Price v. Hartford Accident & Indemnity Case Brief

Summary of Price v. Hartford Accident & Indemnity, S. Ct AZ [1972]

Punitive Damages

Relevant Facts: Gary Gardner was injured as a result of a drag race btwn Price and another man. Gardner brought a claim against Price for $100,000 comp and $25,000 punitive. Price’s mother had her insurance company issue a policy for $100,000,000 against any possible loss caused by her minor son. The insurance company claimed it had no duty to defend or indemnify him for the punitive claim. The policy promised to pay “all sums" he might become liable to pay as damages ‘arising out of the ownership, maintenance, and use’ of the automobile in question. The policy had a $1 million limit.

Legal Issue(s): Whether public policy would be best served by requiring the insurance company to honor the policy it issued to Price?

Court’s Holding: Yes

Procedure: Price and his mother sought declaratory judgment, denied; S. Ct AZ reversed and remanded further proceedings.

Law or Rule(s): Public policy of the State may make an insurance contract illegal as it relates to punitive damages, if the wrongdoer is allowed to transfer his responsibility for damages to the driving public.

Court Rationale: Though a driver is insured for punitive damages he cannot engage in wanton conduct with impunity. Hartford voluntarily insured for punitive damages, and since its premiums were based on its exposure, holding it liable for what it has promised to pay would not result in additional burdens on the public. Punitive damages are not only designed to punish the offender but are also designed to serve as a deterrent to others. There is not evidence that those states which deny coverage have accomplished any appreciable effect on the slaughter on their highways. AZ has more than one public policy. One public policy is that insurance company which takes premium for covering all liability for damages should honor its obligation.

Plaintiff’s Argument: The premium was paid for the protection against loss such as was visited upon the Pl.

Defendant’s Argument: There is no point in punishing the insurance company b/c it has done no wrong. The burden would not come to rest on the insurance company but on the public by passing the increase liability along.

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