The San Antonio Court of Appeals recently held that a personal auto policy which covers “damages for bodily injury” does not on its face cover punitive damages. In Farmers Texas County Mut. Ins. Co. v. Zuniga, No. 04-16-00773-CV, 2017 WL 54718887 (Tex. App-- San Antonio Nov. 15, 2017 (slip op.), Farmers' insured hit a pedestrian and was slapped with a judgment for $93,000 in actual damages and $75,000 in punitive damages. Farmers brought a declaratory judgment action to determine whether its policy covered the punitive damage award and if so, whether Texas public policy allowed coverage of the award. (Meanwhile, the insured filed for bankruptcy and assigned his rights against Farmers to the injured pedestrian.)

The court compared the language of the Farmers policy to other liability policies considered by other Texas courts, and drew a distinction between an insuring agreement covering “all sums which the insured shall become legally obligated to pay as damages because of... bodily injury,” to the narrower Farmers policy, which only covered “damages for bodily injury.” The court concluded that while the “all sums” insuring agreement may be broad enough on its face to include punitive damages, the phrase “damages for bodily injury,” standing alone, does not include punitive damages, and nothing else in the Farmers policy created coverage for punitive damages. Therefore, the court did not address the public policy question. Notably, the court expressly rejected Manriquez v. Mid-Century Ins. Co., 779 S.W.2d 482 (Tex. App.-- El Paso 1989 (writ denied), which was the claimant's chief legal support, and which had previously construed language similar to the Farmers policy to include punitive damages.

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