When Beverly Hughes was injured in a motor vehicle accident, she filed a claim with her insurer, Essentia Insurance Co., under the UM/UIM benefit provision of her policy, according to the appeals court’s May 5 opinion. Essentia insured Hughes’ two classic cars, but not the “regular use vehicle” she was driving at the time of the crash.
The Essentia policy specifically prohibited “regular use vehicles” from coverage under the UM/UIM provision and denied the claim. The trial court ruled in favor of Essentia, citing the Court of Appeals’ 2000 ruling in Cruz v. Farmers Insurance Exchange, which held that “excluding coverage for regularly used cars that are not listed on the policy and for which premiums are not paid are enforceable in Colorado because they protect the insurer from a situation in which the insured pays only for coverage on one vehicle but regularly drives other vehicles not listed on this policy.”
The trial court granted Essentia’s motion for summary judgment, reasoning that the insurer strictly covered classic cars, which have a lower insurance rate and premium, not regular use vehicles. Essentia’s requirement that insureds own a regular use vehicle that is separately insured offered Hughes the accident protection she needed in this circumstance, the trial court said.
But Hughes argued on appeal that excluding her claim is in direct contradiction of Colorado law 10-4-609 and public policy. The law in question states, in part, that the insured is “legally entitled to recover damages from owners or operators of uninsured [or underinsured] motor vehicles.”
Colorado Court of Appeals Judge Craig Welling, in his written opinion, reversed the grant of summary judgment, finding that Cruz is not persuasive since it preceded the Colorado Supreme Court’s decision in DeHerrera v. Sentry Insurance Co., which “provides that UM/UIM benefits cover persons injured by uninsured or underinsured motorists and can’t be tied to the occupancy or use of a particular vehicle or type of vehicle.”
Welling said DeHerrera “mandated coverage irrespective of the vehicle occupied at the time of injury because the statute [10-4-609] provides coverage for persons, not vehicles.”
“We see no way to reconcile the holding in Cruz with the broad protections outlined in DeHerrera,” Welling said.
Essentia argued that because they required a “regular use vehicle policy,” Hughes was “essentially protected by Essentia.” Welling rejected that argument stating that “Essentia can’t escape its own statutorily mandated duty to provide UM/UIM benefits (if the policyholder elects to purchase them) to persons, rather than cars, by attempting to tie its provided UM/UIM coverage to the occupancy of ‘your covered auto’ (in this case, one of the classic cars.”
“Simply put, under section 10-4-609, as interpreted by DeHerrera, Hughes is entitled to recover UM/UIM benefits under the Essentia policy for the injuries she sustained when she was involved in an accident with an underinsured motorist,” Welling wrote in his opinion, “And because the regular use vehicle exclusion in the Essentia policy violates section 10-4-609, the trial court erred in granting summary judgment in Essentia’s favor.”
Judge Stephanie Dunn and Judge David Yun joined Welling in reversing the summary judgment and remanding for further proceedings consistent with their opinion.
