Court: District Court of Appeal of Florida; June 17, 2011; Florida; State Appellate Court
Lillian Sommerville filed a lawsuit against Allstate Insurance Company seeking uninsured/underinsured motorist (UM) benefits for injuries sustained while riding a motorcycle rented by her employer, Pavili Installations, Inc. She is appealing a final summary judgment that favored Allstate. The court reviews summary judgments de novo. The trial court incorrectly determined that Pavili's business automobile insurance policy did not provide UM coverage for Sommerville. As the named insured on the policy, Pavili qualifies for coverage under Florida law. Although the motorcycle was not explicitly listed as a covered vehicle, the policy allows for additional insured persons and vehicles under certain circumstances.
Sommerville, as the company president, is classified as a Class II insured, which means she is a lawful occupant of an insured vehicle but not a named insured or relative. For her to be entitled to UM coverage, the motorcycle must be considered a covered vehicle. The policy defines 'insured' in terms of liability coverage, granting coverage to Pavili and others using a covered vehicle with permission. The UM endorsement similarly extends protection to anyone occupying a covered auto. Thus, the reversal indicates that the policy's terms potentially provide UM coverage to Sommerville while she was using the motorcycle.
Premium charges detailed in the policy Declarations pertain specifically to two trucks owned by Pavili, but coverage extends beyond these vehicles. Allstate identifies vehicles using 'covered auto designation symbols' for different types of coverage. For liability coverage, designations include:
1. **Specifically Described 'Autos'**: Only those vehicles listed in Item Three of the Declarations that incur a premium charge, including any trailers attached to these vehicles.
2. **Hired 'Autos'**: Vehicles leased, hired, rented, or borrowed, excluding those from employees or partners.
3. **Nonowned 'Autos'**: Vehicles not owned, leased, hired, or borrowed that are used in connection with the business, including those owned by employees or partners while used for business purposes.
Pavili's trucks fit the first designation, while a rented motorcycle falls under the second. However, for Uninsured Motorist (UM) coverage, only the two trucks are listed as covered autos, highlighting a potential gap between liability and UM coverage. The UM statute, section 627.727, aims to broadly protect citizens against uninsured motorists and mandates UM coverage for all vehicles insured for liability unless explicitly rejected or limited by the named insured in writing.
Pavili opted for lower UM limits than its $1,000,000 liability limits without rejecting UM coverage entirely. Allstate's policy provides liability coverage for the rented motorcycle but excludes UM coverage for it, which is restricted to the trucks under designation 7. Allstate asserts that Ms. Sommerville qualifies as an insured for liability but not for UM, as the definition for UM requires 'occupying' a covered auto. Allstate maintains that Pavili's choice to accept UM coverage only for the two trucks is permissible under section 627.727(9)(b), which states that UM coverage available is that of the vehicle occupied at the time of an accident.
An informed rejection of uninsured motor vehicle (UM) coverage cannot be inferred solely from an insured's signature on the application, as established in case law. While Florida statute § 627.727(9)(a), (e) allows insurers to limit UM coverage, it does not permit exclusions for specific vehicles or individuals. Case precedent indicates that a policy excluding UM coverage for only select insureds contravenes the UM statute. Specifically, an insured may reject UM coverage for all insureds under the policy, but not for only some. The statute permits a named insured to reject or select lower UM limits for all vehicles, not selectively for specific ones. Further, it has been ruled that insurers cannot constrict UM coverage by defining 'covered autos' more narrowly for UM than for liability coverage. In instances where such limitations occur, the broader liability definition prevails for UM coverage. The trial court's reliance on a narrower definition of 'covered auto' was therefore erroneous, and the case is reversed and remanded for further proceedings. Definitions within insurance policies are pivotal, and in ambiguous cases, the interpretation favoring greater indemnity applies. Additionally, when a named insured is a corporation, UM claims are generally associated with Class II insureds, as the corporation itself cannot file bodily injury claims. The document mentions a specific situation involving Ms. Sommerville, who rented a motorcycle, but does not clarify the implications of her use on her UM claim.
The policy defines 'autos' to include motorcycles and mandates that any motor vehicle liability insurance providing bodily injury coverage must also include uninsured motor vehicle (UM) coverage. The UM coverage limits must be at least equal to the bodily injury liability limits purchased by the named insured. All motor vehicle owners are required to maintain the ability to respond to damages of at least $10,000 for property damage from accidents.
The term 'named insured' refers to the individual identified in the insurance policy, typically the vehicle owner. In this case, Ms. Sommerville is identified as the company president, but the policy does not list the motorcycle as a vehicle for which premiums were paid. However, the policy allows for additional persons to be classified as “insureds” and for additional vehicles to be considered “covered autos.”
Insurance policies generally categorize insureds into two classes: Class I includes named insureds and their resident relatives, while Class II comprises lawful occupants of an insured vehicle who are neither named insureds nor their relatives. Ms. Sommerville, being the only named insured’s associate, qualifies as a Class II insured and is entitled to UM coverage only if the motorcycle she was riding is considered an insured vehicle.
The policy outlines that liability coverage extends to damages resulting from the ownership, maintenance, or use of a covered auto, with 'insureds' defined as the named insured and anyone using a covered auto with permission. The UM endorsement similarly defines 'insureds' to include anyone occupying a covered auto.
The policy Declarations indicate premium charges for two Pavili-owned trucks but do not limit coverage solely to those vehicles. Allstate employs "covered auto designation symbols" for coverage types. For liability coverage, designation 7 applies to specifically described autos (the two trucks) and includes trailers attached to these vehicles. Designation 8 covers hired autos, excluding those leased or borrowed from employees or partners. Designation 9 pertains to nonowned autos used for business, including those owned by employees or partners while utilized in business or personal affairs.
For uninsured motorist (UM) coverage, only the two trucks (designation 7) are listed as covered, creating a potential gap in coverage compared to liability provisions. The UM statute, section 627.727, aims to protect citizens against uninsured motorists, mandating that insurers provide UM coverage for all vehicles insured for liability, at least at the same limits, unless the named insured explicitly rejects UM coverage or opts for lower limits. The statute is designed to protect injured persons, not to benefit insurers or negligent motorists, and cannot be limited by the insurer through exclusions.
Pavili has selected lower UM limits than its $1,000,000 liability limits but has not rejected UM coverage entirely. While Allstate offers liability coverage for the rented motorcycle under designation 8, UM coverage appears restricted to vehicles under designation 7. Ms. Sommerville is deemed an insured under liability provisions for using a covered auto with permission.
Allstate asserts that the limitation of uninsured motorist (UM) coverage to two specific trucks is permissible under section 627.727(9)(b), which stipulates that the UM coverage available to an injured person occupying a motor vehicle is that of the vehicle being occupied. Allstate argues that the insured, Pavili, chose to accept UM coverage only for the two trucks for which a premium was paid. However, case law indicates that an informed rejection of UM coverage cannot be inferred solely from the insured's signature on the application without additional evidence. Section 627.727(9)(a)(e) permits insurers to limit UM coverage, but does not allow for exclusions of specific vehicles if the insured has not actively rejected that coverage. In prior rulings, such as Varro, it was determined that excluding UM coverage for only some insureds violates the UM statute, which requires that rejection of coverage be applicable to all insureds under the policy. Additionally, limitations on UM coverage must be unambiguous and consistent with the statute's intent. The court found that a policy definition of “covered autos” in UM provisions cannot be narrower than in liability provisions. Because the policy attempted to impose a narrower definition for UM than for liability, the broader liability definition applies to UM coverage. Consequently, the trial court's reliance on the narrower definition was erroneous, leading to the case being reversed and remanded for further proceedings. The terms "insured" and "covered" are used interchangeably in various cases, but the specific definitions within the policy take precedence, favoring interpretations that provide greater indemnity.
Florida law mandates that insurance contracts are interpreted based on the clear language agreed upon by the parties involved. When a corporation is the named insured, it cannot file bodily injury or uninsured motorist (UM) claims, nor can family members claim coverage; the risk primarily involves Class II insureds. In the case of Pavili, it is acknowledged that he allowed Ms. Sommerville to use a motorcycle, which she rented on his behalf for her own purposes in California. The specifics of the rental's purpose remain unclear, and no conclusions are drawn regarding its effect on her UM claim. The insurance policy explicitly includes motorcycles under the category of "autos." Florida statutes require that any motor vehicle liability insurance policy providing bodily injury coverage must include uninsured motorist coverage for those legally entitled to recover damages from uninsured vehicle owners or operators. Furthermore, uninsured motorist coverage limits must be at least equal to the bodily injury liability insurance limits purchased by the named insured, or a lower limit as per the insurer's rating plan. All vehicle owners or operators must maintain the ability to compensate for damages resulting from motor vehicle accidents, with a minimum liability for property damage set at $10,000 for any single incident.
