On Behalf of | Aug 26, 2021 | Liability

In Higgins v. Louisiana Farm Bureau Casualty Insurance Co., 2021 WL 1115395 (La. March 24, 2021), the plaintiff had been injured in an automobile accident operating an employer owned truck.  The employer did not carry UIM coverage on the truck.  The tortfeasor was underinsured.  Because of this, the employee plaintiff sought UIM coverage from his own personal insurer, Farm Bureau.  Farm Bureau rejected coverage, arguing that its policy’s “regular use” exclusion applied to UIM coverage.  Under the exclusion, the UIM coverage would not apply to an automobile that was furnished or available for regular use by the employee.  In the trial court, the employee argued that the exclusion conflicted with Louisiana’s mandatory requirements under its UIM statute.  The trial court agreed.  However, the Louisiana appellate court reversed, finding that Louisiana’s UIM statute did not mandate such coverage because the policy did not provide liability coverage for the accident.  The Court of Appeals noted that a tort victim seeking UIM coverage had to qualify as a liability insured under the policy at issue.  Because there was a regular use exclusion within the liability part of the policy, as well as the UM part of the policy, the plaintiff employee was not a liability insured under the policy.

The Louisiana Supreme Court reversed the Court of Appeals.  The Supreme Court held that the policy’s regular use exclusion impermissibly derogated from the rights of the Louisiana UIM statute.  In so finding, the Court used a two-step analysis.  The first step was whether the policy expressly provided UIM coverage.  The second, if no UIM coverage was found, the Court was required to determine whether statutory UIM coverage was mandated.  Under the case facts, the plaintiff employee had UIM coverage expressly under his personal auto policy, but the coverage was excluded.  Because of this, the Court then went to the next step of the analysis, which was whether the plaintiff employee was entitled to stator UIM coverage.  Because every automobile policy was required to contain UM/UIM coverage unless such coverage was expressly rejected, the Court found that the presence of UIM coverage was an applied amendment to any auto policy for the insured’s protection.  While regular use exclusions were valid, the purpose of a regular use exclusion in the UM/UIM context was to prevent an insured from purchasing one policy with such coverage on only one of the insurance owned vehicles, while not obtaining it for other vehicles.  Because of this, the Supreme Court found that the exception applied only to vehicles owned by the insured, and not where the insured was using someone else’s vehicle.