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When Does Liability Coverage Exist for Mental Anguish without Bodily Injury?

November 2006

Mental anguish is typically not covered under primary CGL policies because it is not included within the policy definition of "bodily injury." However, despite the clear language of the policy, some states include mental anguish within the standard Insurance Services Office, Inc. (ISO), definition of bodily injury providing coverage for those damages.

by R. Steven Rawls and Rebecca Appelbaum
Butler Pappas Weihmuller Katz Craig, LLP

Additionally, excess and umbrella policies often define "bodily injury" differently than primary policies and include "mental anguish, shock, humiliation, or mental injury" within the definition of bodily injury. Some excess or umbrella policies also include drop-down obligations where the primary policy does not provide coverage, thus requiring the excess policy to provide primary coverage for mental anguish.

Policy Language

The standard ISO commercial general liability (CGL) policy form defines bodily injury to mean "bodily injury, sickness, or disease sustained by a person, including death resulting from any of these at any time."

The following are examples of excess policies' definitions of "bodily injury."

  • "Bodily Injury" means bodily injury, sickness, disease, disability, shock, mental anguish, mental injury and humiliation, including resulting death.

  • Bodily Injury
    Means:

  1. injury to the body, sickness or disease, including death resulting from any of these at any time, and if arising out of the foregoing, mental anguish, mental injury, disability, shock or fright;

Effect of the Standard Definition

The majority of jurisdictions hold that the standard CGL definition of "bodily injury" does not include purely emotional or mental injuries pursuant to the plain, unambiguous policy language. However, a minority of jurisdictions hold that a policy defining "bodily injury" as "bodily injury, sickness or disease" provides coverage for purely emotional injury. These courts typically do so either because they find ambiguity in the policy language or because they find mental injury subsumed within the phrase "sickness or disease."

Mental anguish does not constitute "bodily injury." In National Casualty Company v. Great Southwest Fire Insurance Company, 833 P.2d 741 (Colo. 1992), the Supreme Court of Colorado explained that unambiguous policy provisions "must be given [their] plain and ordinary meaning," and "mere disagreement of the parties does not establish an ambiguity." Great Southwest at 744 and 746. The court agreed with the majority view that the term "bodily injury" "covers physical injury and does not include claims for purely nonphysical or emotional harm." Id.

Similarly, in Trinity Universal Insurance Co. v. Cowan, 945 S.W.2d 819 (Tex. 1997), the Supreme Court of Texas explained that "'bodily injury' ... does not include purely emotional injuries ... and unambiguously requires an injury to the physical structure of the human body. Our decision comports with the commonly understood meaning of ‘bodily,' which implies a physical, and not purely mental, emotional, or spiritual harm." Cowan at 823.

"Bodily injury" encompasses mental anguish.
In Alabama mental anguish is necessarily included within the terms "sickness" and "disease" in the general liability policy definition of "bodily injury." American States Insurance Co. v. Cooper, 518 So. 2d 708, 710 (Ala. 1987) (citing Morrison Assurance Co. v. North American Reinsurance Corp., 588 F. Supp. 1324, 1327 (N.D. Ala. 1984)). Mental anguish is included within the ordinary meaning of sickness because "one may experience "sickness" or "disease" without first experiencing a physical touching." Lavanant v. General Accident Ins. Co. of America, 561 N.Y.S.2d 164, 168 (N.Y. App. Div. 1990) (explaining that the insurer could have written language requiring physical contact for bodily injury).

Courts in Louisiana have determined that the standard definition of "bodily injury" is ambiguous. Because the definition is ambiguous, it is "reasonable to find that ‘bodily injury' ... include[s] severe and debilitating mental pain and anguish." Hill v. Shelter Mutual Ins. Co., 935 So. 2d 691, 694 (La. 2006) (citation omitted); see alsoAllstate Ins. Co. v. Biggerstaff, 703 F. Supp. 23 (D.S.C. 1989) (in insurance parlance, "bodily injury" need not be manifested by physical loss and includes emotional strain).

In an Iowa case primarily discussing the impact rule (discussed below), the court determined without much discussion that the underlying plaintiffs who witnessed a fatal auto accident sustained "bodily injury" within the meaning of the policy. The court in Pekin Insurance Co. v. Hugh, 501 N.W.2d 508 (Iowa 1993), explained that "the medical community now knows that ‘every emotional disturbance has a physical aspect and every physical disturbance has an emotional aspect.'" Hugh at 512 (citation omitted). Thus, the policy definition of "bodily injury" provided coverage for emotional distress but the Hugh court remanded for a determination of the fact question which required medical or psychological proof of whether the underlying plaintiffs actually suffered bodily injury.

Effect of the Excess Definition

Excess and umbrella policies typically define "bodily injury" to include some, or all, of the following terms: humiliation, mental anguish, shock, or mental injury. Thus, these policies provide coverage for solely emotional distress damages.

The wrinkle is how coverage is triggered under the second-layer policy. Some second-layer policies provide coverage in excess of the "retained limit" which is defined to include the underlying policy limits. Some provide only indemnity coverage, while others give the insurer the right to participate in the defense, upon choosing to do so, if the loss could reach the policy (or once the underlying policy limits are exhausted).

However, some excess policies contain the following, or similar, defense language.

  • We shall have the right and duty to defend any "Claim" or "Suit" seeking damages covered by the terms and conditions of this policy when:

***

  • (b) Damages are sought for "Bodily Injury", "Property Damage", "Personal Injury", or "Advertising Injury" which are not covered by "Underlying Insurance" or other insurance.

This language requires the excess carrier to provide a defense for suits seeking damages for bodily injury [defined to include mental anguish] when those damages, as in the vast majority of jurisdictions, are not covered by the underlying policy. Thus, in a suit solely seeking recovery for mental distress damages, in all but a few jurisdictions, this language requires the excess or umbrella insurer to drop down and provide a defense (presuming all other policy conditions and requirements are met).

The Impact Rule

Although unrelated to whether the policy provides coverage for mental anguish as "bodily injury," whether emotional distress damages are recoverable absent physical injury in the first instance is a threshold liability issue.

The impact rule requires that "before a plaintiff can recover damages for emotional distress caused by the negligence of another, the emotional distress suffered must flow from physical injuries the plaintiff sustained in an impact." Southern Baptist Hosp. of Fla. v. Welker, 908 So. 2d 317 (Fla. 2005) (citations omitted). Thus, there is "no cognizable cause of action for simple negligence resulting in psychological trauma, alone, unless the case fits within one of the narrow exceptions to the impact rule." Rowell v. Holt, 850 So. 2d 474, 478, n.1 (Fla. 2003) (citations omitted). See also Parker v. Brush Wellman, Inc., 377 F. Supp. 1290 (N.D. Ga. 2005) (Georgia's impact rule requires a physical impact on the person which causes physical injury which in turn is the cause of the emotional distress).

Jurisdictions that adhere to the impact rule recognize exceptions to allow recovery for purely mental anguish in certain circumstances including when a defendant's conduct infringes on a plaintiff's legally protected interest, Rathgeber v. James Hemenway, Inc., 69 P.3d 710 (Or. 2003), when "malicious, willful or wanton" conduct is proved, Hang v. Wages & Sons Funeral Home, Inc., 585 S.E.2d 118, 120 (Ga. App. 2003), mishandling of a corpse, Brown v. Matthews Mortuary, Inc., 801 P.2d 37 (Idaho 1990), and bad faith claims against a health insurer, Time Insurance Co., Inc. v. Burger, 712 So. 2d 389 (Fla. 1998).

Thus, even when an insurer is legally obligated to pay damages for mental anguish, they must first be recoverable against the insured in the underlying tort suit. Some jurisdictions, however, have completely abrogated the impact rule. See e.g., Dziokonski v. Babineau, 380 N.E.2d 1295 (Mass. 1978) (rejecting the impact rule in Massachusetts); Williams v. Baker, 572 A.2d 1062 (D.C. 1990).

Conclusion

Most jurisdictions hold that the standard CGL policy definition of "bodily injury" does not include coverage for emotional distress without accompanying physical injury. However, a minority of states construe the definition to include mental anguish either by finding the policy to be ambiguous or finding that "sickness or disease" encompasses mental injury. Although there are exceptions, many jurisdictions require physical injury in order for liability to attach for emotional distress damages.

Thus, in evaluating a claim for emotional distress damages from an excess policy perspective, it is important to determine whether the jurisdiction interprets the liability policy definition of "bodily injury" to include mental injury, whether the language of the excess policy imposes a drop-down defense obligation for damages which are not covered by underlying insurance, and whether the applicable law requires physical impact to find liability for emotional distress.


Contributing author Rebecca C. Appelbaum is a senior associate with Butler Pappas Weihmuller Katz Craig, LLP, practicing in the area of third-party coverage.


Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.

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