From the Desk of Kyle Riley: In this case, the Washington Court of Appeals held that an employee who is injured by an underinsured motorist is not entitled to UIM coverage when the employee is not a named insured, was not using an automobile covered under the employer’s business auto policy, and was not conducting company business.
Claims Pointer: Insurers that provide business auto policies should be aware that Washington courts will not extend UIM coverage to an employee who is not named on a business auto policy, when that employee is injured while on personal business. Insurers should continue to use plain language to exclude employees who are injured in such situations. Phrases such as “only while using” and “only to the extent of” should be sufficient to avoid potential UIM disputes.
Anthony Vasquez v. American Fire and Casualty Co., in the Court of Appeals of the State of Washington, Division I, No. 67702-1-I, — P3d —-, (March 18, 2013).
Anthony Vasquez was struck and injured by an underinsured motorist while walking in a crosswalk on personal business. At the time, Vasquez was the president, majority owner, and an employee of Benchmark Underground Construction, Inc. (“Benchmark”). Before the accident, Vasquez had purchased a package of commercial insurance policies for Benchmark, including a business auto policy. Benchmark, but not Vasquez personally, was the insured entity named in the declaration of the business auto policy. Vasquez did not have an auto liability policy in which he was a named insured. However, Vasquez believed he had full coverage under Benchmark’s business auto policy.
Vasquez sought UIM coverage under the benefits of Benchmark’s policy. American Fire and Casualty Company (“American Fire”), the insurer, denied Vasquez’s claim. Vasquez sought declaratory relief and the trial court ruled that the policy did not cover Vasquez for injuries suffered as a pedestrian. Vasquez appealed.
On appeal, Vasquez argued that even though he was not named personally as an insured under Benchmark’s policy, he was entitled to coverage because the policy did provide him with liability coverage in certain situations. Specifically, Vasquez cited provisions of the policy which extended coverage to “[a]ny employee of [Benchmark] while using a covered ‘auto’ you don’t own, hire or borrow in your business or your personal affairs.” American Fire agreed that under these provisions, Vasquez had liability coverage as an employee when he was using a covered vehicle on Benchmark business.
The Court held that at the time of the accident, Vasquez was a pedestrian in a crosswalk and he was not using a covered auto. The Court rejected Vasquez’s argument that an employee who is covered for liability under a business policy only in limited circumstances is entitled to UIM coverage for any injury caused by an underinsured motorist in any circumstance. Such a position, the Court noted, would make a business auto policy a personal policy for all employees. Because Vasquez was not a named insured and was not insured under the liability portion of the policy under the circumstances of the accident, he was not entitled to UIM coverage.
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