Judge Rules for Auto Insurer ; Says Putting Surcharge on Driver in Accident No Admission of Fault

By JULIE JETTE

A single justice of the state Appeals Court has ruled that an insurance company isn't necessarily liable to cover injuries sustained in an accident just because it imposes a penalty on the driver who caused the accident.

In his decision on Tuesday, Judge James McHugh said that a surcharge placed on a driver is not tantamount to a company's admission that the driver is at fault for purposes of compensating an injured party.

The ruling goes back to a Dec. 31, 1998, accident in which Norwell resident Thomas Beach was leaving a Scituate restaurant and asked his 15-year-old daughter to warm up the family car.

He noticed she was having trouble with the manual transmission and went to help her, but the SUV lurched forward and pinned him against a wall.

Beach was severely injured in the accident with compound fractures of both his legs, according to his attorney, Joseph M. Burke of Wellesley.

Burke said that Beach's insurer, Webster-based Commerce Insurance, the state's largest auto insurer, covered him only under the state's no-fault accident law. That meant it paid a total of $8,000 for medical bills and lost wages.

If the incident had been considered an at-fault accident, the insurer could have had to pay much more.

In January 1999, Commerce sent out a surcharge bill on Beach's daughter - even though she was not yet licensed and was not listed as an insured on the policy. A month later, the company sent a notice withdrawing the surcharge.

State law allows insurance companies to place a financial penalty on people they insure who are considered responsible for accidents.

But in Oct. 1999, when Beach added the girl to his Commerce Insurance policy after she got her license, Commerce again assessed a surcharge on her for a major accident.

On Dec. 31, 2001, Beach filed a Superior Court lawsuit against his daughter, an action his lawyer said he took because the statute of limitations to collect from Commerce was running.

In auto accidents in which an injured party sues, the driver who caused the accident is almost always the defendant, even though the injured person is really seeking to recover damages from the insurance company.

Beach dropped the lawsuit in June 2002. "We just decided it was too stressful for my daughter," even though she wasn't the intended target of the suit, he said.

Beach then sent Commerce a demand letter under the state's consumer protection law, seeking $250,000 in damages and saying that Commerce breached its contract with him for not offering him a reasonable settlement.

Commerce made no offer in response to the letter, and Beach sued, charging that by penalizing his daughter for an accident, it was taking advantage of the ability to charge her more, but ignoring its responsibility to the person who was injured in the accident.

Burke said he hoped the legal theory could provide an entry for other plaintiffs, like Beach, who may have been injured in an accident with a family member and don't want to sue the family member but believe the insurance company didn't adequately compensate them.

"We were looking for an option that would allow Tom to pursue a claim without directly involving his daughter," Burke said.

An attorney for Commerce could not be reached for comment.

Beach said his daughter, now 24, has had a perfect driving record since the accident.

Julie Jette may be reached at [email protected].

Originally published by By JULIE JETTE, The Patriot Ledger.

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