When Is a Vehicle Not a “Vehicle”?

Property & Casualty Insurance   |   September 27, 2015
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Two police officers were riding in a police car that was struck by an intoxicated underinsured driver. The officer in the passenger seat suffered serious injuries that were inadequately compensated by the tortfeasor’s liability limits. The police car did not carry uninsured/underinsured coverage, nor did the injured officer have that insurance on his personal automobile. However, the officer driving the police car carried supplementary underinsured motorist coverage (SUM) from State Farm on his personal vehicle. The injured officer sought to arbitrate a SUM claim with State Farm because the State Farm policy provided underinsured motorist benefits to any person occupying the covered driver’s personal vehicle or any "motor vehicle" that the insured was driving. The State Farm policy did not define "motor vehicle."

In State Farm Mutual Automobile Insurance Co. v. Fitzgerald, State Farm sued to stay arbitration alleging that the injured officer was not entitled to SUM coverage. The New York trial court ruled in favor of State Farm but the intermediate appellate court reversed. The Court of Appeals of New York reinstated the trial court’s judgment and determined that, under New York insurance law, a police vehicle was not a "motor vehicle" under the SUM endorsement.

The court’s ruling was based on State Farm Mutual Automobile Insurance Co. v. Amato in which the court of appeals held that police cars were not included in the New York insurance law mandating that all motor vehicle policies must contain uninsured motorist coverage. The Amato decision did not apply to SUM coverage according to the intermediate appellate court. The court of appeals disagreed because "there is no material distinction between the uninsured motorist coverage in Amato and the disputed SUM coverage" in the case at issue. A principal insured can receive SUM benefits under his or her own insurance while occupying a police vehicle but a person cannot recover under a SUM endorsement in someone else’s policy.

Ambiguities in insurance policies are generally construed against the insurer, according to the court of appeals, however, "a policy provision mandated by statute must be interpreted in a neutral manner consistently with the intent … of the legislation." The court concluded that the insurance statute restricted SUM coverage to a "motor vehicle" and the statute excluded fire and police vehicles from the term "motor vehicle." Thus, both uninsured motorist coverage and SUM coverage did not apply to police vehicles.

The court relied heavily on the doctrine of stare decisis to support its conclusion stating that "common-law decisions should stand as precedents for guidance in cases arising in the future" and "generally be followed in subsequent cases presenting the same legal problem." Moreover, the court noted that the legislature had repeatedly amended the insurance law following Amato and made no effort to change that decision.

Three judges dissented, also relying on Amato. According to the dissent, Amato stood for the rule that the city, which owned the police vehicle, need not provide uninsured motorist protection to its officers. However, the Amato decision recognized that officers "may make a claim against their own uninsured motorist policy." Thus, according to the dissent, Amato justified the injured officer’s SUM claim against the policy of the police officer driving the police vehicle.

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