Although this issue is not the usual car accident case, it underscores the importance of reading and understanding terms and conditions of any contract. A bike rider who had an accident because he was riding his dirt bike under the influence of alcohol had an accident and filed a claim for his insurance provider to pay his medical bill.

As expected, his life insurance carrier outright denied his bid for benefits because his policy does not cover injuries that arise from “illegal use of alcohol”. On the other hand, the insured argued that his case was not that of illegal use of alcohol because he was 22 years when it happened and he can take alcohol legally. Instead, his case is more of riding under influence and it is not stated in his insurance policy that injuries arising from riding or driving under influence is not covered.

To the surprise of everyone, the court upheld his argument. The insurance company was ordered to pay the plaintiff the sum of $200,000 to offset his medical bill. The district court gave that judgment and the appellate court upheld the judgment.

According to the clause on the policy, it only excludes injuries arising from illegal use of alcohol. To everyone, illegal use of alcohol is when it is consumed by someone who is under the age of 21. Since the insured was 22 years of age and has already pleaded guilty of riding under influence, he can’t be guilty of illegal use of alcohol. The defendant tried to prove that “illegal use of alcohol” also meant driving under influence but both courts disagreed.

Illegal use of alcohol and driving under influence are two different issues. In the former, drinking is the crime while in the latter, the crime is the action taken after drinking. This difference swung the case in the favor of the plaintiff.

According to the appellate court, if the insurer meant to disclaim injuries that arise from driving under influence, it would have specified it clearly. This will go down as a big blow for the insurance company. Think of it; it is not likely that an insurance policy that does not cover injuries from illegal use of alcohol will cover the ones from driving or riding under influence.

The insurance company paid for an error of mission. It is obvious that the insurance company did not involve a car accident lawyer when it was drafting the terms and conditions of its life insurance policies. An experienced car accident lawyer would have spotted the error easily. He would have also alerted them on the implication of the error.

Two things will definitely follow – the insurance company will fire whoever drafted the policies. In addition, all the terms of their insurance policies will be reviewed to plug any “potential loophole” that another policyholder may capitalize on.