How Underinsured Motorist Coverage Applies to Passengers of an Accident

Automobile accidents create questions of coverage and liability – the only problem is how to answer those questions. Who is liable? Are you covered? If you are covered, to what extent are you covered? If you are covered, are your passengers covered? The final point is a more complex question to which recent case law has provided guidance for us.

In February of 2009, an uninsured motorist crashed into a vehicle owned by Ann Bernard. Ann was the driver and she had two passengers with her, Andrea and Norell Bernard, both members of her family not living in her household. Ann filed suit against her insurance provider, Imperial Fire & Casualty Insurance Company in order to obtain uninsured/underinsured motorists coverage under Ann’s Imperial policy. This type of coverage was named “UM” coverage. Ann believed that herself, Andrea, and Norell were all “using” the vehicle and were, accordingly, all insured persons as defined under her policy; thus statutorily entitling them all to coverage under Louisiana law.

In her filing, Ann referenced La. R.S. 22:1295 which states, in relevant part:

La.R.S. 22:1295(1)(a)(1)
No automobile liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vechicle shall be delivered or issued … unless coverage is provided … for the protection of persons insured thereunder who are legally entitled to recover … from owners or operators of uninsured or underinsured motor vehicles.

However, Imperial did not believe that Norell and Andrea fit the definition of “insured person” under the terms of Ann’s insurance policy because they were not operating or “using” the vehicle, and were not member’s of her household. In order to receive UM coverage the individual seeking coverage had to, pursuant to the Ann’s policy, be “using” the vehicle and be an insured person as defined under the policy. Ultimately, it was the court determined that Andrea and Norell Bernard were insured persons who were using the vehicle, and under the Imperial policy were entitled to coverage.

The upper court looked to public policy to determine what the term “use” meant to determine if Norell and Andrea were insured persons, and to give meaning to the term for future references when dealing with an insurance policy. Public policy is simply the principles of a society, often unwritten, of which social laws are typically based. This theory states that any injury to the public good is a good enough basis for denying the legality of an action. With this focus, the court branded its definition with the public
good in mind. The court looked to the underlying purpose of uninsured motorist coverage, determining that its primary function was “to promote and effectuate complete reparation…” Because Ann Bernard’s insurance policy did not define the terms in question, the court had to interpret a meaning. Insurance policies cannot be interpreted in an unreasonable manner – meaning that an interpretation of the terms of a policy cannot be construed in such a way as to unreasonably restrict, or go beyond what can be reasonably contemplated by the terms of the policy. In this particular
situation, the “use” involved is distinguished from the operation of the vehicle.The court posited that “Use” refers to the purpose, not the actual physical operation of a vehicle, meaning that “use” has a much “broader meaning than operation of [a] vehicle and would include any use of the vehicle in a manner that is related to its inherent purpose.

The term “use” is interpreted very liberally by courts, for public policy reasons. “Using” a vehicle not only includes operating a vehicle, but being transported in one as well. The purpose of the vehicle is transportation and it appears courts are willing to stand by this when assessing uninsured motorist coverage. The purpose of having uninsured motorist coverage is to give complete reparation to the injured parties. It would be unjust for a guest passenger to be prohibited from coverage when injured by an uninsured motorist at no fault to the passengers.

The practical implications of this are as such: in the event an uninsured motorist crashes into an individual, and the individual has guest passengers in their car, those passengers can be covered by the insurance of the individual, provided
they have a policy covering an accident caused by an uninsured or underinsured motorist.

If you have been involved in a motor vehicle accident, and you question whether passengers in your vehicle can receive coverage under your insurance policy, contact Berniard Law Firm today.