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North Carolina
Texas
North Carolina Insurance Guaranty Association v. State Farm Mutual
Automobile Insurance Company, 115 N.C. App. 666, 446 S.E.2d 364 (1994).
Automobile liability insurer brought declaratory judgment suit seeking to
recover from Insurance Guaranty Association uninsured motorist benefits
paid when tortfeasor’s liability insurer was declared insolvent, more than
three years after accident. The court held that an uninsured motorist clause
which provided that a vehicle is uninsured if liability insurer “is or becomes
insolvent” extended coverage under policy beyond three‐year minimum
mandated by Financial responsibility Act because two occasions of
insolvency were contemplated (1) if insolvency exists at the time of the
accident, and (2) if insolvency occurs some time following accident.
Furthermore, the court noted that when an insurance policy, containing the
aforementioned clause, does not specify any period of time, an uninsured
motorist claim may not be barred even though minimum period specified by
Financial Responsibility Act has elapsed. In addition, the court stated that
the three‐year limitation mandated by Financial Responsibility Act accrued
when tortfeasor’s liability insurer was declared insolvent, even though
declaration did not occur until more than three years after date of accident.
McLean v. Morrow, 137 S.W.2d 113 (Tex. Civ. App. 1940) writ dismissed. When
the receiver assigned the rights obtained against a policyholder to another
party for $10 as consideration, and the assignee attempted to recover against
the policyholder, the court held that the assignment was executed by the
receiver without authority from the court which had appointed the receiver.
Without such approval, the assignment was void and the assignee had no
justifiable interest in the claim asserted by the receiver. The court found the
intent of the assignment was to substitute the plaintiff for the receiver, and
the assignee was not acting for the benefit of the receiver.
Virginia The Uninsured Employer’s Fund v. Flanary, 27 Va. App. 201, 497 S.E.2d 912
(1998). Albert Flanary was originally awarded weekly compensation
disability benefits for 300 weeks. Upon a change in his condition, he was
awarded lifetime benefits. Mr. Flanary’s employer was required by statute,
Va. Code § 65.2‐801 (1950), to continually maintain liability insurance because
its employees were susceptible to pneumoconiosis. Both of the employer’s
insurance carriers became insolvent. The Virginia Property and Casualty
Insurance Guaranty Association became liable for “covered claims” against
Rockwood Insurance and the Uninsured Employer’s Fund became liable for
claims against the Coal Producers Group. Rockwood Insurance was solvent
when compensation was first awarded and paid its share of the original
award. It became insolvent, however, prior to the entry of the award based
upon the claimant’s change in condition.
The Uninsured Employer’s Fund is a statutorily created “governmental
insurance or guaranty program,” which is financed by taxes levied upon
insurers and functions as the workers’ compensation insurer of last resort
under statutorily limited circumstances. The Court of Appeals of Virginia held
that statute requires individuals having a claim against the Fund, which is
also a “covered claim” under the policy of an insolvent insurer, to exhaust
first his rights under the Fund before bringing a claim against the Property
and Casualty Insurance Guaranty Association. Further, the court held when
there has been a failure to maintain the statutorily required liability
insurance, the Fund will be liable because the employer has violated its
statutory duty. The Virginia Property and Casualty Insurance Guaranty
Association would only become liable for payment if the Fund were to be
unable to fully satisfy the award.