Gail Riggins owned a van which was covered by an auto liability policy from Auto-Owners. Gail commuted daily between her home in Odon, Indiana, and her job at the Thomson Consumer Electronics company in Bloomington, Indiana. As many as 11 co-workers would ride with her every weekday, and each passenger paid her $17 a week. When Gail was unable to drive, she asked one of her riders to drive the van, and the driver's cost was reduced by $5 for each day he or she substituted as the van's driver.

On February 18, 1992, the insured made arrangements for Larry Ramsey to drive the van. Larry happened to have his own auto policy issued by Meridian Insurance. When primary coverage existed, Larry's policy provided excess coverage. However, his Meridian policy excluded coverage for losses involving vehicles "used to carry persons or property for a fee." "Shared-expense car pools" were a specific exception under the Meridian policy exclusion.

While Ramsey was driving the van, it collided with a car driven by Sheila Markham. Both Markham and Ramsey died from their injuries, and all eight passengers in the van were also injured. There were no passengers in Markham's vehicle.

Meridian Mutual and Auto-Owners filed cross-motions for declaratory judgment to determine whether Meridian provided excess coverage above Auto-Owners' primary limits on the van. The trial court found in favor of Auto-Owners, deciding that coverage was not excluded under the Meridian policy. Meridian appealed.

In reviewing the lower court's decision, the higher court noted that Meridian's policy did not define what was meant by "passengers or property for a fee" nor did it explain the exception it granted for "shared-expense car pools." The court found that Indiana law governed the accident, and Meridian's potential liability was secondary to that of Auto-Owners. Auto-Owners' policy covered anyone driving the van with the owner's permission.

As to the trial court's finding that the fee arrangement between Gail and her passengers was "shared expense car pool" and not "carrying passengers for a fee," the higher court disagreed, and found that Meridian had no duty to defend or indemnify under its policy.

In reversing the lower court's decision, the appeals court based its findings upon Illinois cases since this was a case of first impression in Indiana. Illinois courts decided that four factors were required to determine the exclusion of passengers for a fee: (1) whether the amount charged was a definite amount; (2) whether it was in proportion to the actual expenses of the trip; (3) whether payment was voluntary or paid as consideration to the driver; and (4) whether the driver and passengers were engaged in a common enterprise. In this case, the amount was definite, and was relaxed only when one of the passengers drove. Under this criterion, Riggins was carrying passengers for a fee.

The amount charged was not in proportion to the expense of the trip. Although Riggins contended the fee was collected to defray her expenses, she made no effort to determine her actual cost. In fact, she simply charged the same amount to all passengers. When she bought a new van, she raised the charge, although again she made no effort to determine her costs. In the higher court's opinion, the lack of proportionality also indicated that Riggins was carrying passengers for a fee.

Finally, the court held that Riggins and her riders were engaged in a common enterprise. They shared both a common destination and a common employer. The court concluded that the van was being used to carry persons for a fee when the accident occurred, an activity excluded from coverage under Meridian's policy.

The lower court was instructed to vacate the summary judgment in favor of Auto-Owners and enter summary judgment in favor of Meridian. (One justice dissented with a brief decision.)

Meridian Mutual Insurance Company, Appellant v. Auto-Owners Insurance Company et al--No. 14A01-9502-CV-41-Court of Appeals of Indiana--December 20, 1995--659 North Eastern Reporter 2d 207.