By Carl J. Kanowsky
Bob and Mary were fighting constantly, over money, over the kids, over the marriage in general. Do you have friends like this? Anything can and does set them off against each other. And there’s no peace treaty afterwards. No, things continue to smolder until the next slight justifies jumping down the other’s throat. Well, that was Bob and Mary’s life of wedded bliss. Eventually everything dissolved into a divorce, with Mary getting the kids.
In the midst of all of this, their daughter Julie turned 17. She was an unwitting pawn in the war between her folks. Each jockeyed ceaselessly to show who the better parent was. As it happened, Bob had his own landscape maintenance company, which, of course, has a lot of vehicles, including pick-ups. So, he used this to get one up on Mary. He told Julie she could use one of the company trucks. All she had to do was pay for gas and maintain good grades.
What he did not cover was insurance. Maybe he just forgot. Maybe, just maybe, he wanted to stick it to Mary – force her to pick up the tab on that. After all, he was providing the truck. Couldn’t she do something? Who knows, maybe she didn’t love Julie as much as he did. (Divorces are nasty and often petty.) What he did do was to exclude Julie’s use of the truck from his and his company’s policy.
Anyway, Julie picked up the truck and drove it as her own car. No one took care of the insurance. And, Julie, as teenagers often do, got into an accident. She was at fault and the driver in the other car was hurt.
When Mary got served with the lawsuit filed by the other driver, she sent it to her auto insurance carrier, assuming that there would be coverage. Her rude awakening came when she got a letter from the insurance company, declining coverage.
Essentially, the truck was furnished and available for Julie’s regular use, indeed her exclusive use, hence triggering the exclusion from coverage for a non-owned automobile. The insurer reasoned, “The truck was basically Julie’s vehicle, but no one insured the truck for her use.” This situation triggered what is known as the non-owned auto exclusion.
Mary was to learn to her dismay that courts actually often side with the insurance companies in cases like this. “The provision is intended to provide coverage for occasional use of other [non-owned] cars without requiring payment of additional premiums. For obvious reasons, coverage was not intended to include the regular use of other cars because insurance companies would necessarily bear an increased risk without receiving a related increase in premiums. Specifically, the exclusion serves to prevent a situation in which the members of one family or household may have two or more automobiles actually or potentially used interchangeably but with only one particular automobile insured.”
This story mirrors what happened in a case that came before the California Court of Appeal in December 2015, known as Nationwide v Shimon. In that case, a divorced dad gave his teenaged daughter a car for her use without insuring it. The mom, with whom the daughter lived, also did not put the car on her policy. As a result, there was no insurance when the daughter got in an accident. The mom’s insurance covered a household family member’s use of a “non-owned” vehicle, but not if the non-owned auto was “furnished or available” for her “regular use.” The trial court ruled in favor of the insurer, and the appeal court upheld the finding.
So, word to the wise. Make sure your insurance agent knows all about any cars that you or anyone in your home is using. Otherwise, you might save a little up front on your insurance premium but pay a bundle down the road when anyone in your house gets in an accident.
Carl Kanowsky of Kanowsky & Associates is an attorney in the Santa Clarita Valley. He may be reached by email at [email protected]. Mr. Kanowsky’s column represents his own views, and not necessarily those of The Signal. Nothing contained herein shall be or is intended to be construed as providing legal advice.