"Temporary Substitute" In Auto Policy

August 5, 2012

Grand Prairie attorneys and those in Fort Worth, Colleyville, Grapevine, Keller, Saginaw, Lake Worth, Benbrook, and other places in Tarrant County need to know how the courts interpret language in auto policies.
The El Paso Court of Appeals issued an opinion in 1995, that dealt with how the courts looked at what a "temporary substitute" auto was in an auto policy. The style of the case is, State Farm Mutual Automobile Insurance Company v. Ismael Cobos, Sr., Ismael Cobos, Jr., and Johnny Ray Riley. Here is some background.
Junior was involved in an automobile collision with Riley while driving a truck owned by Senior's employer. The trial court found Junior covered under the Cobos family insurance policy because the truck was not furnished for Senior's regular use and because the truck was a substitute vehicle at the time of the accident as defined in the insurance contract per the facts of the case.
Senior was employed by a construction company which furnished him a company vehicle to use on the job and for transportation to and from his workplace. This vehicle, the truck involved in the collision, was not for Senior's plenary use, and he rarely used it for purposes unrelated to work. Senior is the named insured in the policy issued by State Farm.
On July 3, 1992, Senior and Junior were at a relative's house to assist in roofing repair work. Senior traveled to the house in the truck, while Junior traveled to the house in the family car, which was insured by State Farm. During the course of the roofing work, there developed a need for Junior to return to the family home to fetch a roofing knife. The family car that Junior had driven to the site was by then boxed in by several other vehicles. Also, Junior did not have the keys to the car, having earlier turned them over to this aunt. After trying unsuccessfully to get the keys from his aunt, and with his father's permission, Junior embarked on the errand in the truck and then was involved in the wreck creating this issue.
Two provisions of the family insurance contract under which Senior was insured are relevant. The first appears in a section entitled "Exclusions," and reads:
We do not provide Liability Coverage for the ownership, maintenance or use of:
....
2. Any vehicle, other than your covered auto, which is:
....
b. furnished or available for your regular use.
The second relevant clause appears in a section entitled "Definitions," and reads:
Your covered auto means:
....
4. Any auto or trailer you do not own while used as a temporary substitute for any other vehicle described in this definition which is out of normal use because of its:
a. breakdown;
b. repair;
c. servicing;
d. loss; or
e. destruction.
The Court said they were of the opinion that the phrase "furnished for regular use" as used in context does not imply the manner of use, that is [temporarily] putting the automobile to the same uses to which an insured would use his own automobile, but implies a right to the regular use of the automobile in the sense that there is an expressed or implied understanding with the owner of an automobile that the insured could have the use of the particular automobile or perhaps any automobile of the other at such times as he desired, if available.
The purpose of the exclusion "is to make certain that the insured properly pays premiums on all of the vehicles which are regularly used and therefore covered by the policy. The exclusion seeks to avoid burdening auto insurers with unknown liability for vehicles that insureds do not own but use as theirs.
The Court said it was a modest requirement that insurers at least consider the use being made of a vehicle at the time of a collision, rather than allow them to exclude from coverage all vehicles driven by an insured however intermittently he may drive them and however circumscribed may be the purposes for which he may use them. In short, the Court concluded that the question whether a particular vehicle was furnished for an insured's regular use is a fact question to be resolved by the fact finder. In this light, the arguably conflicting results of other cases are explained by the unremarkable reality that different fact finders can reach different conclusions.
In this case, the fact finder had ample evidence to support the decision that coverage applied.
The second point here was State Farm attacking the sufficiency of the evidence presented. State Farm argued that the family's car was not available because of its loss or breakdown as defined by the auto policy, which would be required by the policy. The Court responded saying, "A contract of insurance should give the policyholder clear notice of any limitations of liability. Any ambiguities in the policy must be strictly construed in favor of coverage. We must adopt the construction of an exclusionary clause urged by the insured as long as that construction is not itself unreasonable, even if the construction urged by the insurer appears to be more reasonable or a more accurate reflection of the parties intent."
The Court upheld the finding of coverage.