Insurer Did Not Waive Defenses Due to Non-Cooperation Letter Sent to Insured

 

In Safe Auto Ins. Co. v. American Family Mutual Ins. Co. , 2008 WL 2779961 (Ind.App.) , the plaintiff motorist filed suit against the defendant motorist, as well as against his own uninsured/underinsured motorist insurer, for the defendant's alleged negligence in causing a motor vehicle accident in which the plaintiff suffered a fractured hip. The plaintiff's insurer filed a third-party complaint against the insurer of the owner of the vehicle the defendant motorist was driving at the time of the accident. The plaintiff's insurer sought a declaratory judgment that the vehicle owner's insurer had to defend and indemnify the defendant motorist. The insurers filed cross-motions for summary judgment and the trial court granted summary judgment to the plaintiff motorist's insurer. The vehicle owner's insurer appealed.

 

The Indiana Court of Appeals reversed and remanded with instructions.

 

The appeals court held that the trial court abused its discretion in striking the summary judgment affidavit of the vehicle owner, as the trial court did not condition the admission of the affidavit into evidence on the ability of the owner's insurer to produce the owner for an in-person deposition, and there was no argument that the owner's affidavit violated the rule governing admissibility of affidavits on summary judgment.

 

The court also held that the vehicle owner's insurer did not waive all coverage defenses, aside from the owner's non-cooperation, by virtue of a letter the insurer sent to the owner denying any claim coverage as a result of the accident due to the owner's failure to cooperate. According to the court, it was not possible that the insurer could have known all potential coverage defenses in play, and, as soon as the insurer did learn of the litigation filed by the plaintiff motorist against the defendant motorist, it hired an attorney for the defendant motorist and filed a declaratory judgment action raising all coverage defenses at issue.

 

In addition, genuine issues of material fact existed as to whether the insurer for the owner of the vehicle driven by the defendant at the time of the accident with the plaintiff motorist conducted a reasonable investigation, thus precluding summary judgment to the plaintiff motorist's insurer.

Finally, the court held that the driver of the vehicle involved in the accident was not covered under the insured's insurance policy. The policy stated that the insurer's duty to defend did not apply to a loss arising while a covered vehicle was being operated by a resident of the insured's household or by a regular user of the insured's covered vehicle unless that person was listed as an additional driver. The duty also did not apply to loss arising from the use of any vehicle during the course of business or employment, unless the insured had paid a business use coverage premium.

 

Here, the insured's former live-in ex-boyfriend, who was the primary user of the vehicle, was not included on the policy as a covered driver and the insured did not give the driver permission to use the vehicle. In addition, the ex-boyfriend used the vehicle primarily for his business, and it was reasonable to infer that the insured did not pay a business use coverage premium. And, because the ex-boyfriend's use of the vehicle was not covered, he could not confer coverage on the driver.