410_C176
RENTAL
VEHICLE INELIGIBLE AS A COVERED AUTO
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Automobile
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Substitute Auto
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Covered Auto
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Permissive Driver
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Jonathan Purvis owned a Toyota pickup truck that
was insured under a business insurance policy issued by Progressive Casualty
Company. In March 2000, Purvis needed a car with more passenger seats because
he was having visitors, so he rented a car from Thrifty Car Rental. When he
rented the car, Purvis declined insurance coverage and told Thrifty he would be
the only one driving the car. Nevertheless, a day after he rented the car,
Purvis gave his minor daughter, Ashley, permission to drive it. Unfortunately,
Ashley and her passenger, Kelly Smith, were involved in an accident, and Smith
was seriously injured. Smith's parents filed a legal action against Purvis.
Because he had declined insurance coverage for the rental car, Purvis sought
coverage for the lawsuit under the Progressive policy. Progressive denied
coverage. According to Progressive, Ashley was not an "insured
driver" under the terms of the policy, and the rental car was not an
"insured auto." Ashley was found to be at fault in the accident, and
the Smith/Purvis lawsuit was settled for more than $1 million. After the
settlement, Purvis assigned any rights he had against Progressive to Smith.
Smith then filed an action against Progressive in Purvis' name. The lower court
found that neither Ashley nor the rental car was covered under the Progressive
policy when the accident occurred. Purvis appealed.
On appeal, Purvis argued
that the policy language was ambiguous and should therefore be construed against
Progressive. According to Purvis, the policy could be read to provide both
operator's and owner's coverage. The relevant language of the policy provided
that Progressive would pay damages "on behalf of an insured, damages…for
which any insured is legally liable..caused
by accident and resulting from the ownership, maintenance, or use of your
insured auto." "Insured" was defined as "1. You while
driving your insured auto, 2. You while driving any auto other than your
insured auto, except: a. autos you hire or borrow from your employees or
members of their households. b. autos furnished for
your regular or frequent use. c. an auto hired by you
unless it is specifically listed in the Policy Declarations. 4. Anyone else
driving your insured auto with your express permission. However, the owner or
anyone else from whom you hire or borrow an insured auto is an insured only if
that auto is a trailer connected to an insured auto you own." "Your
insured auto" was defined as "a. Any auto described in the Declarations
and any auto you replace it with. If you want coverage for Liability to Others to apply to the replacement you must notify us within
30 days of its acquisition . . . c. Any auto not owned by you while you are
temporarily driving it as a substitute for any other auto described in this
definition because of its withdrawal from normal use due to breakdown, repair,
servicing, loss or destruction…"
The Supreme Court of Idaho
found that this language clearly identified what was covered: the Toyota pickup and/or its substitute, and Purvis while driving certain other vehicles.
The rental car did not qualify as a "substitute" vehicle because the
pickup truck was in working condition at the time of the accident. Thus, the
Progressive policy unambiguously excluded Ashley and the rental car from
coverage.
Purvis also claimed that
the Progressive policy violated Idaho
statutory law because it did not provide the coverage required for either an
owner's policy or an operator's policy. Again, the court disagreed. Idaho law
requires an owner's policy to "(a) Designate by explicit description or by
appropriate reference all motor vehicles with respect to which coverage is to
be granted; and (b) Insure the person named therein and any other person, as
insured, using any such described motor vehicles with express or implied
permission of the named insured . . . " The court found that the
Progressive policy was an owner's policy, that it designated the Toyota as the
insured vehicle, and that it covered Purvis and Ashley when she was using the
Toyota with Purvis' permission. Thus, it complied with the statutory
requirements for an owner's policy. Because the court characterized the policy
as an owner's policy, there was no need to evaluate whether the policy provided
the coverage required by law for an operator's policy. The decision of the
lower court in favor of Progressive was affirmed.
Purvis
vs. Progressive Casualty Insurance Company-No. 31410-Supreme Court of
Idaho-December 20, 2005-127 Pacific Reporter 3d 116