In Louisiana, uninsured/ underinsured motorist insurance (UM/ UIM) follows the person, not the vehicle. So, if you have UM/ UIM coverage and are involved in a motor vehicle accident where the at fault driver is not insured, you will be covered even if you are not in your own vehicle, or any vehicle at all! But, there may be an exclusion in your UM/ UIM policy which could limit your insurance company’s liability.
The “regular use” exclusion contained in many policies excludes an insurance company from liability when an insured driver uses another vehicle they do not own and is not named on their policy, but which they use regularly. The term “regular use” may apply to a vehicle provided to you by your employer for regular transportation to and from work and for everyday work duties.
It is acknowledged that the “regular use” exclusion serves a valid purpose in protecting an insurance companies from covering a person who “regularly uses” a vehicle for which he has not paid a premium. It may seem unfair to limit a person’s ability to use their uninsured/ underinsured insurance that they have paid for, but not when the individual has not paid a premium for a “regularly used” vehicle. Louisiana has a strong public policy favoring UM/ UIM coverage in order to protect victims who are injured by a tortfeasor with inadequate or no coverage.
On March 24, 2021, the Louisiana Supreme Court invalidated this “regular use” exclusion in uninsured/ underinsured motorist policies as a result of the case Higgins v. La. Farm Bureau Cas. Ins. Co., No. 2020-01094. The plaintiff, Charles Higgins, was injured in an accident while operating his work vehicle owned by AT&T, his employer. The at- fault driver was not insured. Because AT&T did not carry UM/ UIM coverage on the vehicle given to Mr. Higgins, he filed a claim with his own insurer, Farm Bureau Casualty Insurance Company.
After Mr. Higgins filed suit, the defendant moved to have the case dismissed claiming that the “regular use” exclusion applied to Plaintiff’s UM policy. Specifically, it excluded “any automobile or trailer owned by or furnished or available for the regular use of the named insured or a resident of the named insured’s household if that automobile is not described on the Declarations.”
There was no dispute as to whether Mr. Higgins regularly used the work truck, whether the truck was described in the Declaration of the Farm Bureau policy, or whether he was an insured person under his personal insurance policy.
The issue Mr. Higgins was arguing was whether the “regular use” exclusion being raised by Farm Bureau violated the Louisiana UM/ UIM statute. La. R.S. § 22:1295 contains provisions mandating the fundamental requirement that every automobile liability insurance policy also include UM coverage of persons insured under the policy unless such coverage is expressly rejected by the insured or is owned by the insured and not declared under the policy.
To determine the existence of UM coverage under a policy of automobile insurance: “(1) the automobile insurance policy is first examined to determine whether UM coverage is contractually provided under the express provisions of the policy; (2) if no UM coverage is found under the policy provisions, then the UM statute is applied to determine whether statutory coverage is mandated.”
In Mr. Higgins’ policy with Farm Bureau, there was UM coverage contractually provided, but those provisions included the “regular use” exclusion. The truck Mr. Higgins was operating was not owned by him, thus it was not declared in his own policy. Again, there was no dispute as to whether the vehicle was provided for Mr. Higgins’ regular use or that the work vehicle was not listed on the policy. So, UM coverage was excluded in this instance.
Moving to the second step of the two-part analysis, the Louisiana Supreme Court must determine whether coverage to Mr. Higgins is mandated under the terms of the UM statute. UM coverage on an automobile policy is made for the protection of persons insured under the policy not the vehicle. “Any person who enjoys the status of insured under a Louisiana motor vehicle policy which includes uninsured/underinsured motorist coverage enjoys coverage protection simply by reason of having sustained injury by an uninsured/underinsured motorist.” Thus, the court found in Mr. Higgins favor and determined that Farm Bureau’s policy wrongly expanded the categories of vehicles excluded from UM coverage beyond what the UM statute allows.
Ultimately, the Louisiana Supreme Court found that the “regular use exclusion” is inconsistent with the UM statute and against public policy. It should stand that UM coverage shall follow the person and not the vehicle. Moreover, UM coverage should only be excluded when expressly rejected or within the limited exception under the statute for vehicles an insured owns but has not been listed under the policy.
In Justice Crichton’s concurring opinion, he highlights the impracticability of expanding UM coverage exclusions, and the hardships it puts on insured policy holders. He states, “For an employee who has paid for UM coverage, what are his options? Refuse to use the company’s truck as instructed by his employer unless his company secures UM coverage? Incur the expense of adding the company truck to his personal automobile policy? These choices are both impractical and unjust.”
If you or someone you love has been involved in an automobile accident, call us today for a free consultation! PHONE CARDONE at 504-522-3333, 833-597-1818 (toll-free), 225-706-3920 (Baton Rouge office), or email us at firstname.lastname@example.org