June 25, 2019

Colorado Court of Appeals: Excluding Coverage for a Family Member’s Use of a Car that Another Family Member Owns and Is Separately Insured Is Not Uncommon or Against Policy

The Colorado Court of Appeals issued its opinion in Mid-Century Ins. Co. v. Robles on December 8, 2011.

Summary Declaratory Judgment—Automobile Insurance Policy.

Claimant appealed from the trial court’s summary declaratory judgment determining that there was no coverage for an accident under an automobile insurance policy issued by plaintiff Mid-Century Insurance Company (Mid-Century). The judgment was affirmed.

On January 21, 2008, an automobile accident occurred between claimant and the tortfeasor. At the time, the tortfeasor was living with his parents and driving his father’s Oldsmobile, which was insured by Farmers Insurance Exchange (Farmers). The tortfeasor’s parents were the named insureds. The tortfeasor owned a Ford Explorer insured by Mid-Century.

Claimant sustained injuries in the accident and filed a lawsuit against the tortfeasor. The parties reached a partial settlement and claimant received $100,000 from Farmers pursuant to the policy limits.

Mid-Century instituted this action for a declaration regarding coverage. Both parties filed motions for summary judgment. The trial court granted Mid-Century’s motion, concluding that the Oldsmobile was not an “insured car” under the policy and that the “regular use” or “drive other car” exclusion did not violate public policy. It also excluded coverage under the anti-stacking provision of the Mid-Century policy.

On appeal, claimant argued that the trial court misinterpreted the policy exclusion. He contended that the exclusion did not apply because the tortfeasor did not regularly use the Oldsmobile. The Court of Appeals disagreed, finding this to be a misinterpretation of the insurance contract language, which clearly barred coverage by Mid-Century of the tortfeasor’s use of his father’s vehicle. The Court noted that excluding coverage for a family member’s use of a car that another family member owns and is separately insured is not uncommon.

The Court then considered whether the Oldsmobile qualified as an “insured car” under the Mid-Century policy. The only way it could so qualify was if it were a replacement vehicle. Because this term was not defined in the Mid-Century policy, the Court looked to the common meaning of “replacement” to determine whether the Oldsmobile was a replacement vehicle for claimant’s Explorer. The Court held that it was not a replacement vehicle under this definition and, therefore, the Oldsmobile was not insured by Mid-Century.

This summary is published here courtesy of The Colorado Lawyer. Other summaries for the Colorado Court of Appeals on December 8, 2011, can be found here.

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