Understanding Insurance Exclusions: A Case of Property Damage Coverage for Borrowed Cars

storm_damage_hurricane_wind-1024x768Borrowing a car from family or friends is a common occurrence. While you might think your car insurance protects you in the unfortunate event you are involved in a car accident while driving the borrowed car, it is essential to be aware of exclusions that might apply to your insurance coverage. This case involves a policy exclusion that applied to property damage caused to the borrowed car. 

Asha Sade Johnson had a car insurance policy from Geico. Johnson was involved in a car accident while driving a Jeep owned by her mother, Ruby Lee Lewis. The accident caused significant damage to her mother’s car. Lewis did not have her own collision or comprehensive coverage insurance for her car. Johnson owned a different car insured by Geico. 

Lewis filed a lawsuit against Geico seeking compensation under Johnson’s insurance policy for the damages caused to her vehicle from the accident while Johnson was driving her car. Geico filed a summary judgment motion, arguing Johnson’s policy did not include coverage for damage to property such as Lewis’ car. The trial court denied Geico’s summary judgment motion.

Once there has been an opportunity for adequate discovery, summary judgment is appropriate if there are no genuine issues of material fact. See La. C.C.P art. 966.  Summary judgment is favored to help quickly and fairly resolve disputes. The appellate court reviews the trial court’s decisions about whether to grant summary judgment de novo, which means it does not have to defer to the trial court’s decision in determining whether it is appropriate to grant summary judgment. 

A summary judgment finding there was a lack of coverage under an insurance policy is only appropriate when there is no reasonable interpretation of the insurance policy that would provide coverage. Courts interpret insurance contracts in their entirety, and when the contract’s language is clear, the court cannot make interpretations based on the parties’ supposed intent. See La. C.C. art. 2046

The appellate court reviewed the language of Johnson’s insurance policy, including the policy exclusions. While her insurance policy included liability coverage up to $25,000 for property damage occurring while she was using a vehicle she did not own, there was an exclusion for damage occurring to property in her charge. 

Here, Geico would have been obligated to pay for damage Johnson caused to another car while driving Lewis’ car but was not obligated to pay for damage to Lewis’ car because it was in Johnson’s charge. The court explained this exclusion in the policy was permitted under La. R.S. 32:900(E) outlines permissible exclusions to insurance policies in Louisiana. Therefore, the appellate court held the trial court erred in denying Geico’s summary judgment motion. 

Being aware of insurance policy exclusions is crucial when borrowing a car and anticipating potential accidents. This case illustrates the importance of reviewing and understanding the exclusions in your insurance coverage. If you find yourself involved in an accident while driving a borrowed car, consulting a skilled attorney is recommended. They can provide guidance on navigating insurance policy exclusions and help you make informed decisions regarding your claim.

Additional Sources: Ruby Lee Lewis v. Geico Casualty Co.

Additional Berniard Law Firm Article on Car Insurance Coverage in Borrowed Cars: What Happens When Your Rental Car is in an Accident in Louisiana?

Can Uninsured/Underinsured Motorist Coverage be Applied To a Temporary Substitute Vehicle?

Contact Information