Mississippi Circuit Court Addresses Insurance Coverage for Unnamed Additional Insured in Netto v. Atlantic Specialty Insurance

In a recent case, Netto v. Atlantic Specialty Insurance, a question of first impression under Mississippi insurance law was addressed. The case concerned whether an insurer may deny coverage of a claim made by an unnamed additional insured under an insurance policy by relying on a consent-to-settle exclusion. The case was heard by Circuit Judges Leslie H. Southwick, James L. Dennis, and Timothy B. Higginson.

Gary Netto was involved in a car accident while working for Pearl River County, Mississippi. The car he was in was owned by the county and insured by Atlantic Specialty Insurance. Netto was not a party to the policy, but he was an unnamed additional insured under its terms. The at-fault vehicle was allegedly uninsured. Netto's attorney sent a letter to the Pearl River County Board of Supervisors advising them that she had been "retained to represent the interest of Gary Netto" and requested that they forward the letter to the insurance carrier in force at the time of the accident. Atlantic received the letter and assigned the case to a claims adjuster, Barbara McConnell. McConnell considered Netto's claim to be a possible uninsured motorist claim, but Atlantic did not give Netto any information regarding the applicable policy.

While Netto's counsel tried unsuccessfully to contact the county's insurer, she was negotiating a settlement with the at-fault driver and the Mississippi Workers Compensation Trust. Netto settled with both, and the Mississippi Workers Compensation Commission approved the settlement. Atlantic did not attempt to contact Netto until the day the Commission approved the settlement.

There is no evidence that Netto's counsel returned the call, or of any additional attempts by Atlantic to contact Netto. Nearly two months later, Netto's counsel sent a second letter directly to Atlantic, informing them of the settlement and raising a possible claim under the county's uninsured motorist policy. More than a year passed without a response from Atlantic before Netto and his wife filed suit, seeking damages under the uninsured motorist policy Atlantic issued to Pearl River County.

Atlantic moved for summary judgment, arguing that Netto was excluded from coverage due to his failure to obtain Atlantic's consent before settling. The district court denied the motion, holding that Atlantic had "not provided summary judgment evidence demonstrating Plaintiffs possessed actual knowledge of the provisions of the subject insurance policy or the identity of Pearl River County's insurer prior to the July 21, 2015 settlement."

The Circuit Court affirmed the district court's ruling. The Court held that an insurer may not enforce its contractual right to deny coverage because an unnamed insured had not consented to the settlement absent evidence that the unnamed insured knew or should have known of the exclusion. The Court emphasized that the insurer had not provided any evidence that Netto had actual knowledge of the policy provisions or the identity of Pearl River County's insurer prior to the settlement.

In conclusion, Netto case reaffirms that insurers cannot deny coverage without evidence of knowledge, emphasizing the importance of notice and consent before settling.

The Netto case presents an important question of first impression under Mississippi insurance law. The Court's ruling reaffirms that an insurer may not enforce its contractual right to deny coverage to an unnamed additional insured absent evidence that the unnamed insured knew or should have known of the exclusion. This decision underscores the importance of providing notice and obtaining consent before settling a claim under an insurance policy to ensure that all parties are aware of the policy provisions and any potential exclusions.

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