Accident with personal vehicle fell outside policy

A federal court has granted an insurance company’s motion for summary judgment after determining that an accident involving a company employee using her personal vehicle for business purposes was not covered by the company’s insurance policy.

The insurance company filed the lawsuit seeking a declaration that it “does not have any duty to defend or indemnify” the employee driver or the company for the accident.

Senior U.S. District Judge Henry E. Hudson of the Eastern District of Virginia authored the memorandum opinion in Progressive American Insurance Company v. Jireh House Inc. (VLW 022-3-261).

Car crash

The defendant, Jireh House, Inc., bought insurance coverage from the plaintiff insurance company, Progressive, in 2019. The policy was purchased for two vehicles owned by Jireh House, a Dodge Grand Caravan and a Plymouth Grand Voyager.

According to the opinion, Jireh House is a group home that cares for adults with intellectual disabilities and transports some of those adults to and from medical appointments as part of the care it provides. On the date of the accident, an employee had to drive one of the residents back from a medical appointment, but both of Jireh House’s vehicles were in use.

The employee used her own car to pick up the resident. On the way, the employee collided with another vehicle, with the other driver sustaining injuries from the crash.

The driver sued Jireh House and the employee in state court for negligence arising out of the accident. Progressive later filed suit a motion for summary judgment and sought a declaration that it did not have a duty to defend or indemnify Jireh House or the employee.

Analysis

In considering Progressive’s motion, Hudson first evaluated if Progressive had a duty to defend Jireh House or the employee. Citing precedent, the judge noted that in Virginia an “insurer’s duty to defend is triggered if there is any possibility that a judgment against the insured will be covered under the insurance policy.”

“Put another way,” Hudson said, “if the insurance policy would not cover any of the allegations in the complaint, the insurer has no duty to defend.”

“The real heart of the dispute in this case is whether [the employee] was using a covered auto during the collision. According to the Policy, the only covered autos are those specifically described in Item Three of the Policy Declarations. Thus, the plain and unambiguous language of the contract clearly bars [the employee’s] car from being a covered auto.”

— Senior U.S. District Judge Henry E. Hudson

In the policy at issue in this case, Progressive was bound to pay “all sums an insured legally must pay as damages because of a bodily injury or property damage … caused by an accident and resulting from the ownership, maintenance or use of a covered auto.” Later, the policy defined a “covered auto” as vehicles that are “specifically described” in the policy for which a premium charge is shown.

In Jireh House’s policy, three vehicles are specifically described: the Dodge and Plymouth vans owned by Jireh House, and a Ford Winstar. No other vehicles — including the employee’s personal vehicle involved in the collision — are listed in the policy.

“The real heart of the dispute in this case is whether [the employee] was using a covered auto during the collision,” Hudson wrote. “According to the Policy, the only covered autos are those specifically described in Item Three of the Policy Declarations.”

The judge continued, “Thus, the plain and unambiguous language of the contract clearly bars [the employee’s] car from being a covered auto.” He added that because the employee’s car was not a covered vehicle in the policy, Progressive had no duty to defend the employee or Jireh House.

The injured driver and her insurance company, State Farm, presented two arguments to attempt to show that Progressive had a duty to defend. They first argued that the policy language on who is insured “creates ambiguity.” The driver pointed to two exceptions regarding who is insured, which she alleged were “nonsensical because they would exclude all circumstances where Jireh House would borrow a vehicle.”

But the judge rejected that argument.

“[The injured driver], however, forgets that a borrowed or hired vehicle is only covered when it is also a covered auto,” he wrote. “Jireh House elected not to pay for coverage for borrowed or hired vehicles and only received coverage in the Policy for those specifically described in the Policy Declarations.”

Hudson added that, even if the exceptions applied in this case, “the Court cannot agree that they are ambiguous.”

State Farm argued the policy was ambiguous due to the lack of a definition of a “rated driver” and how it affects the policy. Jireh House’s policy lists 14 drivers, including the employee involved in the collision, but “never describes what rated drivers are or how they affect the terms of the agreement.”

But Hudson said that “[w]hile State Farm contends this absence creates ambiguity, the Court finds the opposite. … The Court will not manufacture a definition of ‘rated driver’ out of whole cloth and have it affect the plain language of the Policy. In fact, Virginia law clearly states that this Court may not do that.”

Progressive also prevailed on the duty to indemnify, with Hudson determining that because the insurance company had no duty to defend, they had no duty to indemnify either Jireh House or the employee driver.

“According to the undisputed evidence … Progressive has no duty to defend, and therefore, has no duty to indemnify, Jireh House or [the employee driver] in the Underlying Action,” the judge concluded, granting Progressive’s motion for summary judgment.