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A Louisiana appellate court reversed a trial court decision that had found coverage was available for a driver whose BAC was above the legal limit at the time of the accident. The case is Williams v. USAgencies Cas. Ins. Co., 140 So. 3d 895 (La. Ct. App. 2014).
What happened
Mr. Williams totaled a Chevy pickup in a single-vehicle collision. He was later issued a citation for driving while intoxicated. He sought coverage for the pickup under a policy issued by USAgencies Casualty Insurance Company (USAgencies), but the claim was denied because his blood alcohol content (BAC) at the time of the accident was above the legal limit.
Trial litigation
Williams sued for coverage of the truck as well as “emotional damages due to the financial strain of paying a bank note for collateral that no longer exist[ed].” In its motion for summary judgment, USAgencies argued the policy exclusion for a BAC above the legal limit was enforceable. Williams also filed for summary judgment, claiming the cited exclusion was ambiguous and went against public policy.
The trial court sided with Williams and ruled the exclusion was void for going against public policy. USAgencies appealed.
BAC exclusion and state law
Williams had sought both comprehensive and collision coverage under his policy. The exclusion USAgencies had used as its grounds for denying Williams’s claim specifically precluded coverage under those same policy provisions “while the operator of the auto…has a blood alcohol content above the legal limit for operation of a motor vehicle.”
The appellate judges agreed with USAgencies that an auto policy could contain just about anything, so long as the policy did not run afoul of state law or public policy. As USAgencies pointed out, no state statute prohibited an exclusion for coverage when a driver’s BAC was above the legal limit. Because the policy exclusion was permissible under state law, the only barrier remained whether the exclusion went against public policy.
“Ambiguous” legal limit
Williams also argued the exclusion rendered the policy ambiguous because it did not specify a “legal limit” for a driver’s BAC. This argument was struck down cold. The judges pointed out that the exclusion only applied when the driver had “a blood alcohol content above the legal limit for operation of a motor vehicle” (emphasis added). The “legal limit” to which the policy referred was specified in state law under La. R.S. §14:98: “operating a vehicle while impaired is the operating of any motor vehicle…when any of the following conditions exist: … The operator’s blood alcohol concentration is 0.08 percent or more by weight based on grams of alcohol per one hundred cubic centimeters of blood” (emphasis added). Since the legal limit was specified by state law, the policy could not be ambiguous.
BAC exclusion and public policy
According to Williams, the USAgencies exclusion for a BAC above the legal limit went against public policy for multiple reasons. First, Williams claimed the exclusion rendered the entire policy illusory because it meant USAgencies could exclude coverage “for any and all violations of state law,” which would effectively negate any liability coverage. The judges denounced this claim as “a stretch.” So long as the policy did not violate state law, the parties to a contract–such as an insurance policy–could include any terms they desired. The issue at hand was whether the specific policy exclusion for a driver whose BAC was above the legal limit went against public policy. Any coverage the exclusion may or may not or may not preclude at a later date was not a present concern for the court. Unless the exclusion at issue or any other exclusion was applicable, coverage would be provided.
USAgencies, on the other hand, argued the exclusion actually supported public policy because state law prohibited driving while intoxicated. The court agreed. Louisiana had “a strong public policy…against driving while intoxicated,” as evidenced by multiple state laws criminalizing driving while intoxicated (La. R.S. §§14:98, 32:300) and permitting the imposition of harsher civil penalties for intoxicated drivers (La. C.C. Art. 2315.4). In Marcus v. Hanover Ins. Co., 740 So. 2d 603 (La. 1999), the Supreme Court of Louisiana specifically stated that the protections afforded by “the compulsory automobile liability insurance law” were intended for those injured by another person’s operation of a motor vehicle, not the vehicle’s owner.
The judges also stated that “public policy [did] not compel insurers to provide coverage for damages to an insured's own vehicle caused by an intoxicated driver” because the comprehensive and collision coverages Williams had claimed were both optional, not required, for drivers. As the Supreme Court of Louisiana had found in Marcus, compulsory auto coverage protected innocent third parties from a driver’s negligence; it was not meant to shield a negligent driver from the consequences of their own actions.
Conclusion
The judges determined that the USAgencies exclusion in question was both valid and enforceable. They reversed the trial court’s decision and awarded summary judgment to USAgencies. The case was sent back to the trial court for further proceedings.
Editor’s Note: Williams’s arguments that the exclusion at issue was against public policy failed for multiple reasons. For one thing, compulsory auto coverage is compulsory in order to protect injured parties, not the insured. If an insured behaves negligently, an innocent third-party should not suffer due to that negligence.
Second, precluding coverage for a driver whose BAC is above the legal limit at the time of the accident, as USAgencies argued, actually supports public policy. Knowing coverage is unavailable to drunk drivers is an incentive not to drive while intoxicated, and providing coverage for such incidents may even encourage the opposite.
Finally, it defies logic to force an insurer to provide optional coverage. Individuals who purchase comprehensive and collision coverage must pay a higher premium in order to enjoy the protection offered by those coverages. Had Williams not elected to purchase comprehensive and collision coverage, his case would have looked very different, had it been allowed to proceed at all.
This article was originally published on FC&S Expert Coverage Interpretation and may not be reprinted.
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