DEALER'S GARAGE LIABILITY INSURANCE DID NOT COVER CUSTOMER AS "INSURED" WHO CARRIED OWN INSURANCE

DEALER'S GARAGE LIABILITY INSURANCE DID NOT COVER CUSTOMER AS "INSURED" WHO CARRIED OWN INSURANCE 222_C013

DEALER'S GARAGE LIABILITY INSURANCE DID NOT COVER CUSTOMER AS "INSURED" WHO CARRIED OWN INSURANCE

A customer of an automobile dealership brought his car in for servicing, and was given a "loaner" car for temporary use. A passenger was seriously injured when the customer was involved in an accident while driving the dealer-owned car.

The injured man's lawsuit against the driver resulted in a judgment of nearly $1 million. He released the driver from liability for the accident after the latter's automobile insurer paid the $100,000 limit of his personal auto policy, except to the extent that other insurance available to him (the driver) would apply.

Having previously dismissed a claim against the dealer with prejudice, the passenger sought payment from its garage policy insurer for the balance of the judgment. He sued the insurer, when it denied liability, asserting that the driver of the car was an "insured" under the dealer's insurance. On the insurer's motion for summary judgment, the trial court granted judgment in its favor. The passenger appealed.

The appeal court noted that the liability provisions of the garage policy provided coverage for a customer, with respect to a "covered auto," in two situations: First, when a customer had no other available insurance, and then, only to the extent of applicable financial responsibility limits; second, when a customer had other available insurance less than the applicable financial responsibility limits, but then only for the difference between the limits of the other insurance and the FR limits.

The court concluded that the language was clear and that the driver, in this case, was not an insured under the garage policy. It was not persuaded by the passenger's contention that the limitation of coverage applied only to new cars (not "loaners"), as the named insured was a dealership, a term used in connection with the limitations.

The judgment of the trial court was affirmed in favor of the insurer and against the injured passenger.

(SPURLIN, Plaintiff-Appellant v. MERCHANTS INSURANCE COMPANY OF NEW HAMPSHIRE, Defendant-Appellee. United States Court of Appeals for the First Circuit. No. 94-2232. June 7, 1995. CCH 1995 Fire and Casualty Cases, Paragraph 5286.)