Insurance Claim Denial

Insureds in Weatherford, Mineral Wells, Aledo, Azle, Hudson Oaks, Willow Park, Brock, Millsap, Cool, Springtown, and other places in Parker County and Texas do not always understand what is covered by their policy and what is not. Here is a case that helps understand a little bit about coverage as it relates to auto policies.
In 2003, the Houston Court of Appeals, 14th Dist. issued an opinion in the case, Alejandro Armendariz and Alma Armendairz v. Progressive County Mutual Insurance Company. This case is an appeal from a Declaratory Judgment lawsuit where in Progressive won after filing a motion for Summary Judgment. Here is some background.
The Progressive automobile insurance policy in the case covered two cars, one owed by Alejandro and the other owned by his sister, Alma. Alejandro was the named insured on the policy. Additionally, Alejandro’s parents, who lived with him, and Alma were named as “listed drivers” on the policy. When Alejandro first purchased insurance from Progressive, the policy covered his parents’ van. However, Alejandro deleted the van from the policy because his parents wanted to sell it. Four months later, while driving her parents’ then uninsured van, Alma, by accident, backed over and killed her father. Alma’s mother then sued Alma for the father’s wrongful death.
Contending that the van was not a covered auto and Alma was not an insured, Progressive denied the claim and filed this lawsuit. The language in the policy that Progressive relied upon said: “We do not provide liability coverage for the ownership, maintenance, or use of any vehicle other than your covered auto which is owned by a family member or furnished or available for the regular use of any family member.”
The Armendarizes contended that the exclusion at issue violated public policy and the Texas Motor Vehicle Safety Responsibility Act. There were two pertinent portions of the Progressive policy in the case. The first was the exclusion:
“B. We do not provide Liability Coverage for the ownership, maintenance or use of:

3. I. Any vehicle, other than your covered auto, which is:
a. owned by any family member, or b. furnished or available for the regular use of any family member.
II. However, this exclusion (B.3) does not apply to [the insured’s] maintenance or use of any vehicle which is:
a. owned by a family member ….”
The second pertinent portion of the policy was the definition of “family member”: “a person who is a resident of [the insured’s] household and related to [the insured] by blood, marriage, or adoption.” In this case, Alejandro’s parents, who lived with him, owned the van. Further, the van was no longer a covered auto under the policy. Lastly, Alma was not an insured under the Progressive policy, but merely a listed driver for the two covered autos. Because Alma caused the accident while driving her father’s uninsured van, the exclusion, if valid, precluded liability coverage.
The Armendarizes argued that the exclusion in the case was akin to the invalid “family member exclusion.” The family member exclusion, also called Endorsement 575, reads, “We do not provide Liability Coverage for you or any family member for bodily injury to you or any family member.”
In its analysis of this case the court looked at the above and stated, “However, there was no liability coverage here because the family member’s vehicle was uninsured, not because a family member was the injured claimant. Even if an unrelated third party had been struck by the van, the exclusion would still apply because the van was owned by a family member but was not insured.”
The decision in this case was consistent with the interpretation of owned-but-uninsured exclusionary language in other states. As this court noted, without the exclusion, an insurance company would be “required to insure against risks of which it is unaware, unable to underwrite and for which it is unable to charge a premium.
These cases are tough. An experienced Insurance Law Attorney needs to be involved early in these claims to establish facts that might be helpful to a recovery.