Is The Car Still Covered?

Dallas insurance law attorneys and those in Garland, Mesquite, Richardson, and other places in Dallas County need to be aware of this opinion.
The Houston Court of Appeals, 14th District, issued an opinion in 2003 that insurance law attorneys need to know. The style of the case is, Armendariz v. Progressive. Here is some relevant information about the case.
Alejandro and Alma Armendariz, appeal from cross-motions for summary judgment granted in favor of Progressive County. In two issues, they contend that Progressive owed Alma the duty to defend and indemnify her in a wrongful death lawsuit filed by Alma’s mother.
The Progressive automobile insurance policy in this case covered two cars, one owned 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 also 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 accidently 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 filed a declaratory judgment action to determine whether it owed a duty to defend and indemnify Alma in the underlying wrongful death suit. It sought summary judgment based on exclusionary language in the policy as follows: “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 contend that the exclusion at issue violates public policy and the Texas Motor Vehicle Safety Responsibility Act. There are two pertinent portions of the Progressive policy in this case. The first is the exclusion at issue:

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 is 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, precludes liability coverage.
The Armendarizes argue that the exclusion in this case is 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.” The family member exclusion is invalid because it conflicts with Texas’s public policy to ensure “that every motor vehicle is covered by an automobile policy that will protect all claimants against losses which arise out of the operation of the vehicle.” The family member exclusion runs afoul of this purpose because it makes otherwise-insured drivers uninsured for claims against them by innocent family members. Thus, the Armendarizes analogize that the exclusion in this case precludes coverage simply because a family member was the victim of Alma’s accident.
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 uninsured.
Accordingly, the court held that Alma was not entitled to liability coverage under the Progressive policy for an accident occurring while she drove an unscheduled van owned by the named insured’s family member. This court ruled that because the trial court correctly granted Progressive’s motion for summary judgment and denied the Armendarizes’ motion, this court affirmed the trial court’s judgment.