Allstate’s insured was involved in an automobile accident with a plaintiff in which it was alleged that Allstate’s insured was negligent causing injury to the plaintiff. Allstate had issued a policy of liability insurance to the driver and her husband, which was in full force and effect at the time of the accident. The vehicle being driven at the time of the accident was owned by Hertz, the driver’s husband’s employer. The driver was not renting the Hertz-owned vehicle at the time of the accident, but instead was driving it pursuant to Hertz’s employee vehicle policy which allowed not only their employees, but their employee’s spouses to drive vehicles on the employee’s days off or while on vacation or on holiday. Allstate denied coverage under its policy stating that because the vehicles in Hertz’s fleet were regularly available for their insured’s use the “drive other car” exclusion applied.
A particular provision involved identifies a non-owned auto that is insured under the Allstate policy as: “A non-owned auto used with the permission of the owner. This auto must not be available or furnished for the regular use of a person insured.”
In its analysis, the Wisconsin Court of Appeals concluded that the “drive other car” exclusion requires a vehicle specific analysis. The Court determined that the only reasonable reading of the exclusion was that the auto referred to is the specific auto for which coverage is sought stating “this auto”, meaning the vehicle being operated at the time of the accident as opposed to any other vehicles that may have been available in the Hertz rental fleet. The Court stated that the exclusion as set forth above was drafted by Allstate and clearly and unambiguously indicated that the “regular use” analysis was specific to the vehicle for which coverage is sought. The Court indicated that had Allstate intended the “regular use” analysis to apply to the entire Hertz fleet of vehicles rather than a specific non-owned vehicle, it could have done so by drafting a more restrictive “drive other car” exclusion. The Court concluded that the cases discussing “regular use” also generally apply the regular use analysis to the specific vehicle for which coverage is sought and that there was nothing in those cases cited by the Court that suggested that the “regular use” analysis applied to any vehicle other than the specific vehicle for which coverage was sought.
The Court also went on to hold that contrary to Allstate’s assertion that the subject vehicle was available for its insured’s regular use, applying the “signposts” of “regular use” the vehicle being operated at the time was not available or furnished for Allstate’s insured’s regular use.
The Court indicated that some of the “signposts” of “regular use” are things such as continuous use rather than sporadic use; frequent use rather than infrequent or merely casual use; unqualified use rather than restricted use; use for an indefinite period rather than a definite period; usual use rather than unusual use. In addition, the Court noted that the purpose of the “available or furnished for … regular use” provision was to provide coverage to the insured while he or she had only infrequent or merely casual use of a vehicle other than one described in the policy, but not to cover the insured … against personal liability with respect to the use of a vehicle which the insured frequently uses or has the opportunity to do so as that increases the risk to an insurance company without a corresponding increase of premium. The greatly added risk which insurers are unwilling to incur for a single premium is the multiplicity of potential liability situations where a non-owned vehicle is regularly used or available for regular use.
Applying the above analysis to the facts in the indicated case, the Court concluded that the “regular use” analysis must be applied to the insured who was using the non-owned auto with the owner’s permission at the time of the accident because the phrase “a person insured” as used in the subject Allstate policy is ambiguous. Further, applying the “signposts” set forth above, in this particular case, the Court of Appeals determined that Allstate’s insureds use of the vehicle under the circumstances set forth could not establish “regular use” within the meaning of Allstate’s “drive other car” exception.
The Court of Appeals decision in this particular case set forth a very restrictive interpretation of the “drive other car” exclusion limiting its interpretation of such an exclusion to the specific auto and the specific person operating the vehicle at the time of a motor vehicle accident.
If you should have any questions regarding this article or insurance litigation in general, please contact Brad Matthiesen at [email protected].