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By:  Patricia McHugh Lambert, Esquire

I have some relatives that should be starting college this year.  But claiming that the pressures of “becoming an adult” are too great for them right now, they have decided to take a “gap year.”  My initial reaction was to lecture them with “in my day” stories, which sounded ponderous even to my jaundiced ear. Upon reflection that my advice was not wanted or even needed, I decided that gaps were appropriate if the risks and benefits were considered.  And I decided to let their parents explain the pros and cons of gaps.

All this thinking about gap years made me think about gaps in insurance policies. Too often, there are gaps in coverage that insureds do not understand. There are risks unevaluated and misunderstood.  In this article, I talk about such gap risks.

First, there are gap risks for claims for emotional damages, particularly where there is no bodily injury.  Maryland law is expanding the right to recovery for purely emotional damages. Take Bogert v. Thompson, a case recently decided by the Maryland Court of Special Appeals.

In that case, a truck driven by the defendant crashed into the Plaintiffs’ garage—at 2:00 a.m. (not unexpectedly considering the nature of the accident, the defendant was under the influence of alcohol). The car crashed through one wall  knocking out another wall before coming to rest right below the bedroom of children aged 4 and 11. Upon hearing the crash, the Plaintiffs woke up and ran to the bedroom of the children.  The children were “terrified” and the parents “couldn’t process what was happening.” The family was ordered by a building inspector to leave the home immediately as it might not be safe.  Later the family felt “stunned” and “numb,” with the father having his PTSD (from a decades old mortar attack) “reactivated.”  No one was hit by the car, but the Plaintiffs experienced anxiety, heart palpitations, migraines, vertigo, nausea, difficult sleeping, exhaustion, and other emotional issues such as depression.

Ordinarily, a plaintiff cannot recover for emotional injuries caused by witnessing or learning of negligent injury to the plaintiff’s property. Initially, the defendant was awarded summary judgment on that basis. The appellate court, however, found that the plaintiffs could pursue a claim when the defendant’s negligence in causing property damage results in emotional injuries that are due to reasonable fear for oneself or for one’s family.  With this expansion, there is a potential for an insurance coverage gap. Many insurance policies—whether underlying liability policies or excess—do not provide coverage for purely emotional injuries (i.e. injuries that are not caused by traditional bodily injuries). As a result, there can be gaps in coverage.

Second, there can be gaps caused by household exclusions in excess policies. Buarque de Macedo v. Auto. Ins. Co. of Hartford, Connecticut, underscored that household exclusions, while ineffective in primary automobile insurance policies, are enforceable in umbrella policies.  While most people do not buy umbrella policies so that relatives can sue them, gaps of this type can be tricky once the lawsuit arrives. From my perspective, umbrella policies should be reviewed to see if they provide the needed coverage, including liability claims and uninsured motorist claims.

Third, there can be gaps dealing with online defamation. Watching Johnny Depp as a Pirate during a weekend binge of old movies, I wondered about whether Amber Heard had insurance coverage for the substantial verdict against her. Considering the punitive damages award made in the case, as well as the typical policy language in liability policies, I suspect that there is a serious gap in the net of protection her insurance provides.

While the facts of the Depp v. Heard case are both unusual and dramatic, every one of us goes online.  And while we may be circumspect as to what we post about others, there are likely to be members of our family—or even our household—that complain about businesses, friends and aunts that smell like mothballs. While there have been some cases about online posting (more in the bullying context), there is the risk of defamation claims being filed whenever someone goes negative on the internet, particularly against someone that is not a public figure. And with that risk comes the potential for gaps in coverage.

One final gap to consider. There are all sorts of devices—some would call toys—that move people from one place to another. There are ATVs, motorized scooters, and E-bikes. In Mutual Benefit Insurance Company v. Natale, the appellate court found that an ATV was a motor vehicle that was excluded from coverage by the owned but not insured policy language. This creates the potential for gaps in liability coverage for many individuals.

I suspect that my relatives who are almost adults—but don’t want to be adults quiet yet—aren’t thinking about gaps in insurance coverage for their gap year. Perhaps they—or at least their parents—should think about gaps for them as well as for themselves. We all want to believe that we are covered for all inevitabilities, but, of course, policies are more limiting in coverage. While that makes sense, it is important for people to understand what is and, perhaps more importantly, what is not covered.

Ms. Lambert has over 35 years of experience in handling complex commercial litigation and insurance matters. Ms. Lambert has worked on national class actions, significant litigation and regulatory matters for Fortune 500 companies. She has also assisted small and mid-sized companies and business executives with contract, real estate, liability assessment and commercial disputes that needed to be resolved quickly and efficiently. Ms. Lambert is best known as an attorney who knows the field of insurance. She has represented insurers, policyholders, and insurance producers in disputes both in court and before the Maryland Insurance Administration.

Ms. Lambert is the firm’s Co-Liaison for Harmonie, a national network of high quality law firms that serve the special needs of the risk industry, and was recently appointed to Harmonie’s Board.  She can be reached by phone at 410-339-6759 or email