An auto policy’s “non-owned” auto coverage did not apply where the non-owned vehicle the insured was driving at the time of the accident was “furnished or available” for the insured’s “regular use.” ( Nationwide Mutual Insurance Co. v. Shimon (2015) 243 Cal.App.4th 29)
Facts
Phillip Lionudakis (“Mr. Lionudakis”) and his former wife, Kristen Doornenbal (“Mrs. Doornenbal”), were the parents of a teenaged daughter, Simone Lionudakis (“Simone”). Mr. Lionudakis and Mrs. Doornenbal lived ten minutes apart, and Simone split her time between them.
When Simone turned 16, Mr. Lionudakis bought a GMC pickup truck for Simone to drive. Although Mr. Lionudakis was the registered owner of the pickup truck, Simone was (with inconsequential exceptions) the only person who drove the truck. If Simone was not driving the truck, it sat parked. Although Simone had exclusive use of the truck, Mr. Lionudakis and Mrs. Doornenbal did some put some restrictions on Simone’s use of the vehicle (e.g., she had to maintain her grades at school, she could not drive outside a certain geographic area without permission, etc.). In order to save money, Mr. Lionudakis excluded Simone from Mr. Lionudakis’ own auto insurance policy.
In February 2008, Mr. Lionudakis and Mrs. Doornenbal placed Simone on restriction for poor grades, and temporarily prohibited her from driving the pickup truck. However, despite the fact that Simone was on restriction, Simone took the truck out and, while driving it outside of her normal geographical boundaries, caused an accident in which Aweia and Flora Shimon (“the Shimons”) were injured.
The Shimons later filed a personal injury lawsuit against various parties, including Simone. The personal injury lawsuit settled, with an agreement that the court would determine whether there was insurance coverage for Simone under an auto insurance policy which her mother, Mrs. Doornenbal, had through Nationwide Mutual Insurance Company (“Nationwide”). The Nationwide policy covered Simone’s use of a “non-owned” auto, unless the non-owned auto was “furnished or available” for her “regular use.”
Nationwide filed a declaratory relief action seeking a determination that the non-owned pickup truck Simone was driving at the time of the accident was “furnished or available” for her “regular use,” and that Simone therefore was not entitled to coverage under the non-owned auto provisions of the Nationwide policy. The trial court ruled that the GMC pickup truck was furnished or available for Simone’s regular use and that the Nationwide policy therefore did not cover Simone’s liability to the Shimons. The Shimons appealed.
Holding
The Court of Appeal affirmed the finding of no coverage. The appellate court reasoned that non-owned auto insurance coverage is meant to allow coverage for an insured’s occasional use of a non-owned automobile, and the exclusion for regular use is meant to prevent an insured from regularly using a non-owned vehicle without paying insurance premiums for the vehicle. According to the appellate court, Simone’s use of the GMC pickup truck in this case fell squarely within the purpose of the regular use exclusion. The GMC pickup was basically available for Simone’s exclusive use, and yet no one insured the vehicle for her use.
The Shimons nevertheless argued that the GMC pickup truck was not furnished or available for Simone’s regular use because Simone’s parents had placed her on restriction such that she should not have been driving the truck at the time and place the accident occurred. The appellate court rejected that argument. According to the court, although Simone drove the truck in defiance of her parents’ instructions, that did not render the “regular use” exclusion inapplicable. Rather, the court held that where a driver such as Simone is the exclusive user of the vehicle, “regular use” cannot vary with each trip the driver takes.
In short, because the GMC pickup truck was furnished or available for Simone’s regular use, the Nationwide policy did not cover Simone’s liability to the Shimons.
Comment
“Non-owned” auto coverage is intended to provide coverage for an insured’s occasional use of a non-owned vehicle without requiring the payment of additional premiums. By the same token, the exclusion of coverage for “regular use” of non-owned vehicles is intended to prevent abuse by precluding the insured and family members from regularly driving two or more vehicles while only insuring one vehicle. Coverage is not intended to include the ” regular use” of non-owned cars because the insurer would necessarily bear an increased risk without receiving any premium for the increased risk.