A California District Court awards Accidental Death and Dismemberment (“AD&D”) benefits to a beneficiary and found Unum was wrong to invoke a crime exception under the life insurance policy at issue.
In 2019, Lilly Miller received grave news that her son was killed in a motorcycle accident. Ms. Miller was the beneficiary of her son’s life insurance policies. She filed a claim for $50,000 in life insurance benefits and $50,000 of AD&D benefits.
Unum paid the life insurance benefits but denied the AD&D benefits claiming that a crime exclusion (he was speeding at the time of the accident) precluded AD&D benefits. So, Ms. Miller filed a lawsuit against Unum in pursuit of the AD&D benefits.
The Crime Exclusion Policy
The life insurance policy included an exclusion for:
Accidental losses caused by, contributed to by, or resulting from. . . an attempt to commit or commission of a crime
The Court’s Decision
Unum argued that the crime exclusion was proper for the following reasons:
- Speeding is a crime under California Law; and
- Dictionaries define crime as any illegal act for which someone can be punished by the government
Ms. Miller argued that the statutory definition of crime does not control and instead the court must determine whether the insured person of average intelligence would consider speeding a crime.
The court agreed with Ms. Miller and made the following findings:
- The policy failed to define “crime” and its meaning is amenable to different interpretations; and
- Unum was not entitled to rely on California statute to define the term crime; and
- The dictionary has several definitions of the term crime proving it is ambiguous
In other words, the court found the term “crime” to be ambiguous. Because of this ambiguity, the court held that it is uncertain whether the crime exclusion should apply to speeding. Under the law, the court must construe the ambiguity against the insurer who drafted the policy.
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