Hon. John J. DiMotto
In many personal injury automobile accident negligence cases that are filed by a plaintiff, the driver of the car who is alleged to be negligent and responsible for the accident has coverage from an insurance company. When the action is filed, an insurance company for an insured can be made a party to the lawsuit in one of two ways:
1) Where the insured is a party to the lawsuit.
2) If the conditions precedent for Direct Action against the insurance company are present regardless of whether the insured is a party to the lawsuit.
INSURED IS A PARTY TO THE LAWSUIT
When an insured is named as a party to a personal injury lawsuit and the court obtains personal jurisdiction over the insured, based on the insurance policy, the insurer is a proper party to the lawsuit and the court obtains personal jurisdiction over the insurer once service of process on the insurer is effectuated. It does not matter whether the insurer issued or delivered the policy in Wisconsin. It does not matter to what extent, if any, the insurer has its own contacts with the State of Wisconsin. By virtue of the insurance policy -- the contract of insurance between the insured and the insurer -- the insurer is "tethered" to the insured. However, what if the insured is not a party to the lawsuit?
DIRECT ACTION AGAINST AN INSURER
Regardless of whether an insured is made a party to a personal injury lawsuit, an insurer may be made a party to a personal injury lawsuit if:
1) The insurance policy was delivered or issued for delivery Wisconsin, or
2) Although the insurance policy was not delivered or issued for delivery in Wisconsin, the accident, injury or negligence occurred in Wisconsin.
Insurance Policy Delivered or Issued for Delivery in Wisconsin
Chapters 631 and 632 set forth the law in Wisconsin with respect to Insurance Contracts Generally (Ch. 631) and with respect to Insurance Contracts in Specific Lines (Ch. 632).
Section 631.01: application of statutes, provides in subsection (1):
This chapter and ch. 632 apply to all insurance policies and group certificates delivered or issued for delivery in this state...
Section 632.24: direct action against insurer, provides:
Any bond or policy of insurance covering liability to others for negligence makes the insurer liable, up to the amounts stated in the bond or policy, to the persons entitled to recover against the insured for the death or any person or for injury to persons or property, irrespective of whether the liability is presently established or is contingent and to become fixed or certain by final judgment against the insured.
At first glance, one might believe that Section 632.24 is limited by Section 631.01(1) and requires that the policy must be delivered or issued for delivery in Wisconsin in order to allow direct action against an insurance company regardless of whether the insured is a party to the lawsuit. However, that is not the case.
In Casper v. Am. Int'l Ins. Co., 336 Wis2d 267,301 (2011) the Court set forth:
...we hold ... that Wis. Stat. 632.24 applies to any policy of insurance covering liability, irrespective of whether that policy was delivered or issued for delivery in Wisconsin, so long as the accident or injury occurs in this state.
In a footnote they stated that Wis. Stat. 632.24 has the same reach as 803.04(2). As a result of this decision, the delivery or issuance of a policy for delivery in Wisconsin is not the exclusive way to bring a Direct Action suit against an insurer.
Accident, Injury or Negligence Occurred in Wisconsin
Not only does 632.24 allow for direct action against an insurer if the policy was delivered or issued for delivery in Wisconsin but it also allows for direct action if the accident, injury or negligence occurred in Wisconsin.
Section 803.04, which discusses permissive joinder of parties, addresses negligence actions with respect to insurers in subsection (2)(a). This subsection provides:
In any action for damages caused by negligence, any insurer which has an interest in the outcome of such controversy adverse to the plaintiff ... is by this section made a proper party defendant in any action brought by plaintiff in this state on account of any claim against the insured. If the policy of insurance was issued or delivered outside this state, the insurer is by this paragraph made a proper party defendant only if the accident, injury or negligence occurred in this state.
While Section 632.24 is a substantive right, Section 803.04(2)(a) is a procedural right.
While in most personal injury negligence cases, the court obtains personal jurisdiction over the insured by virtue of the fact that the plaintiff specifically brings the insured into the lawsuit as a defendant, in those cases where the insured is not a party to the lawsuit, the insurer can be made a proper party if the policy was delivered or issued for delivery in Wisconsin or if the accident, injury or negligence occurred in Wisconsin.