Lizama issues ruling favorable to insurance firm

The Superior Court has issued a favorable ruling to an insurance company that was sued by a man who had sought compensation despite the fact that only his wife was injured in a car accident.

Associate Judge Juan T. Lizama ruled that because CGU International Insurance’s personal automobile policy complies with the Mandatory Liability Auto Insurance Act, the $15,000 “per person” limit holds sway.

The plain language of CGU International’s personal automobile policy limits coverage of all damages associated with a single-party accident to $15,000, Lizama noted in his order affirming the insurance company’s position that John Jones and his wife Florilyn Tria Jones are entitled to nothing more than the $15,000 “per person” limit.

The judge said he agrees that the $15,000 “per person” limit is hardly sufficient to cover the damage from an auto accident. Yet, he pointed out, insurance companies whose policies provide coverage at this minimal level are in compliance with the Mandatory Act.

“If the Legislature truly feels that ‘a person who suffers damage as a result of a motor vehicle accident caused by another should not have to bear such financial burden,’ it should set a higher minimum level,” Lizama said.

Unfortunately, the judge added, the fact that the $15,000 per-person limit is insufficient does not allow the court to distort the language of the policy in favor of higher compensation.

According to court records, the Jones couple hold CGU International’s personal automobile policy, which provides coverage in the amount of $15,000 “per person” injured in a car accident, or $30,000 “per accident.”

Florilyn Jones was seriously injured when a vehicle driven by an uninsured motorist struck her vehicle. The parties resolved Florilyn Jones’ claim by settlement without admission of liability, paying her the policy’s $15,000 per person limits.

John Jones was not physically injured, but claimed that he suffers from a loss of consortium. He demanded compensation beyond that already provided to Florilyn Jones under the $30,000 “per accident” limit of the policy. CGU International denied the claim, asserting that the Joneses are entitled to nothing more than the $15,000 “per person” limit.

In his order, Lizama said that, although it is not defined, “loss of consortium” appears to fall within the category of “all damages, including damages for care and loss of services.”

Thus, the judge said, when there is only one person injured in a car accident, the $15,000 limit would control a loss of consortium claim.

“The $30,000 limit would apply only where more than one person is injured in a car accident,” he said.

Citing the CNMI Supreme Court’s decision in Ito v. Macro Energy, CGU International argued that terms in insurance policies must be afforded their plain and obvious meaning.

The plain meaning of the policy, CGU suggested, is that a loss of consortium claim is derivative from a bodily injury and must fall under the “per person” limit.

John Jones argued that the Ito decision alerted CGU and other insurers to the potential ambiguity of the terms “loss of consortium” and “bodily injury.” He noted that CGU sat for 13 years after the Ito decision without amending its policy to clearly define these terms.

But Lizama said the fact that it is possible to create a clearer policy does not mean that the existing policy is ambiguous.

An ambiguity, the judge said, arises from contract language if it is facially inconsistent, it is susceptible to two or more reasonable interpretations, or there is disputed extrinsic evidence affecting the interpretation.

“The policy is facially consistent, and neither party has presented extrinsic evidence suggesting an alternative interpretation,” he said.

Lizama said to exclude “loss of consortium from “all damages, including damages for care and loss of services” would be unreasonable.

The Mandatory Act requires all policies to provide at least “$15,000 for bodily injury or death of any one person in any one accident; $30,000 for the bodily injuries or deaths of all persons involved in any one accident.”

John Jones argued that CGU’s interpretation of the policy contradicts the Act because the Act mandates insurance compensation for “all persons involved.”

Claimant also argued that “bodily injury” should be interpreted to include any physical, emotional or mental injury to any person, regardless of whether the person was present at the accident.

Lizama disagreed.

“While it is possible to interpret ‘all persons involved in any one accident’ so as to include the relatives of a person directly injured, this is not the logical interpretation,” he said.

Further, he said, the term “bodily injury” does not logically include emotional or mental injury.