The Essentia policy limited its UM/UIM coverage to occurrences involving the classic cars. The definition of “insured” in the UM/UIM context under the Essentia policy specifically excluded coverage for injuries suffered “while occupying, operating or otherwise using any vehicle owned by, or furnished or available for the regular use of, you, or any person related to you who resides with you, if that vehicle is not your covered auto” (italics omitted, bold added).

When Hughes sued Essentia, the insurer filed for summary judgment, arguing that Hughes was not considered an “insured” under the Essentia policy in this instance because she was not driving one of the classic cars at the time of injury. Hughes claimed the regular-use vehicle exclusion violated precedent from the Supreme Court of Colorado that state law “tie[d] UM/UIM coverage to persons rather than vehicles.”

The trial court granted summary judgment to Essentia, reasoning that the requirement to which Hughes referred was actually satisfied because the Essentia policy required Hughes to have a “regular use vehicle” with its own insurance in order to maintain coverage under the specialty auto policy. Hughes appealed.

The appellate court “fully acknowledged that Hughes was seeking to recover ‘more than she bargained for’ with Essentia,” but the judges stated they were obligated to follow the precedent set by the Supreme Court of Colorado that UM/UIM coverage followed the insured rather than a specific vehicle. The appellate judges reversed the trial court and ruled in favor of Hughes. Essentia appealed.

The Supreme Court of Colorado was tasked with answering the question of whether Hughes could receive benefits from the specialty policy despite the exclusion for injuries suffered in an accident while driving her regular use vehicle. Colorado law required insurers to offer UM/UIM coverage to insureds “to protect insureds against the risk of inadequate compensation for injuries caused by an uninsured or underinsured at-fault motorist,” which the insured could waive in writing.

The justices took a closer look at the precedential case relied on by the appellate court. In DeHerrera v. Sentry Insurance Co., 30 P.3d 167 (Colo. 2001), the insured’s son was driving a motorcycle when he had a collision with a pickup truck. The insurer denied coverage based on a policy exclusion for injuries suffered while occupying anything other than a “four-wheeled motor vehicle.” The state law in question, C.R.S. §10-4-609, was silent on whether coverage followed the vehicle or the insured. The trial court ruled in favor of the insurer and was affirmed by the appellate court. In the Supreme Court of Colorado, the justices reasoned the “four-wheeled motor vehicle” exclusion ran afoul of state law because it depended “on the type of vehicle insured, rather than on the class of persons insured” (emphasis omitted).

Like the policy at issue in DeHerrara, Essentia’s specialty auto policy limited the carrier’s UM/UIM coverage to a particular type of vehicle: Hughes’s classic cars. However, unlike the policy in DeHerrara, the Essentia specialty policy required the insured to have a regular use vehicle other than the covered specialty autos and maintain separate coverage for that vehicle that satisfied all of the minimum state requirements, including UM/UIM coverage. The justices said this requirement turned Essentia’s specialty policy into “an adjunctive policy that functions in tandem with a standard policy.”

As stated above, Hughes was in compliance with the specialty policy when she was injured. Therefore, unlike the insured in DeHerrara, UM/UIM coverage was available to Hughes even if the Essentia policy was enforced as written. Colorado public policy suffered no violation under the Essentia policy because, though UM/UIM benefits were unavailable for the injuries at issue, Hughes was still protected from “the risk of inadequate compensation for injuries caused by an uninsured or underinsured at-fault motorist.”

Since the Essentia specialty policy, as written, worked with a standard auto policy to provide UM/UIM coverage to policyholders, the justices reasoned that the UM/UIM exclusion for regular use vehicles was valid and enforceable.

The appellate verdict in favor of Hughes was reversed, and the trial court’s grant of summary judgment to Essentia was reinstated.

Editor’s Note: Classic cars like Hughes’s are not exposed to all of the same risks as “regular use” autos because they are generally not driven in the same manner or even the same places as other autos. Limited-risk vehicles, according to the court, expose insurers to less risk than regular autos and therefore need a proportionately tailored policy. Even though the limited Essentia policy did not cover UM/UIM benefits for regular use vehicles itself, it required policyholders to have a regular-use auto and maintain separate coverage for that vehicle, so there was protection against “inadequate compensation for injuries caused by an uninsured or underinsured at-fault motorist”, as required by state law.

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