Permission To Use Vehicle And Texas Insurance Law

If you are a business owner in Grand Prairie, Arlington, Mansfield, Hurst, Euless, Bedford, Keller, Colleyville, Plano, Fort Worth, Burleson, or anywhere else in Texas and one of your employees is involved in an accident in a company vehicle, will your insurance provide coverage for him? This is the second of three posts on this related subject. Read on to find out what happened in one case.
The Texas Supreme Court, in 1979, issued an opinion in the case, Betty Coronado v. Employers’ National Insurance Company et al.
The issue before the court in this case was whether an employee who was driving a company owned vehicle on a purely personal mission after working hours was operating the vehicle with the permission of the company so as to be insured under the company’s automobile liability policy. The jury said yes. The first appeal court said no and the Texas Supreme Court agreed with the decision of no.
The facts were as follows. On August 23, 1974, Fernando Sotelo was one of five operators for White Well Service and, as such, he was in charge of a crew of three other men. He was assigned a company truck for use in the performance of his duties. The company yard was located in Wickett which is a small town a few miles west of Monahans where Sotelo and his crew lived. Sotelo used the pickup to transport his crew to and from their homes to the company yard each day as well as from the company yard to the different well locations where their work was to be performed. On August 23, he and his crew left the company yard about 4 or 4:30 p.m. after completing their work for the day. Sotelo drove east on Highway 80 towards Monohans and the homes of all crew members. All of the crew lived on the east side of Monahans near the highway. He testified that just before they reached the intersection of Loop 464, which is on the western edge of Monahans, they decided to go to Wally’s Bar and have a beer. They stayed there for three or four hours and then went to Rose Gardens, which is another bar located some distance west of Wally’s Bar. He left Rose Gardens sometime after midnight, apparently many beers after leaving the company yard. Shortly thereafter, he was involved in a collision with another vehicle and, as a result thereof, Reynoldo Coronado lost his life.
Betty Coronado, the surviving wife of Reynaldo, subsequently brought suit against Sotelo and the jury found in her favor. She then sued White Well Service and Employers National Insurance Company, who had issued the auto policy.
It was not contended in this case that Sotelo had express permission to use the vehicle for the purpose it was being used at the time and place he was involved in the fatal accident. In fact, Sotelo testified that such a use was prohibited by his employer. It was urged, however, that his employer had impliedly granted him permission for such use by acquiescence or lack of objection to similar use on prior occasions.
Since the uncontradicted evidence established that Sotelo was permitted to use the vehicle for business purposes only, the precise question before the court was whether his deviation for personal pleasure at the time and place of the accident was such as to avoid coverage under the policy.
The court discussed that there are three different approaches to the problem of deviation in the United States; 1) the “strict” or “conversion” rule, 2) the “liberal” rule, and 3) the “minor deviation” rule. Under the “strict” rule, the actual use at the time of the accident must be within the time limits and geographical area specified or contemplated by the parties, otherwise permission cannot be found to exist. Under the “liberal” rule, coverage is extended so long as the vehicle was originally entrusted by the named insured to the person operating it at the time of the accident. The only essential thing is that permission be given for use of the vehicle in the first instance and coverage remains afforded irrespective of how gross the deviation from the original use. The third position is somewhat between these two extremes and the courts applying this rule modify the strict rule to the extent that protection will be afforded if the use is not a material or gross violation of the terms of the initial permission. Under this rule, the court must determine in each instance taking into account the extent of deviation in actual distance or time, the purposes for which the vehicle was given, and other factors whether the deviation was “minor’ or “material.”
Based on the evidence in the case and the prior paragraph guidance on these issues the court found there was no coverage in this instance. Each of these cases are fact specific and have to be examined on an individual basis.