Chapter 3 - § 3.18 • COVERAGE LIMITS

• Jurisdiction: Colorado

§ 3.18 • COVERAGE LIMITS

§ 3.18.1—In Wrongful Death Claim, Per-Person Liability Limit Applies to Decedent, and Parents Asserting Claim Are Not Entitled to Recover Separate, Per-Person Limit

The insureds' minor son was involved in an auto-pedestrian accident that caused injury to two sisters, resulting in death of one sister. The deceased sister's estate brought an action against the insureds and their son to recover medical and funeral expenses, and the deceased sister's parents brought a wrongful death action against them. The injured sister also brought a bodily injury action against the insureds and their son. The insureds' liability coverage had limits of $100,000 per person and $300,000 per accident. The insurer contributed $200,000 toward $300,000 settlement with the plaintiffs, but declined to pay more, asserting its liability was limited to $200,000 — $100,000 for each person injured in accident. After settlement, to which the insureds contributed $100,000 of their own funds, the insureds brought action against the insurer for breach of contract, bad faith, and violation of the Colorado Consumer Protection Act. The insureds argued that the policy was ambiguous and that the per-person limit of liability applied separately to wrongful death claims asserted by the injured sister's parents. The Colorado Court of Appeals affirmed summary judgment in favor of the insurer, holding that the policy was not ambiguous and the insureds were only entitled to liability coverage in the amount of $200,000. Swan v. Farmers Insurance Exchange, 140 P.3d 261 (Colo. App. 2006).

Swan v. Farmers Insurance Exchange, 140 P.3d 261 (Colo. App. 2006), was an action for breach of contract, insurance bad faith, and violation of the Colorado Consumer Protection Act arising out of a dispute over the liability coverage limits in an automobile insurance policy. The trial court granted summary judgment in favor of the insurer, and the court of appeals affirmed.

Barbara and Paul Swan were insured under an auto liability policy issued by Farmers with coverage limits of $100,000 per person and $300,000 per accident. Their minor son was involved in an accident, in which a car he was driving struck two sisters, one of whom later died from her injuries. A lawsuit containing three claims was brought against the Swans and their son: (1) the deceased sister's estate asserted a claim to recover medical and funeral expenses; (2) the deceased sister's parents brought a wrongful death claim...