To Involve Other Insurers Insured Must Act Promptly


Student Driver a Permissive User of State’s Car & is an Insured

Too Little, Too Late

In October 2016, Mary R. Evans was a student driver enrolled in a high school driver’s education course. Driving lessons utilized vehicles provided by the high school and owned by the State. These State-owned vehicles were outfitted with brake pedals for both the student driver and for the driving instructor, who was responsible for the unlicensed student driver’s safety. On October 28, 2016, Evans was operating a vehicle under the supervision of driving instructor, Perkins-Johnson. Evans and Perkins-Johnson were involved in an accident with another car (the “Accident”). At the time of the Accident, Perkins-Johnson was employed by the State as a driver’s education instructor for the Red Clay School District. Perkins-Johnson was injured in the Accident.

In State Of Delaware Insurance Coverage Office v. Diona Perkins-Johnson, Mary R. Evans, and The Travelers Home And Marine Insurance Company, C. A. No. N19C-10-260 MMJ, Superior Court of Delaware (August 19, 2021) the state, after defending the student driver for three years tried to pass the obligation to her parents’ insurer by bringing a declaratory relief action.

The Accident

Delaware law mandates that the State procure insurance for vehicles owned by the State. Vehicles owned by the State are covered by a Pennsylvania Manufacturers Association Insurance Group policy (“PMA Policy”). The State-owned driver’s education vehicle operated by Evans at the time of the Accident was covered under the PMA Policy. Evans was “an Insured” under the PMA Policy.

Perkins-Johnson Received Workers’ Compensation

Perkins-Johnson claimed personal injuries as a result of the Accident. Perkins-Johnson sought and recovered workers’ compensation benefits from the State of Delaware, Perkins-Johnson’s employer.

Perkins-Johnson also obtained PIP benefits from the PMA Policy.

Perkins-Johnson sued seeking tort damages for personal injuries arising out of Evans’ alleged negligence. Evans was the sole defendant.

The State filed an answer on behalf of Evans, asserting defenses to the negligence and damages claims. The State-provided defense counsel responses to written discovery, defended Evans’ deposition, and took the deposition of Perkins-Johnson. Evans’ defense was not provided under any reservation of rights on the part of the State. The State did not specifically reserve the right to deny liability coverage to Evans on the basis of any PMA Policy exclusions.

At some point, the State became aware that Evans was an additional insured on the Travelers Policy at the time of the Accident. The State subsequently took the position that Evans was not insured under the State’s policy. On June 28, 2019, the State tendered Evans’ defense and indemnification in the underlying litigation to Travelers.

Coverage Litigation

On October 30, 2019, the State sued for declaratory judgment action. The State and Evans and Travelers have cross-moved for summary judgment to determine who owed defense and indemnity to Evans.


Insurance Contract Interpretation

Delaware, contract interpretation is a determination of law. Delaware adheres to the objective theory of contracts, i.e., a contract’s construction should be that which would be understood by an objective, reasonable third party. Priority is given to the intentions of the parties as reflected in the four corners of the agreement. An interpretation that gives effect to all the terms of an insurance policy is preferable to any interpretation that results in a conclusion that some terms are uselessly repetitive.

Where the language of an insurance policy is “clear and unambiguous,” the parties’ intent is ascertained by giving effect to the plain meaning of the policy’s terms and provisions, without resort to extrinsic evidence.  Under the doctrine of contra preferentum, the language of an insurance policy must be construed against the policy drafter.

The Delaware Code provides that the State must maintain minimum insurance coverage for State-owned vehicles. The plain meaning of the statute is clear and unambiguous.

The Court concluded that the State must, and did, maintain liability insurance coverage for Evans against the tort claims brought by Perkins-Johnson in the underlying litigation. Evans was a permissive user of the State-owned vehicle covered under the State’s PMA Policy. Therefore, Evans is an “Insured.”

PMA Policy Exclusions

The precise narrow issue – whether tort damages are available to an employee who sought workers’ compensation benefits from their State employer, as well as tort recovery from a third-party tortfeasor, who is not an agent of the State but nonetheless an insured under the State’s liability insurance policy as a permissive user of State property – is a matter of first impression in Delaware but not difficult in the facts of the case. The Court, as a result, found that there can be multiple Insureds under the State’s PMA Policy. An Insured under one section of the PMA Policy may be different under another section of the PMA Policy. For example, the State is the named Insured under Part IA of the PMA Policy. Evans is an Insured under Part IV of the liability insurance section, Subsection D2 because she was a permissive user. The State is an Insured for the workers’ compensation claims.

Under PMA Policy Part 1 A, Evans is not simply “an Insured” but essentially “the insured.” Perkins-Johnson brought tort claims solely against Evans, who has liability coverage under the State’s PMA Policy as a permissive user of a covered State-owned vehicle. Evans does not have workers’ compensation coverage under the State’s PMA Policy. The State is not a named defendant in the underlying lawsuit.

Delaware’s workers’ compensation exclusivity doctrine does not apply in this case to preclude the State’s defense and indemnification of Evans in the underlying tort action brought by Perkins-Johnson. While an employee who collects workers’ compensation benefits from their employer cannot then recover from their employer for negligence, Perkins-Johnson brought the underlying tort action against Evans alone. Since the State is not a defendant in the underlying litigation the State has a duty to defend and indemnify Evans in the underlying tort action.

The State accepted defense and did not provide Evans with a reservation of rights letter at the time of filing. In 2019, the State sent Evans a denial of coverage letter, disclaiming its obligation to defend and indemnify Evans in the underlying tort litigation, and citing PMA Policy exclusions and knowledge the State obtained during discovery that Evans was an Insured under the Travelers Policy.

The State had ample opportunity to bring in Travelers sooner. The State was, therefore, estopped from changing its initial coverage position, almost three years after the date of the Accident and over nine months after the underlying tort litigation was commenced.

Defendants’ affirmative defenses of waiver and estoppel prevent the State’s denial of primary liability coverage for Evans under the State’s PMA Policy against Perkins-Johnson’s tort claims in the underlying tort litigation. Evans was covered by the State’s PMA Policy in the underlying tort litigation. Evans is an Insured under the State’s PMA Policy as a permissive user of a State-owned driver’s education vehicle covered under the PMA Policy. None of the PMA Policy exclusions apply to the facts of the case.

The Travelers Policy is secondary insurance available to Evans for damages in excess of the primary bodily personal injury coverage under the PMA Policy. Travelers may in the future participate in Evans’ defense.

The Motions for Summary Judgment by Travelers and Evans were granted.


This case teaches that where there is a dispute between insurers it is incumbent on the parties to act promptly, fairly and in good faith. The state failed to do so. It provided coverage under its policy to Evans without reservation and defended her for a long time before its slothful investigation found that Travelers might also insure Evans. Too little, too late.

© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.

He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business.

He is available at and Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to training available at; articles at,  the podcast Zalma On Insurance at;  Follow Mr. Zalma on Twitter at; Go to Barry Zalma videos at ; Go to Barry Zalma on YouTube-; Go to the Insurance Claims Library –  The last two issues of ZIFL are available at  podcast now available at

This entry was posted in Zalma on Insurance. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.