The Montana Supreme Court has ruled that an insurer wrongfully denied uninsured motorist's coverage to a policyholder who was injured while riding his motorcycle despite an exclusion in the policy for damages caused by motorcycle accidents. The case is Goss v. USAA Cas. Ins. Co., 2021 MT 289.
The court ruled that the insurance policy that Joseph Goss purchased from USAA Casualty Insurance Co. violated public policy because Goss could not fulfill the terms of the contract. USAA does not insure motorcycles, but their policies exclude UIM coverage for accidents that happen on motorcycles that it does not insure, even if the policyholder had purchased UIM coverage for other vehicles.
Goss was involved in a car accident in 2015, when a car turned left at an intersection in front of his motorcycle. He suffered "severe and disabling" injuries. Goss had separate uninsured motorist policies, each of which had a $300,000 limit for three vehicles. He insured his motorcycles with Progressive, which has a partnership with USAA to provide motorcycle coverage for policyholders who insure their other vehicles through USAA.
After the accident, Goss received $25,000 in uninsured motorist benefits from USAA, but the company refused to pay the limits of the policy, citing the exclusion mentioned above. Goss filed a lawsuit. USAA argued that Goss could have purchased UIM coverage for his motorcycle through Progressive, but chose to insure through a different company.
Goss' attorney wrote in a brief that his client had paid premiums for uninsured motorist coverage in three policies that together provided up to $900,000 in coverage, but USAA refused to honor the contract only because it included terms that the policyholder could never meet.
The court reversed a ruling of summary judgment in favor of the insurer. In the opinion, the court said "[w]hile USAA is free to decline to insure motorcycles, or to require that an owned vehicle be insured with USAA, it cannot then exclude coverage on the ground the insured failed to have his vehicle insured with USAA when that is impossible . . . We conclude that such an exclusion of coverage by way of an unattainable condition precedent is contrary to public policy."
The court agreed that the policy cannot stand because USAA made it impossible for Goss to meet the conditions for coverage. The court noted that UIM coverage is "personal and portable" in Montana, meaning that claims can be made for coverage regardless of whether the insured was injured by accident in their own vehicle or any other vehicle.
Editor's Note: The opinion contained a footnote that explained that although another U.S. District Court has upheld a policy with a similar exclusion, that case was different because the policyholder was able to purchase UIM coverage but elected not to.