The Indiana Court of Appeals this month rejected an argument by an auto insurer that it should not be required to cover bodily injury damages caused by its insured because a policy exclusion barred him from coverage if he drove with a suspended license. As long-time Indiana car accident attorneys in Gary, we know well the ways in which auto insurance companies will seek to deny coverage. Exclusions drafted into auto insurance policies are the basis for many insurance claim denials. However, as our injury lawyers often explain, an insurance company denial is not the last word. With the help of a dedicated personal injury attorney, auto insurance denials can often be successfully challenged.
According to court records in the recent case, the insured/at-fault driver in this matter lost control of his vehicle and slammed into the side of the residence, resulting in both bodily injury and property damage for himself as well as the occupants of the dwelling.
Although the driver’s license was suspended at the time of the crash, his vehicle was insured by a policy he obtained months earlier. However, an exclusion contained in that policy stated: “We do not provide liability coverage for any ‘insured’ using a vehicle without reasonable belief that ‘insured’ is entitled to do so. This exclusion … does not apply to a family member using your covered auto, which is owned by you.”
Plaintiffs, the occupants of that house, filed an Indiana car accident lawsuit against defendant to recover damages. The insurer sought a declaratory judgment with a determination that it was not responsible to cover the crash because the crash fell under the exclusion due to the driver’s license being suspended. The plaintiffs and a second auto insurer involved in the case disputed this and both sides moved for a summary judgment. The trial court denied defense’s motion and granted plaintiffs’. Defendant auto insurer appealed.
Gary car accident lawyers note this was the first time the Indiana appellate court had the opportunity to address entitlement exclusions pursuant to the policy holder’s own use of a vehicle. For guidance, appellate justices looked to the basic principles of contract law because, after all, that’s what auto insurance policies are: Contracts.
Generally speaking, Indiana auto insurers (or any insurers, for that matter) are given broad discretion in limiting liability in their policies, so long as it does not conflict with public policy and is not ambiguous. The issue here, as noted by both the trial and appellate court, was that the language of the exclusion was open to interpretation, and thus ambiguous. Specifically, the insurer argued that the term “using” in this policy is synonymous with “operating.” The court disagreed, noting that while operation of a vehicle is one way of using a vehicle, that’s not the only way a vehicle can be used.
Further, justices referred to the 2010 Illinois Supreme Court case of Founders Ins. v. Munoz. There, the court weighed an auto insurance policy exclusion that precluded liability coverage if an insured “operating the vehicle does not have a reasonable belief of being entitled to do so.” The trial court held this coverage could be applicable to motorists without valid driver’s licenses. The state supreme court ruled the average, ordinary reasonable person would understand the exclusion, as it is worded, would apply to unlicensed drivers. Further, the court held the exclusion didn’t violate public policy and insurers are allowed to limit their risk by excluding coverage for insureds/permissive users who don’t have a valid driver’s license.
Back to the recent Indiana case, the appellate court wrote that reasonable minds could differ about whether “using” one’s own vehicle under the exclusion was predicated on whether the person had a valid driver’s license. Any ambiguity must be construed against the insurer.
Indiana Injury Attorney Burton A. Padove handles personal injury claims throughout northern Indiana, including Highland, Gary and Hammond.
Additional Resources:
Indiana Farmers Mutual Ins. Co. v. Weaver, Vanzile, Vanzile, and State Farm Auto Ins. Co., March 1, 2019, Indiana Court of Appeals
More Blog Entries:
Indiana Appeals Court: $1.3M for Rear-End Accident Injuries Not Excessive, Dec. 21, 2018, Gary, Indiana Car Accident Attorney Blog