Simmesport Auto Accident Reminds Insurance Policy Holders: Read Your Policy Carefully!

Previously on this blog, we examined the concept of a “substitute vehicle” for purposes of extending insurance coverage for an auto that is used only temporarily and in place of a policyholder’s usual car. In this situation, the insurer is required by state law to extend the same coverage to the substitute car as was in place for the regular vehicle. This requirement, however, does not necessarily apply to a vehicle that a driver simply borrows from another ownerin addition to the vehicle covered by his policy. A vehicle under this arrangement is known as a “non-owned” auto and, as the plaintiff in Burns v. Couvillionlearned, coverage is determined by the language of the owner’s policy.

On October 12, 2005, Linda Burns was driving on Highway 1 in Simmesport when she was rear-ended by a bean harvester farm vehicle operated by Burton Dupuis. At the time of the accident, Dupuis was engaged in work for his employer, Victor Lachney. The bean harvester was owned by Ted and Don Couvillion and had been loaned to Lachney for use by Dupuis that day. Burns filed a lawsuit for damages against the parties and also Progressive Insurance, alleging that Progressive had issued a policy to Lachney which applied to the bean harvester. Progressive admitted that it had issued a policy to Lachney that provided coverage on a different vehicle but denied that coverage extended to the bean harvester. The parties filed cross-motions for summary judgment and the trial court granted judgment in favor of Progressive.

On appeal, Burns argued that coverage should apply to the bean harvester because the Progressive policy included an “Employer’s Non-Ownership Liability Endorsement,” which stated that “[t]he definition of insured auto is modified to include a non-owned auto when you or any of your employees use the non-owned auto in your business.” Progressive countered that the policy had not been modified by the Endorsement because, although it was among the various endorsements and other forms that accompanied the policy, it was not listed on the policy’s Declarations Page which specifically identified the forms that modified the policy. In fact, the policy contained the following language:

“All forms in the endorsement section may not pertain to your policy. Please refer to your Declarations Page for form numbers associated with your policy. All other parts of the policy that have not been modified by an endorsement will remain unchanged.”

The Third Circuit, applying “ordinary contract principles,” noted that the “policy reveals clear and unambiguous language… [and] expressly notes in bold language that not all endorsements pertain to a given policy.” Finding that the Employer’s Non-Ownership Liability Endorsement did not apply to the policy because it was not among the endorsements and modifications listed on the Declarations page, the court concluded that “Dupuis was not an insured under the Progressive policy and that the [bean harvester] vehicle was not an insured auto under the Progressive policy.”

The Burns case reveals a common but potentially troublesome practice among insurers. Many policies are drafted using a standardized, boilerplate template where certain portions may or may not apply to the policy depending on whether they are specifically referenced in the appropriate sections. This can lead to considerable confusion on the part of the insured unless he or she understands the requirements for adding or removing provisions within the policy. This case suggests no hesitation on the part of the court to enforce these types of agreements, so policy owners are well advised to review all insurance documents and confirm they reflect the level of coverage that is expected.