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Chapter 50
Insurance
VI. Answers to Critical Legal Thinking Cases
50.1 Exclusion from Insurance Policy
Chevrolet van that Usher had been loading was accidentally set in motion. The court held that the
exclusionary clause of the policy was clear and unambiguous and, therefore, there was no coverage for
50.2 Automobile Insurance
owner when someone else drives the owner’s car with his or her permission. In this case, Surber had
purchased a policy from the Farmer’s Insurance Company that covered: “Any person using your insured
car.” Because of the expanded coverage of this liability policy, when Bruce Martin borrowed Surber’s
Mercedes, the policy covered any damage he might cause to third parties while driving. When Martin had
a collision with Loretta Haynes, Farmers agreed to pay for her injuries and the damage to her car because
50.3 Automobile Insurance
Munoz wins. Munoz’s widow was attempting to collect on the uninsured motorist coverage of her late
husband’s automobile insurance policy. People insured in a car accident usually look to the insurer of the
party at fault to recover for their personal injury. A person who is injured by an uninsured motorist or a
hit-and-run driver may be protected if he or she has purchased uninsured motorist coverage. Such
The gunman’s car was, in the words of the court, “a launching pad for the missile fired at Munoz.” For
these reasons, the Appellate Court allowed the claim to be brought under the uninsured motorist provision
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50.4 Malpractice Insurance
Yes, Travelers is liable. The insurance policy the law firm held is a type of business insurance known as
professional malpractice insurance. Professionals, such as attorneys, dentists, physicians, and engineers
are liable for injuries resulting from their negligence in practicing their professions. These professionals
can purchase malpractice insurance to insure against such liability. In this case, the law firm of Winokor
fact that Baker died after the policy expired. The policy had been in effect in 1977, the time of the “act or
omission” by the law firm which gave rise to the malpractice suit. Because the malpractice policy was in
effect at the time of the firm’s negligence, the fact that the damage to Barker’s beneficiaries did not occur
50.5 Duty to Defend
Cranford wins since he did not have a duty to defend Jaffe against the criminal charges brought against
him. An insurer has a duty to defend the insured against any suit brought against him or her that involves
a claim within the coverage of the policy. An insurer who wrongfully refuses to defend a lawsuit against
one of its insurers is liable for damages, including the cost of any judgment or settlement and attorneys’
“where there is no potential for coverage, there is no duty to defend.” Because the outcome of Jaffe’s trial
was not within the scope of his malpractice coverage, Cranford had no duty to defend him. Jaffe v.
VII. Answer to Ethics Case
50.6 Ethics Case
relating to the policy. Under the terms of the insurance policy, Ila was specifically responsible for Gary’s
fraud. Obviously Gary Fedderson acted illegally and unethically by committing arson to try to
fraudulently recover fire insurance proceeds. Ila did not act unethically in trying to recover one-half of the
insurance proceeds. She was an innocent party who did not know about nor was a participant in Gary’s
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