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A New Approach to Inadequate Liability Insurance

Terrain Tamers Chip Hauling, Inc. vs. Insurance Marketing Corporation of Oregon
A Decision from the Oregon Court of Appeals

It can be a business owner's nightmare: a catastrophic loss, and inadequate liability insurance. Perhaps the broker dropped the ball on placing coverage. Or the carrier refuses to defend. What can the business's attorney do.

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The key to the settlement working, the Court of Appeals found, was that the settlement agreement did not unambiguously and unconditionally eliminate the trucking company's liability during the pendency of the claim against the broker.
The Oregon Court of Appeals recently upheld an approach to settlement in our case of Terrain Tamers Chip Hauling, Inc. v. Insurance Marketing Corporation of Oregon [full text of opinion]. In that case, a truck driver caused a wreck that caused permanent total blindness to the other driver. The trucking company learned after the wreck that the broker had not obtained the amount of insurance requested, and so there was inadequate coverage for the loss. We originally represented the blind man. The Court of Appeals upheld a settlement giving him a policy limits settlement, and allowing a further claim by the trucking company against its broker, with any further proceeds benefitting the blind man.

The key to the settlement working, the Court of Appeals found, was that the settlement agreement did not unambiguously and unconditionally eliminate the trucking company's liability during the pendency of the claim against the broker. This same basic approach should work in a case where the liability insurer refuses to defend. If the Oregon Supreme Court declines review, this should be a guide to future settlements of this type.

This kind of settlement only works under certain circumstances, of course, but the case law is littered with unsuccessful attempts to put these deals together. Obviously, negotiation of a settlement like this requires the involvement of the company's own attorney, as it involves terms beyond the scope of most insurance defense counsel's work. From the business's point of view, part of the appeal of this kind of settlement package is that the risk of it not working is on the original tort plaintiff.

If you have any questions about the case or the Terrain Tamers settlement, or have any feedback about this email or ideas for future tort tips emails, I would by happy to hear from you.
 
The Corson & Johnson Law Firm serves clients throughout Oregon, including Eugene, Portland, Brownsville, Springfield, Hood River, Brookings, Corvallis, Salem, Redmond, Roseburg, Medford, Klamath Falls, Myrtle Creek, Bend, Albany, Creswell, Ashland, Central Point, Grants Pass, Junction City, Florence, Tigard, Cottage Grove, Coos Bay, North Bend, Newport, Oregon City, Hillsboro, Gresham, Beaverton.

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The Corson & Johnson Law Firm serves clients throughout Oregon, including Eugene, Portland, Brownsville, Springfield, Hood River, Brookings, Corvallis, Salem, Redmond, Roseburg, Medford, Klamath Falls, Myrtle Creek, Bend, Albany, Creswell, Ashland, Central Point, Grants Pass, Junction City, Florence, Tigard, Cottage Grove, Coos Bay, North Bend, Newport, Oregon City, Hillsboro, Gresham, Beaverton.

Benton County • Clackamas County • Coos County • Crook County • Deschutes County • Douglas County • Jackson County • Jefferson County • Josephine County • Klamath County • Lane County • Lincoln County • Linn County • Marion County • Multnomah County • Polk County • Tillamook County • Washington County

The Corson & Johnson Law Firm does not offer any guarantee of case results. Past success in litigation does not guarantee success in any new or future civil action. Our web site describes some of the cases that Don Corson, Lara Johnson, or The Corson & Johnson Law Firm has worked on in the past. Our description of those cases is summary in nature. The results obtained in each of the cases depended on the particular facts of each case. The results of other cases will differ based on the different facts involved.

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