Insurers should be aware the Washington Court of Appeals recently upheld a regular use exclusion in the context of PIP benefits for an insured who was injured in a car accident that took place during her commute to work via a ride-share/vanpool.
Claims Pointer: This case demonstrates that courts are unwilling to strike regular use exclusions based on public policy arguments. Specifically, regular use exclusions do not violate public policy and courts recognize such exclusions account for an insurer’s increased risk, which are not calculated in insurance premiums, when an insured regularly uses a vehicle which is not owned by the insured. In a Washington court, plaintiffs cannot use public policy arguments as a proverbial free pass to recovery.
State Farm Ins., Co. v. Rollins, in the Washington Court of Appeals 2014 WL 4220911 (2014).
On January 19, 2012, Vera Rollins (“Vera”) was injured while commuting to work as a passenger in a vanpool, which she had taken to work, five days a week, for the previous three years. Vera filed for PIP benefits under her husband, Brent’s insurance policy. State Farm denied coverage on the basis of a regular use exclusion, which excluded from coverage injuries sustained when the insured occupied a car regularly used which was not owned by the insured. State Farm filed for declaratory judgment arguing Vera was not entitled to PIP benefits because the regular use exclusion applied to her use of the vanpool’s vehicle and moved for summary judgment on the issue. Vera filed a cross-motion for summary judgment asserting the regular use exclusion was contrary to public policy as applied to Vera’s PIP coverage. The trial court granted State Farm’s motion for summary judgment and denied the Vera’s cross-motion for summary judgment. Vera appealed, making essentially the same argument.
The Washington Court of Appeals held that the regular use exclusion did not violate public policy. The Court explained Washington courts rarely invoke public policy to override the express terms of an insurance policy. Moreover, an insurance clause only violates public policy when the provision is prohibited by statute, condemned by judicial decisions, or contrary to public morals. The Court rejected Vera’s arguments that an insurance exclusion is unenforceable when the condition triggering the exclusion presents no increased risk to the insurer and allowing PIP benefits to a participant in a ride-share agreement presented no increased risk. The Court distinguished between Vera’s case from a prior case which dealt with an exclusion for injuries to a family/household member in automobile insurance policies, where the exclusion violated public policy in favor of allowing recovery for those injured by negligent use of public highways. The Court also held that Vera, who used the vanpool five days a week, significantly increased State Farm’s liability, which was not calculated in the premiums. The Court also rejected Vera’s arguments that the regular use provision violated reasonable consumer expectations as to coverage and the purpose of RCW47.04.280 to promote public transportation policy goals through use of public investments in transportation.
Note: This opinion has not been published. It is provided to demonstrate how the court approaches the issues involved in the case. It cannot be cited as authority to a court of law.
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