TWO COMMON SENSE COVERAGE RULINGS FROM BOTH SIDES OF THE MOUNTAINS
Division I Rejects Unreasonable Interpretation of “Covered Person” and “Covered Auto”
Black v. National Merit Insurance Co., ___ Wn. App. ___, ___ P.3d ___ (2010) (Div. I)
by Pamela A. Okano, Reed McClure
March 2010
Facts:
Plaintiffs were severely injured when their car was struck by a pickup driven by a teenager. The teenager was at fault. Claiming they were joint tortfeasors with the teenaged driver, plaintiffs sued all the passengers riding in the teenaged driver’s vehicle at the time of the accident.
One of the passengers settled with plaintiffs and assigned their rights under their liability policy to the plaintiffs. Plaintiffs then made a policy limits demand.
The policy provided liability coverage for “covered persons.” “Covered person” was defined to mean:
- You or any family member with respect to the ownership, maintenance or use of any covered auto . . . .
- Any person using your covered auto.
The policy did not define “any covered auto”, although it did define “your covered auto” to include, among other things, vehicles you own shown on the declarations, private passengers autos, or certain pickups, vans or trucks on the date you become the owners, temporary substitute autos, and non-owned autos not owned by you or a family member or furnished or available for regular use while in your custody, possession or being operated by you or any family member.
The carrier rejected the demand and moved for partial summary judgment. The trial court granted the carrier summary judgment.
Holding:
Division I affirmed. The court rejected plaintiffs’ claim that the passenger must be a “covered person” on the ground that she was riding in a “covered auto.” Plaintiffs’ theory was that the vehicle had to be a “covered auto” under the passenger’s policy since the vehicle had applicable liability insurance with another carrier. The court observed that under plaintiffs’ theory, the insurer would take on the risk for the universe of insured vehicles. No purchaser of insurance would reasonably construe the policy language that way.
The court also rejected plaintiffs’ alternative theory, that the passenger was “any person using your covered auto” because the vehicle involved fell within the definition of “your covered auto.” Noting that the definition of “non-owned auto” included any non-owned auto not owned by you or a family member and that the regular use provision of the definition was connected to the non-owned provision by the word “or”, plaintiffs claimed that the vehicle in which the passenger was riding qualified as a non-owned auto because she did not own it at the time of the accident.
Plaintiffs’ theories sought to cover vehicles with no ties to the insurance policy at issue. Under plaintiffs’ theories, there would be a near universe of autos “not owned” by the named insured or the named insured’s family.
In any event, the word “or”, while commonly used as a disjunctive, need not always be used as such. The word “or” as used in the non-owned auto provision really means “nor.” Thus, the non-owned auto provision includes vehicles not owned by the named insured or a family member nor furnished or available for regular use while in the named insured’s custody, possession, or being operated by the named insured or family member.
The court also held that the phrase “while in your custody, possession, or being operated by you or any family member” did not modify “furnished or available for regular use.” If it did, then “your covered auto” would include “all autos not owned by [the named insured] or a family member.” The lack of a comma between “not owned by you or any family member” and “or furnished or available for regular use” indicates that “while in your custody, possession, or being operated by you or any family member” applies to both requirements, not just the latter.