A Policyholder is only the Named Insured
When a person is seriously injured in an automobile accident and the person responsible has inadequate insurance to indemnify the injured person every possible insurance policy is attempted to be tapped. Not every policy, however, provides coverage. Only those where the contract allows recovery can be tapped.
In Nathan Ball v. Allstate Insurance Company, an Illinois company, Supreme Court No. S-16573, No. 7275, Supreme Court Of The State Of Alaska (August 17, 2018) Allstate Insurance Company denied underinsured motorist (UIM) coverage to Nathan Ball for an accident involving his own vehicle after determining he was not an insured person under his then-fiancée’s parents’ Allstate automobile insurance policy. Ball contended that his fiancée was a “policyholder” for purposes of her parents’ policy, a necessary predicate to his argument for UIM coverage under the policy.
The superior court ruled on summary judgment that the policy language was not ambiguous because “policyholder” referred only to the parents, the “named insureds,” that the fiancée — only a listed driver — had no objectively reasonable expectation that she was a policyholder, and, therefore, that Allstate did not have a duty to provide Ball UIM coverage.
In September 2012 Allstate delivered an automobile insurance policy renewal to Richard and Kathryn Davis at their address in Tok, incorporating changes they had requested to the policy. The policy listed “Richard & Kathryn Davis” as the “NAMED INSURED(S)” and “Richard” and “Kathryn,” as well as “Vivian,” the couple’s adult daughter, as “DRIVER(S).” (Emphases omitted.)
One day in December Vivian and her then-fiancé, Nathan Ball, were driving two of Ball’s vehicles; the vehicle Ball was driving stalled. Vivian backed the vehicle she was driving to the front of the stalled vehicle so that Ball could attach a tow chain. While Ball was positioned between the two vehicles, a third party drove into the back of the stalled vehicle; Ball was seriously injured.
Ball made successful claims under the third party’s liability insurance coverage, under his own liability insurance coverage protecting Vivian, and under his own UIM insurance coverage. Ball also made a claim under the UIM provision of the Davises’ Allstate policy.
Allstate denied coverage for Ball’s claim. Allstate contended that Ball did not qualify as an insured person under the Davises’ policy because “[n]one of the definitions of ‘[i]nsured [p]ersons’ appli[ed]to [Ball’s] status at the time of the accident.” Allstate explained that Ball was “neither a policyholder of the Davis policy, nor a resident relative in the Davis household,” that “[t]he two people defined as ‘you’ [and thus policyholders] are Richard and Kathryn Davis,” and that the car Vivian was driving at the time of the incident was owned by Ball and thus a non-owned auto under the Davises’ policy.
The trial court determined the policy language was not ambiguous because “policyholder” referred only to the named insureds — Richard and Kathryn — not to listed drivers, and Vivian did not have an objectively reasonable expectation that she was a policyholder.
Insurance policies are construed to honor a lay insured’s reasonable expectations. Policy language is construed in accordance with ordinary and customary usage. Ambiguities in insurance policies are to be construed most favorably to an insured, but ambiguities only exist when there are two or more reasonable interpretations of particular policy language.
Although the policy declarations page does not identify the “policyholders,” it is apparent that “Richard & Kathryn” — the persons identified as insureds, named on the policy’s insurance cards, and identified as those financially responsible for the policy — are intended to be the policyholders. By contrast, “Vivian” is identified only as a permissive driver of the listed vehicles and Vivian’s last name and contact information are not listed anywhere on the policy. The policy repeatedly distinguishes “you” and “your” from “drivers,” but it does not distinguish “you” and “your” from “insureds.”
The owners of the Allstate policy are “Richard & Kathryn Davis”: they procured the policy; the policy was addressed and mailed to them at their address in Tok; they were financially responsible for premium changes; and they had the ability to change or confirm changes to the policy, including rejecting UIM coverage. These ownership attributes are not applicable to Vivian, who is merely a permissive driver. Only Richard and Kathryn Davis — the named insureds — are owners and thus policyholders of the policy.
If Ball’s interpretation controlled, this statute could enable someone in Vivian’s situation — without the requisite ownership attributes of a policyholder — to remove from coverage any other person listed on the declarations page who was a household or family member. This is not an objectively reasonable interpretation of the policy language.
The policy declarations page did not list “policyholders,” it listed only “named insureds” and “drivers.” The superior court granted summary judgment on grounds that the policy language was not ambiguous because “policyholder” referred only to the parents, the “named insureds.” The Alaska Supreme Court agreed and concluded that “policyholder” encompassed only the named insureds, not listed drivers, and therefore affirmed the superior court’s decision.
“Policyholder” encompasses only the “named insureds,” not listed drivers. The Supreme Court affirmed the superior court’s grant of summary judgment.
Ball, seriously injured, understandably tried to collect from every possible insurance policy. He stretched to try to recover from his fiancee’s parent’s policy. Allstate was correct and Ball must be satisfied with the collections he received from multiple different insurers.
© 2018 – Barry Zalma
This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and email@example.com.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
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