Are You Covered For The Anguish Of Mental Anguish?

The general liability policy insuring agreement states, “We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.”

Are lawsuits brought for mental anguish covered by general liability insurance? Sometimes yes. Sometimes no.

The policy says that “bodily injury” means bodily injury, sickness, or disease sustained by a person, including death resulting from any of these at any time. My own keen sense of the language tells me that when you define a word as that word, you are already in trouble.

To further explain, I think the policy wants someone to bleed, or at the least be physically injured, in order for coverage to apply.

Some state courts have said that the above definition is ambiguous (imagine!) and that bodily injury does include mental injury and anguish. I find that ambiguous and try to get my clients’ insurance companies to spell it out. Fortunately, many do.

Many insurers provide general liability broadening endorsements that specifically bring in coverage for metal injury. Some insurers have specific endorsements that can help clarify matters.

Many umbrella liability insurance policies provide coverage that is more broad than the underlying general liability insurance policies. Some policies specifically bring in mental anguish.

Example of an umbrella bodily injury definition: “Bodily Injury” means bodily injury, sickness, disease, disability, shock, mental anguish, mental injury and humiliation, including resulting death.

The only problem in relying on your umbrella to provide the first layer of coverage is that there may be a self insured retention (deductible) when there is no underlying coverage. Also be aware of sneaky endorsements that make the umbrella “follow-form” to the primary coverage – meaning the lesser coverage provided by the general liability insurance may rule.

Of course, the solution to the above is to retain an insurance consultant. Then you don’t have to worry about any of these issues.