Montana Supreme Court: Claims for Bodily Injury Can Cover Injured Plus Observer

The Supreme Court of Montana ruled that even a bystander’s claim for bodily injuries can be covered in an insurance policy.

According to court documents in Allstate Insurance Co. v. Terry Wagner-Ellsworth and Tiffany Rusk, in February 2000, Wagner-Ellsworth caused an automobile-pedestrian accident striking Rusk’s son, Matthew, while Matthew and his brother Brandon were crossing the street. Tiffany was not present at the time of the accident, but arrived while Matthew was still lying injured in the street. Matthew suffered severe trauma and was hospitalized for an extended period. All of Matthews claims were settled and released in exchange for Allstate’s payment of the per-person limit of $50,000 under Wagner-Ellsworth’s policy.

However, Tiffany also filed a negligence action against Wagner-Ellsworth on her behalf and as guardian of her other son, Brandon, claiming emotional and physical injuries. She said that she and Brandon were traumatized and suffered injury as a result of seeing Matthew run over, during the ambulance ride to the hospital, and during Matthew’s recovery. “Brandon allegedly became withdrawn and Tiffany allegedly suffered from stress, migraine headaches, a rapid heart beat when she hears sirens, physical pain and depression,” court documents state.

In response to the suit, Wagner-Ellsworth sought coverage from her liability insurer, Allstate, which sought declaratory judgment that it was not obligated to provide defense or coverage.

The District Court granted Allstate’s motion for summary judgment, which was appealed.

The Supreme Court said the District Court erred when denying Wagner-Ellsworth’s and Tiffany’s motions for summary judgment because the policy’s general statement of coverage declared, “Allstate will pay damages which an insured person is legally obligated to pay because of bodily injury sustained by any person …” The policy did not state “damages must result from ‘bodily injury’ sustained by the ‘insured,'” the high court said.

“Wagner-Ellsworth’s policy requires payment for damages that an insured person is legally obligated to pay because of bodily injury sustained by any person in a covered accident, whether to the claimant directly or to another,” the court wrote. “In summary, the broad language used in the policy’s General Statement of Coverage and the Limits of Liability section provide Wagner-Ellsworth with coverage for the claims made by Tiffany and Brandon resulting from Matthew’s bodily injuries.”

The court also noted that the term “bodily injury” could be construed within an insurance policy “to include mental or psychological injury that is accompanied by physical manifestations.”

However, although Tiffany’s and Brandon’s injuries were covered, there were no additional funds available under Wagner-Ellsworth’s policy because the monetary limit applicable was exhausted in Matthew’s settlement, the Supreme Court noted.