismissed the case against Interstate,
but denied MAIF's motion. MAIF filed this appeal.
In the appeal, MAIF advanced two arguments. First, it claimed that Ms. Scott was
actually insured under Ms. Palugi's policy. In the alternative, MAIF claimed
that Maryland law required Interstate to provide Ms. Scott with UMC.
The Court of Special Appeals held that Ms. Scott was not
insured under Interstate's policy. MAIF attempted to argue that Ms. Scott was
actually an occupant of the car because it struck her while she was walking. The
Court of Special Appeals denied that argument, saying that a pedestrian is only
considered an occupant when they intend on getting in the car or are in the
process of getting in the car. Ms. Scott did not fit into either of those
categories.
The Court of Special Appeals also held that Maryland law did
not require Interstate to provide UMC to Ms. Scott. Maryland law requires an
insurance company to provide UMC to its insured if a tortfeasor is uninsured.
Ms. Scott was not Interstate's insured. In fact, she bore no relation to
Interstate's insured whatsoever. The Maryland Legislature did not intend to
extend UMC to pedestrians who had no relationship to the insured vehicle.
Instead, this opinion held that the Maryland Legislature intended to permit
insurance companies to limit its risk exposure by excluding specific people from
coverage.
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