In a case arising out of a federal court of appeal, a tractor driver was driving down a highway with a trailer attached when the trailer detached from the tractor. The tractor driver pulled over to reattach the trailer, but before he completed the turn, another car crashed into the trailer, killing the car’s driver. The driver’s estate filed suit. The tractor and trailer’s insurance company came to a settlement with the driver’s estate but agreed they would still litigate what the policy limits were.
In this case, both the tractor and the trailer were insured by the same insurance company. The insurance company argued that the policy limited its liability to $1 million per accident, despite the number of insured vehicles involved. The driver’s estate argued that the policy covered $1 million per vehicle involved in the accident, bringing the limit to $2 million because both the tractor and the trailer were involved. Under the settlement terms, the insurance company agreed to pay $1,000,000 if the insurance company’s interpretation was adopted and $1,550,000 if the estate’s interpretation was accepted. The trial court found that the estate’s interpretation was correct, and the insurance company appealed the decision.
In a lengthy opinion that parsed the language of the insurance policy, the federal court of appeals found that the insurance company’s interpretation was correct and that the policy was limited to $1 million. It found that according to the state’s law and the terms of the policy, the policy was limited to $1 million per accident, regardless of the number of covered vehicles involved. Thus, the insurance company only had to pay $1 million to the driver’s estate.