Wis. Code § 632.24

Updated February 12, 2019
632.24 Direct action against insurer

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 of 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.

History: 1975 c. 375. An excess-of-policy coverage clause in a reinsurance agreement constituted a liability insurance contract insuring against tortious failure to settle a claim. Ott v. All-Star Ins. Corp. 99 Wis. 2d 635, 299 N.W.2d 839 (1981). Recovery limitations applicable to an insured municipality likewise applied to its insurer, notwithstanding higher policy limits and s. 632.24. Gonzalez v. City of Franklin, 137 Wis. 2d 109, 430 N.W.2d 747 (1987). Insurers must plead and prove their policy limits prior to a verdict in order to restrict the judgment to the policy limits. Price v. Hart, 166 Wis. 2d 182, 480 N.W.2d 249 (Ct. App. 1991). This section does not apply to actions in which the principal on a bond under s. 344.36 causes injury. That section requires obtaining a judgment against the principal before an action may be brought against the surety. Vansguard v. Progressive Northern Insurance Co. 188 Wis. 2d 584, 525 N.W.2d 146 (Ct. App. 1994). There is neither a statutory nor a constitutional right to have all parties identified to a jury, but as a procedural rule, the court should in all cases apprise the jurors of the names of all the parties. Stoppleworth v. Refuse Hideway, Inc. 200 Wis. 2d 512, 546 N.W.2d 870 (Ct. App. 1996), 93-3182. The insured stands in privity with the insurer under this section. There is but one wrong and but one cause of action. When liability cannot be imposed upon one, none can be imposed upon the other. Plaintiff's cashing of the defendant's insurer's settlement check demonstrated an accord and satisfaction of claims against the insured although the insured had not been named in the action. Parsons v. American Family Insurance Company, 2007 WI App 211, 305 Wis. 2d 630, 740 N.W.2d 399, 06-2481. This section allows direct actions against a negligence insurer for negligence claims. It does not allow a plaintiff in a contract action to sue the defendant's insurer. Rogers v. Saunders, 2008 WI App 53, 309 Wis. 2d 238, 750 N.W.2d 477, 07-0306. This section does not speak to whether the timely answer of an insured denying liability may inure to the benefit of a defaulting insurance company so as to preclude a judgment by default against it for the plaintiff's damages. The timely answer of the codefendant insureds denying the liability of all defendants did not preclude default judgment against the insurer on the issue of liability and damages upon the insurer's acknowledged default. Estate of Otto v. Physicians Insurance Company of Wisconsin, Inc. 2008 WI 78, 311 Wis. 2d 84, 751 N.W.2d 805, 06-1566. This section 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. Casper v. American International South Insurance Company, 2011 WI 81, 336 Wis. 2d 267, 800 N.W.2d 880, 06-1229. This section does not mandate a pro rata distribution of the policy limits among all claimants. The statute is silent as to how the policy limit is to be distributed. Until such time as there was a verdict in this case, policy limits paid into court were not subject to the circuit court's control and neither the direct action statute nor Wisconsin case law required the court to distribute its policy limits in settlement on a pro rata basis. Lovelien v. Austin Mutual Insurance Company, 2018 WI App 4, 379 Wis. 2d 733, 906 N.W.2d 728, 16-1679. The federal compulsory counterclaim rule precluded an action against an insurer under the state direct action statute when an action directly against the insured was barred by rule. Fagnan v. Great Central Ins. Co. 577 F.2d 418 (1978). A breach of fiduciary duty was negligence for purposes of Wisconsin's direct action and direct liability statutes. Federal Deposit Insurance Co. v. MGIC Indemnity Corp. 462 F. Supp. 759 (1978). An insurer's failure to join in an insured motorist's petition to remove the case to federal court necessitated a remand to state court. Padden v. Gallaher, 513 F. Supp. 770 (1981).