Coverage for an automobile’s “use” is broader than many realize

December 1, 2014

Insurance LawMost drivers understand that their auto insurance covers liability arising out of the operation, maintenance or use of an automobile, including the use of a non-owned automobile with the named insured’s permission. While a large body of case law addresses the scope of permissive use coverage, few decisions examine exactly what qualifies as “use” for insurance coverage purposes. The Ninth Circuit’s recent decision in Encompass Insurance Co. v. Coast National Insurance Co., 764 F.3d 981 (9th Cir. 2014), shows that the scope of use is much broader than many policyholders—or their attorneys—realize. Under the Encompass decision, a permissive user need not actually avail herself of the insured vehicle in order to use the vehicle for insurance coverage purposes.

Good Samaritan’s Use of Accident Victim’s Vehicle

Lisa Torti stopped at the scene of a single-car accident to render aid. She grabbed the car’s passenger and physically removed her from the car. The passenger suffered severe spinal injuries, rendering her a paraplegic. The passenger sued Torti, alleging that Torti caused the passenger’s injuries when she removed her from the car.

Torti sought liability coverage for the passenger’s claims under automobile insurance policies issued by Mid-Century Insurance Company to Torti and by Coast National Insurance Company to the owner of the car in which the passenger was injured.  Both policies covered Torti for liability arising out of the “use” of a non-owned vehicle provided such use was with the “permission” of the vehicle’s owner.  Both insurers refused to accept responsibility for Torti’s defense in the passenger’s lawsuit.

Removing Injured Passenger Qualifies As Use

The issue in the ensuing coverage action was whether Torti’s act of removing the passenger from the car constituted a  “use” of the car. The district court held that it did not, but the Ninth Circuit reversed, holding that California Insurance Code § 11580.06(g) requires coverage for the act of removing someone from a vehicle. Section 11580.06(g) defines “use” of a motor vehicle as “operating, maintaining, loading, or unloading of a motor vehicle” (emphasis added). Since Torti unloaded the passenger from the car, she was using the car within the meaning of  § 11580.06(g), which prescribes the scope of coverage insurers are required to provide.

Insured Need Not Avail Herself of the Vehicle

The majority rejected the dissenting judge’s theory that unloading qualifies as“use” of a vehicle only when the unloading is part of the user’s act of availing herself of the vehicle. The court found no basis for the dissent’s proposed limitation on “unloading” in the statute or in case law decided before and since the statute’s enactment. The majority also found no basis for the dissent’s attempt to limit unloading coverage to commercial vehicles.

Was the Good Samaritan’s Use Permissive?

The court rejected the suggestion that its holding will lead to absurd results, such as coverage for a thief who breaks into a car to steal a purse. The court pointed out that coverage for unloading a vehicle applies only if the unloading is with the named insured’s permission. Curiously absent from the court’s opinion, however, is any discussion of whether Torti had the owner’s permission to remove the passenger and whether such permission is required given the exigent circumstance of the accident scene.