When is a 'named insured' singular or plural?
Many automobile insurance policies cover the "named insured," but the term often causes confusion. It may not be well defined or it may not be clear to the policyholder.
What happens when the term is ambiguous and the policyholder has a claim? Is there coverage?
Timothy Montoya and his girlfriend, Alexandra Medina, lived together in Florida but were unmarried. Montoya owned a Volkswagen Passat and had an auto insurance policy with GEICO. In 2012, Montoya added Medina and her Suzuki Vitara to the policy. Medina was the sole owner of the Suzuki.
In 2013, Montoya and Medina bought a Chevy Impala and added it to the policy, eventually dropping the Suzuki. Medina planned to keep the Suzuki in the driveway until her son was old enough to drive. She permitted Montoya to drive the Suzuki when his Passat was inoperable.
On April 19, 2014, Montoya noticed mechanical problems with his Passat and had it towed to a repair shop. According to Montoya, three days later, while his Passat was at the shop, he got Medina's permission to drive the Suzuki to work. On his way to his job, Montoya rear-ended the car in front of him, which hit a third car; Sheryl Lopez allegedly was injured in the wreck.
Lopez sued Montoya for negligence. GEICO refused to defend or indemnify him because, according to the insurer, the "Suzuki was not a listed vehicle and does not meet the definition of non-owned vehicle."
Related: Insurance? Yes. Owns the damaged vehicle or property? No...
Montoya agreed to the entry of a final judgment against him for $485,000 and assigned his rights against GEICO to Lopez. Lopez then sued GEICO, seeking declaratory relief to determine whether there was insurance coverage and damages for breach of contract.
The U.S. District Court for the Middle District of Florida granted summary judgment in favor of GEICO, concluding that the phrase "the named insured" in the policy was "unambiguously plural" and, therefore, that the Suzuki did not qualify as a "temporary substitute auto."
The policy provided the following definition:
Temporary substitute auto means a private passenger, farm or utility auto or trailer not owned by you or your relative, temporarily used with the permission of the owner. This vehicle must be used as a substitute for the owned auto or trailer when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction.
The policy defined "you" as "the named insured shown in the declarations or "his or her spouse" if a resident of the same household.
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The Eleventh Circuit's decision
The U.S. Court of Appeals for the Eleventh Circuit, applying the substantive law of Florida, reversed the grant of summary judgment to GEICO.
In its decision, the Eleventh Circuit explained that if the term "the named insured" in the policy was singular and referred only to Montoya, the Suzuki was not owned by "you," that is, Montoya, and could qualify as a "temporary substitute auto." If it was plural, the circuit court added, the Suzuki was owned by "you," that is, Montoya or Medina, and could not qualify as a "temporary substitute auto."
Moreover, the circuit court said, if "the named insured" was ambiguous -- that is, reasonably susceptible to both a singular and plural interpretation -- it had to be interpreted "liberally in favor of the insured and strictly against the drafter."
The Eleventh Circuit then ruled that the phrase "the named insured" could "reasonably be interpreted to refer to a single person." It observed that the policy used the singular possessive pronouns "his or her" instead of the plural possessive "their" in defining "you" as "the named insured shown in the declarations or his or her spouse." (Emphasis added.)
In the circuit court's opinion, that suggested that the antecedent to which those pronouns referred, "the named insured," also was singular.
In addition, the circuit court continued, the term "the named insured" itself suggested the phrase was singular. Had the policy meant to include both Montoya and Medina within the definition of "you," "it could have substituted the word 'any' for 'the,' specifying 'any named insured.'"
The circuit court pointed out that, in several other provisions, the policy used the word "any" to signify multiple insureds.
Accordingly, the Eleventh Circuit held that the phrase "the named insured" was "ambiguous" because it could "reasonably be interpreted to refer to a single person," and the district court had erred by ruling that the Suzuki was not a "temporary substitute auto" on the basis that it was "owned by you."
The circuit court concluded by remanding the case to the district court for further proceedings to determine whether the Suzuki satisfied the additional requirements to qualify as a "temporary substitute auto."
The case is Lopez v. GEICO General Ins. Co.
Related: Coverage question concerning 'non-owned auto' use
S teven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. Email him at firstname.lastname@example.org. This story is reprinted with permission from FC&S Legal, the industry's only comprehensive digital resource designed for insurance coverage law professionals. Visit the website to subscribe.
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|Publication:||Property and Casualty 360|
|Date:||Feb 8, 2018|
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