The Louisiana Supreme Court decided a case recently which undercuts a major exclusion of many automobile insurance policies because it conflicts with what the State Legislature announced was in the best interest of the public. Many such policies contain various exclusions from coverage, including the one litigated over here: automobile business.
Sensebe v. Canal involved an auto accident where Sensebe was injured when her vehicle was rear ended by a pickup truck on the I-10 twin span bridge in St. Tammany Parish. Deborah Boudreaux was driving the pickup to her employer, an auto shop named Top Hatch, to have the seat covers replaced with leather. Gregory Hyneman was the owner the truck and had it insured with Mississippi Farm Bureau Casualty Insurance Company.
Hyneman’s policy with Farm Bureau contained an “automobile business” exclusion, which Farm Bureau argued applied here and excluded coverage on the pickup during the accident. They reasoned that Ms. Boudreaux was driving the pickup while employed by Top Hatch and as such, the pickup was not covered at the time of the accident.
The District Court agreed with Farm Bureau and dismissed them from the case, but the Court of Appeals reversed that decision by interpreting the insurance policy so as to not exclude the installation of upholstery as automobile business, but rather an after-market upgrade and not an automobile repair or service.
The Louisiana Supreme Court, however, considered the “automobile exclusion” as violating Louisiana Public Policy, which the State Legislature announced requires coverage for permissive drivers – those drivers who operate the covered vehicle with the permission of the policyholder. Because this is Louisiana’s highest court, it sets an important precedent for providing coverage for those injured by vehicles driven by permissive drivers. The Court reasoned that such exclusions, including their broader category of “business exclusion”, violate the legislature’s goal to create a comprehensive scheme to protect injured victims of careless drivers. The Court cautioned that the enforcement of such exclusions would result in motorists being allowed to drive in and out of coverage, depending on the purpose of a particular excursion.
The legislature also included some exceptions to “omnibus coverage”, the required coverage for all vehicles. The owner, they write, may exclude a person if the owner obtains and maintains another policy which provides coverage for the excluded person. Also allowed for exclusion are spouse and other household residents of the policyholder. The LA Supreme Court read these as being the only allowed exclusions from omnibus coverage because the legislature would have included others if it had wanted to allow others. The automobile business exclusion, therefore, was not allowed by the legislature and the fact that it conflicts with the omnibus public policy means it cannot be enforced. The Court sent the matter back down for litigation to continue, denying Farm Bureau’s request to be summarily dismissed from the case on the basis of that exclusion.
The legislature passed the Louisiana Compulsory Motor Vehicle Liability Security Law to pronounce its goals and requirements for automobile insurance, implicitly noting the high cost of automobile-related injuries. Thankfully, the scheme they have passed requires coverage for all drivers except for those noted allowable-exclusions (those otherwise covered by the owner and members of the same household). The idea is to require liability coverage for every vehicle that, by the very nature of driving, might injure someone else. In this case, the Louisiana Supreme Court has signed on to this goal and is enforcing this idea. Those injured in automobile accidents can now worry less about falling through a loophole in the insurance policy of the person who injured them.
If you’ve been injured in an automobile accident, the attorneys at Berniard Law Firm can help. With conscientious care and seasoned expertise, we will employ the best strategy to get you the relief you deserve and avoiding the headaches insurance exclusions can often cause. If you think you might have a claim, please contact us Toll-Free at 504-521-6000 or on the web at www.laclaim.com.