"Loss of Consortium Claims and Liability Policy Limits"
May 1, 2001
Is a claim for loss of consortium limited to the “per person” liability limits of an automobile liability policy? Or, is a claim for loss of consortium compensable under the “per occurrence” limits? Assume that you have been retained, as coverage counsel for a national automobile insurer, to answer this question.
The facts are these. The insured, Ian Innis, was driving his car when he lost consciousness. His vehicle struck a chain link fence and fire hydrant. The fence, in turn, struck a bystander, Clyde Clemans, in the face, knocking him to the ground. Mr. Clemans, a professional gardener, had been putting gas into his lawn mower at the time of the accident.
As a result of the accident, Mr. Clemans suffered multiple pelvic fractures, requiring extensive surgery. He is confined to a wheel chair and may require more surgery in order to regain his ability to walk. His medical bills exceed $170,000. His wage loss is unknown.
Mr. Clemans has made a demand of $50,000. This is the “per person” liability limits under Mr. Innis’s policy. Mr. Clemans’s spouse, who was not present at the time of the accident, has made a separate claim for $50,000 for loss of her husband’s consortium. The Clemans’s attorney contends Mrs. Clemans’s claim for loss of consortium is compensable under Mr. Innis’s “per occurrence” policy limits of $100,000.
The Clemans’s attorney has made some convincing arguments that coverage exists for the loss of consortium claim under the “per occurrence” policy limits. He refers you to Abellon v. Hartford Insurance Co., 167 Cal.App.3d 21, 212 Cal.Rptr. 852 (1985), holding that a claim for loss of consortium is compensable under the “per occurrence” limits of liability of an automobile policy. The Abellon court held that to merge one spouse’s claim for loss of consortium with the other spouse’s claim for physical injuries would defeat the public policy that recognizes loss of consortium as a distinct injury, and, therefore, separately compensable, from the physical injuries sustained by the other spouse.
Citing Rodriguez v. Bethlehem Steel Corp., 12 Cal.3d 382, 115 Cal.Rptr. 765 (1974), the Clemans’s attorney argues that loss of consortium is a claim personal to the spouse suffering the loss of consortium. He contends that the claim is not derivative of the physically injured spouse’s cause of action for bodily injuries, and is, therefore, covered under the “per occurrence” policy limits.
As a matter of tort law, the Clemans’s attorney is correct. As a matter of insurance coverage law, however, he is incorrect. With a few exceptions, which are discussed in this article, the vast majority of courts have uniformly applied the simple “per person” limits of liability to a claim for loss of consortium, such that, under our hypothetical, only $50,000 total would be available for husband and wife.
Applying the “Per Person” Limit to Claims for Loss of Consortium
Most United States jurisdictions consistently follow the principle that where one person was injured or killed in an occurrence, the single injury limit applies, regardless of the number of persons damaged as a result of that injury. They follow the rule that all damage claims, direct or consequential, including damages for loss of consortium resulting from injury to one person, are subject to the “per person” limitation.
In Perkins v. Fireman’s Fund Indemnity Co., 44 Cal.App.2d 427, 112 P.2d 670 (1941), a California court held that a claim for loss of services is subject to the “per person” limit of liability. There, the wife sustained serious bodily injuries in an auto accident. Her husband, who was not present at the scene of the accident, brought a claim for loss of his wife’s services. They argued that each person who suffers a loss, on account of the injury or death of one person, has the right to recover the “per person” limit of liability, provided the total recovery does not exceed the “per occurrence” limit.
The Perkins court rejected the argument that the “per occurrence” limit of liability applied to the husband’s claim for loss of services; it held that the “per person” limit instead applied. Similarly, in Campbell v. Farmers Insurance Exchange, 260 Cal.App.2d 105, 67 Cal.Rptr. 175 (1968), the court held that an arbitration award, made in favor of the claimants, that exceeded the “one person” liability limit, was in excess of the arbitrator’s powers. It therefore vacated the award.
In United Services Auto Association v. Warner, 64 Cal.App.3d 957, 135 Cal.Rptr. 34 (1976), another California court held that the “per person” limit of liability applied to a claim for loss of consortium. The limit applied “to all damages, including damages for care and loss of services, arising out of bodily injury sustained by one person . . .” 135 Cal.Rptr. at 36.
The Warner court held that loss of consortium is clearly a loss sustained because of injuries to one person. It stated that the term “all damages” clearly included loss of consortium which loss necessarily arises out of the bodily injury sustained by the injured spouse. It concluded (id at 37, 38)
[T]he principle consistently followed has been that where one person was injured or killed in the accident or occurrence, the single injury limit applied, regardless of the number of persons damaged as a result of that injury. . . . The cause of action for loss of consortium does not arise out of a bodily injury to the spouse suffering the loss [of consortium]; it arises out of the bodily injury to the spouse who can no longer perform spousal functions. It is the loss of conjugal fellowship, affection, society and companionship which gives rise to the cause of action.
In another California decision, State Farm Mutual Auto Insurance Co. v. Ball, 127 Cal.App.3d 568, 179 Cal.Rptr. 644 (1981), the court of appeal held that the “each person” limit of liability unambiguously applied to a wife’s claim for loss of consortium. In Ball, the limit of liability portion of the policy read:
The limit of liability stated in the declarations as applicable to “each person” is the limit of the company’s liability for all damages arising out of bodily injuries sustained by one person in any one accident… For the purposes of this provision the “bodily injury sustained by one person” as used herein, shall be deemed to include all injury and damages sustained by others as a consequence of such bodily injury.
The court held that “damages” were defined by the policy to include care and loss of consortium. 179 Cal.Rptr. at 646. Further, it refused to resort to the practice of ascertaining the reasonable expectations of the insured because it concluded that the policy was clear and explicit.
In Hauser v. State Farm Mutual Automobile Insurance Co., 205 Cal.App.3d 843, 252 Cal.Rptr. 569 (1988), the court considered policy language that limited coverage for “each person” to “all damages due to bodily injury to one person.” “Bodily injury to one person” included “all injury and damages to others resulting from this bodily injury.” The Hauser court held that the policy language was straightforward and simple, and the loss of consortium claim there was compensable only under the “each person” limit applicable to the injured spouse’s claim. 252 Cal.Rptr. at 571.
A federal court decision, applying California law, has held that a “per person” policy limit applied to both a wife’s claim for bodily injury and husband’s claim for loss of consortium. Safeco Insurance Co. of America v. Simmons, 642 F.Supp. 305 (N.D.Cal. 1986). The policy provided:
The limit of bodily injury liability stated in the declarations as applicable to “each person” is the limit of SAFECO’s liability for all damages, including damages for care and loss of services, arising out of bodily injuries sustained by any one person as the result of any one occurrence. . .
New York courts have long held that the “per person” limit of liability applies to a claim for loss of services or consortium. In Brustein v. New Amsterdam Casualty Co., 225 N.Y. 137, 174 N.E. 304 (1931), the New York Court of Appeals held that a liability policy covering accidents resulting in “bodily injuries or death” limits coverage for such injuries to actual personal injury. The court noted: “Obviously, the husband receives no ‘bodily injury’ from the loss of his wife’s services; nor is his wife his property so that an injury to her person is an injury to his property.” 174 N.E. at 305.
In Massachusetts, the appeals court looked at the arrangement of the policy language in concluding that the “per person” limit was applicable to a claim for loss of consortium. In Dunn v. Travelers Insurance Co., 6 Mass.App. 910, 378 N.E.2d 1007 (1978), the limit of liability applicable to “each person” was the limit of the company’s liability for all damages arising out of “bodily injury sustained by one person.” It is clear from the syntax of each clause, the court stated, that the words, “sustained by one person,” modify the words, “bodily injury,” and not the word, “damages.” So, too, the Appellate Division of the New Jersey Superior Court vacated an arbitrator’s award of damages on a husband’s loss of services (“per quod”) claim, made in excess of a limit of liability “for all damages…because of bodily injury sustained by one person as a result of any one accident.” Harris v. Security Insurance Group 140 N.J.Super. 10, 354 A.2d 704 (1976). The court concluded that all damage claims, direct or consequential, resulting from bodily injury to one person (the wife), were subject to the “one person” limit.
In Gass v. Carducci, 52 Ill.App.2d 394, 202 N.E.2d 73 (1964), the Illinois appellate court held that a claim for loss of consortium was subject to the “one person” policy limit since the term “one person” has repeatedly been construed to mean “one person injured” and that it applies to all damages sustained by all persons as a result of injury to one person. 202 N.E.2d at 77. It noted that courts have rejected the contention that the “one person” limit merely deals with the loss suffered by any one person. Id. Nor does the construction of “one person” render the “per occurrence” clause a nullity since it applies to the situation in which more than one person is directly injured in a single occurrence. Id.
The Supreme Court of Nebraska agreed with the insureds’ argument that consequential damages, and, therefore, loss of consortium damages, are recoverable under a policy insuring against liability arising out of the operation of an automobile. Wilson v. Capital Fire Insurance Co., 136 Neb. 435, 438, 286 N.W. 331 (1939). However, the court stated that the issue is not whether a policy covers consequential damages, but whether the damages assessed against the insured exceed the limitation contained in the policy. Id. The policy in Wilson limited liability for loss from an accident resulting in bodily injuries to or in the death of one person to five thousand dollars. As such, the court held that the “one person” limit applied to the loss of consortium claim. Id.
Rejecting the argument that the “each person” liability limit is not a limit upon the amount which may be received by one person, the Ohio Court of Appeals, in Napier v. Banks, 9 Ohio.App.2d 265, 224 N.E.2d 158 (1967), held that the “each person” limit applies to a loss of consortium claim since the term is a limit on the total amount which may be recovered for injury to one person. 224 N.E.2d at 162. “It matters not how many may legally share in the recovery,” the court explained, “the total recovered from the company cannot exceed the limits of its liability under its contract for ‘injury to one person.’” Id. See also, Izev v. Nationwide Mutual Insurance Co., 1999 Ohio App.LEXIS 5408, 1999 Westlaw 1059661.
In Reid v. State Farm Mutual Automobile Insurance Co., 784 F.2d 577 (5th Cir. 1986), the federal court, applying Mississippi law, did not look to the policy definition of “each person” in holding that a claim for loss of consortium is subject to the “each person” limitation. Instead, the court concluded that a claim for loss of consortium is not a separate claim for bodily injury, but rather a claim that derives entirely from the bodily injuries suffered by the spouse injured in the accident.
The Supreme Court of Florida, in Tromblay v. Iowa National Mutual Insurance Co., 70 So.2d 319 (Fla. 1954), looked no further than the policy’s coverage promise in concluding that the “each person injured” limit applied to a loss of consortium claim. There, the coverage promise was “to pay on behalf of the insured all sums which the insured shall become legally obligated [to pay] as damages because of bodily injury, sickness or disease, including death...sustained by any person caused by accident or arising out of the ownership, maintenance or use of the automobile.” The court stated that there was no reason to resort to rules of construction since the promise was quite clear, and the unit by which liability in this case was to be determined was “the person.” 70 So.2d at 320; see also, Eagle Star Insurance Co. v. Parker, 365 So.2d 780 (Fla.App. 1978).
The Supreme Court of Georgia, in State Farm Mutual Automobile Insurance Co. v. Hodges, 221 Ga. 355, 144 S.E.2d 723 (1965), held that the phrase “Liability for all damages...,arising out of bodily injury,...sustained by one person in any one accident shall not exceed $10,000...” was an unambiguous and definite maximum of liability. 144 S.E.2d at 725. Inclusion of the words, “including damages for care and loss of services” did not render the limitation ambiguous. Accordingly, the insurer was not liable for a wife’s claim for loss of consortium damages that exceeded the paid “one person” policy limit.
The Supreme Court of New Mexico, in Gonzales v. Allstate Insurance Co., 122 N.M. 137, 921 P.2d 944 (1996), held that a surviving spouse’s claim for loss of consortium, in a wrongful death action, was subsumed under the policy’s compensation for “bodily injury” suffered by the decedent spouse.
The Gonzales court held that although the claim for loss of consortium is recognized as a separate cause of action belonging to the spouse suffering the loss, recovery under the Allstate policy was restricted to the “each person” limit of liability. The claim was, the court stated, encompassed by the phrase defining “each person” to include “damages sustained by anyone else as a result of that bodily injury.” 921 P.2d at 948.
Puerto Rico also follows the majority rule in subsuming a claim for loss of consortium under the “each person” (“por persona”) limit of liability, where that limit is defined to include damages for care and loss of services. Ferrer v. Edgardo Lebron Garc/AIA, 103 D.P.R. 600 (1975).
Indemnification Under the “Per Occurrence” Limits of Liability
While most American jurisdictions apply the “per person” limitation in loss of consortium claims, occasionally the “per occurrence” limit of liability will be applied, especially when the policy fails to define “damages.” A leading example is the decision in Abellon v. Hartford Insurance Co., 167 Cal.App.3d 21, 212 Cal.Rptr. 852 (1985), where the court held that a claim for loss of consortium is compensable under the “per occurrence” limits of liability of a general liability policy.
In Abellon, the husband was involved in an accident in which he sustained severe brain damage and loss of sight in one eye. His wife made a claim for loss of her husband’s consortium. The policy in Abellon, covering the adverse driver who collided with the claimants’ vehicle, provided as follows:
The most we will pay for all damages resulting from bodily injury to any one person caused by any one accident is the limit of Bodily Injury Liability shown in this endorsement for “each person.”
Subject to the limit of “each person” the most we will pay for all damages resulting from bodily injury caused by any one accident is the limit of Bodily Injury Liability shown in this endorsement for “each accident.” 212 Cal.Rptr. at 853 (emphasis added). A divided court of appeal held that the wife was not foreclosed from recovering damages for loss of consortium under the “per occurrence” provision of the policy.
The Abellon court first rejected the insurer’s argument that, because the wife’s loss of consortium was derived from the physical injuries sustained by her husband, her consequential damages were, therefore, subject to the “per person” limitation. This argument, the court held, was negated by the decision in Rodriguez v. Bethlehem Steel Corp., 12 C.3d 382, 115 Cal.Rptr. 765 (1974). There, the California Supreme Court first recognized the right of a spouse to bring a claim for loss of consortium, which the court defined as a claim for loss of companionship, emotional support, love, felicity, and sexual relations. (Rodriguez does not discuss the application of insurance policy provisions limiting liability to a claim for loss of consortium; rather, it simply recognizes a spouse’s tort claim for loss of consortium.)
The Abellon court quoted from the opinion in Lantis v. Condon, 95 Cal.App.3d 152, 157 Cal.Rptr. 22, 24 (1979), which held that although a wife’s cause of action for loss of consortium arises from bodily injury to her husband, the injury suffered is personal to the wife, and should be treated no differently than an injury to one’s physical well-being. The Abellon court stated that to merge the wife’s injury with that of her husband under the “per person” limitation would, therefore, negate public policy that recognizes loss of consortium as a distinct and individual injury. 212 Cal.Rptr. at 855.
In examining the policy language, the Abellon court noted that the “per person” limitation did not define “all damages” to include “loss of services.” Therefore, it concluded that the policy did not give notice to the policyholder, when he purchased the policy, that loss of consortium damages fell within the purview of the “per person” limitation. Id. at 858.
The Abellon court then distinguished the policy language at issue from the policy language in United Services Auto Association v. Warner, 64 Cal.App.3d 957, 135 Cal.Rptr. 34 (1976). It stated (212 Cal.Rptr. at 858):
Warner and the related cases Hartford cites are unpersuasive and not controlling here because they contain policy language which is dramatically different from the language in Hartford’s policy. The Warner “per person” limitations specifically defines “all damages” as including loss of “services”; Hartford’s “per person” limitation contains no such qualifying phrase. Hence, Ron’s Delivery Service [the policyholder] was given no notice when it purchased the policy that loss of consortium damages fell within the purview of the “per person” limitation.
The Abellon court applied the general principle that doubts as to the meaning of language in an insurance policy must be resolved against the insurer and that any exception to the performance of the basic underlying obligation must be so clearly stated as to apprise the insured of its effect. 212 Cal.Rptr. at 858. Therefore, it concluded that the policy’s multiple limits were available to indemnify the loss. Specifically, the claim for loss of consortium was covered, the court held, under the “per occurrence” liability limits of the policy. Id. at 859.
More recently, the court that decided Abellon v. Hartford Insurance Co. clarified its decision. “In Abellon, . . . we held that absent language to the contrary in the insurance policy, an independent loss of consortium claim is not merged with the spouse’s claim for personal injuries under the ‘per person’ policy limit. Rather, the higher ‘per occurrence’ policy limit applies.” Gapusan v. Jay, 66 Cal.App.4th 734, 739 n. 4, 78 Cal.Rptr.2d 250, 254 (1998).
Like Abellon, the court in Allstate Insurance Co. v. Fibus, 855 F.2d 660 (9th Cir. 1988), in an appeal of summary judgment, found that a loss of consortium claim was covered under the “per occurrence” policy limit. It looked at the language of the original policy issued to the insured, which provided that “the limit stated for each person for bodily injury applies to all damages arising from bodily injury, sickness, disease or death sustained by one person in one occurrence.” Id. at 662. The court stated that this language was ambiguous, and could reasonably be interpreted to provide separate coverage for a loss of consortium claim. Id.
The Ninth Circuit remanded Fibus to the trial court to consider whether the insured was given adequate notice of amended language in a renewal policy, which restricted coverage. An “Amendatory Endorsement” that laid out the changes in the renewal policy stated that “the limit stated for each person for bodily injury is our total limit of liability for all damages because of bodily injury sustained by one person in any single auto accident, including all damages sustained by anyone else as a result of that bodily injury.” Id. at 863. The court noted that the Amendatory Endorsement itself did not notify the insureds of the reduction in coverage; it stated, however, that it was unable to determine whether Allstate used any other means to notify the insureds. The court therefore remanded the case for further proceedings on this issue.
The Abellon and Fibus decisions can be reconciled with the majority trend, which applies the “per person” limit to a loss of consortium claim, by noting that the term “damages” was not defined by the policy in either case to include “loss of consortium.”
Loss of Consortium may not be “Bodily Injury”
Many of the courts that have addressed coverage for loss of consortium claims have concluded that loss of consortium is not a claim for “bodily injury” within the meaning of a liability policy. United Services Automobile Association v. Lilly, 217 Cal.App.3d 1396, 1400-01, 266 Cal.Rptr. 691 (1990); United Services Automobile Association v. Warner, supra; Abellon v. Hartford Insurance Co., supra, 212 Cal.Rptr. at 860 (dissenting opinion); State Farm Mutual Automobile Insurance Co. v. Wolff, 926 F.2d 755 (8th Cir. 1991); Weekley v. State Farm Mutual Automobile Insurance Co., 537 So.2d 477 (Ala. 1989).
The fact that loss of consortium may have physical consequences also does not necessarily convert the cause of action into an action for bodily injury to the spouse suffering the loss of consortium. USAA v. Warner. Such consequences are an element of damage, that is, the consequential damage arising out of the bodily injury to the injured spouse. Id.
Even Abellon v. Hartford Insurance stopped short of finding that a claim for loss of consortium is one for “bodily injury,” stating in dicta that whether such a claim constitutes a claim for “bodily injury” is “in the final analysis … a question of fact [for the jury].” 212 Cal.Rptr. at 855.
Analyzing a Claim for Loss of Consortium
Let us turn back to the hypothetical case that began this article’s analysis. Unlike the Abellon policy, the Innis’s policy expressly includes both loss of consortium and loss of services within the “per person” policy limits: The bodily injury liability limit for each person as stated in the Declarations is the maximum we will pay for bodily injury sustained by one person in any occurrence including damages for care, loss of consortium and loss of services arising from this injury.
Despite the preceding body of law, the Clemans’s attorney contends that the policy does not specify that the term “one person” under the limit of liability clause be the person who is actually in the accident, but only that the damages be sustained in “any occurrence.”
In Perkins v. Fireman’s Fund Indemnity Co., 44 Cal.App.2d 427, 112 P.2d 670 (1941), the court expressly considered and rejected this argument. It held that to construe the words “one person” as applying to the person suffering loss of consortium, rather than to the person injured or killed, is a strained and unnatural construction of the policy. 112 P.2d at 673. It held that there is no ambiguity or uncertainty with regard to the term “one person” and that it refers to the injured person, and the words “one accident” to the injury of several persons, regardless of how many may suffer loss by reason thereof. Id. A court cannot seize on the words “one person” and give those terms a distorted meaning, when another clause in the policy expressly states what those terms mean. USAA v. Warner, 135 Cal.Rptr. at 37.
Furthermore, the Abellon policy did not require that bodily injury subject to the “each person” limitation be suffered by a person in the accident. USAA v. Lilly, supra, 266 Cal.Rptr. at 694. Since the Abellon policy did not specifically state that the damages must result for bodily injury to one physically present at the accident scene, i.e., “in the accident,” the court held that coverage extended to all persons damaged as a result of bodily injury sustained in the accident.” Id. Unlike the Abellon policy, the Innis’s policy does specifically require the bodily injury to be sustained by one person in any occurrence. As such, the “per person” limit applies to the loss of consortium claim.
Thus, although as a matter of tort law, loss of consortium is a distinct and separate injury, as a matter of insurance coverage, it is a claim for damages, which arises out of the bodily injury sustained by one person. It is, therefore, subject to the “per person” limit of liability.
In our hypothetical, the Innis’s policy has limits of $50,000 for bodily injury per person, and $100,000 for bodily injury per occurrence. You, therefore, quite correctly conclude that both of the Clemans’s claims for bodily injuries and loss of consortium are limited to the $50,000 “per person” limits of liability.
At least for a few years, the never-to-be-underestimated policyholders'/plaintiffs' bar came up with some innovative arguments to double the amount of insurance coverage when one spouse suffered a physical injury and the other had a non-physical claim for loss of consortium. Sensibly, the majority of American courts have characterized the consortium claim as purely derivative and have construed the standard insurance policy language used by most insurers to mean that only a single limit of liability is available to satisfy the claims of both spouses. The insurance industry also received an early message and cleaned up policy language so that the intern to provide a single limit only is abundantly clear.