Creech v. Aetna Cas. & Sur. Co. - 516 So. 2d 1168 (La. Ct. App. 1987)

Rule:

Policy language is to be read broadly in favor of coverage and ambiguities are to be construed against the insurer.

Facts:

The insurer provided liability insurance coverage on the vehicle involved in the accident, a business automobile policy, and an excess indemnity umbrella policy. The injured party, alleging that he was seriously injured and permanently disabled when the insured's daughter drove her vehicle while intoxicated in a wanton and reckless manner, sought to recover, among other damages, exemplary damages based upon LSA-C.C. Art. 2315.4. The insurer argued that the language of the policies did not cover exemplary damages and that insurance coverage for exemplary damages would violate state public policy. The trial court sustained the insurer’s motion for partial summary judgment, concluding that the insurer’s policies did not provide coverage for exemplary damages. 

Issue:

Were exemplary damages covered under the provisions of the insured’s liability policy? 

Answer:

Yes.

Conclusion:

The judgment was reversed and set aside. The court found that there was no language in the policies distinguishing between compensatory and exemplary damages and that none of the policies contained an exclusion of exemplary or punitive damages. The court held that even if the language was ambiguous, it could have been construed toward coverage. Because the insurer could have changed the policy language, the court held that the insurer was bound by terms of the contract. The court held that the legislature in La. Civ. Code Ann. art. 2315.4 did not preclude insurance coverage of exemplary damages. The court further held that it was not fundamentally unfair and no penalty was imposed on the insurer by requiring it to comply with the terms of its contract.