Volunteer Firefighter Responding to Emergency Call in His Own Vehicle Found Entitled to SUM Coverage Under Department's Business Auto Policy

SUM – DEFINITION OF "INSURED" – BUSINESS USE OF PERSONAL AUTO
Matter of American Alternative Ins. Corp. v. Pelszynski
(Sup. Ct., Suffolk Co., decided 1/27/2010)

Respondent, a volunteer firefighter, was injured in an auto accident while responding to an emergency call in his own vehicle.  He settled a personal injury action against the driver of the other vehicle and made a claim for supplementary uninsured motorists (SUM) or underinsured coverage benefits against petitioner, his fire department's business auto insurer.  AAIC declined SUM coverage and respondent demanded arbitration, prompting this special proceeding to stay that arbitration.

In denying AAIC's petition for a stay and granting respondent's cross motion to compel arbitration, Suffolk County Supreme Court Justice Mark Cohen found that respondent qualified as an "insured" for SUM coverage under the business auto policy, even though he was operating his own vehicle.

At the conference, the parties assisted the Court in clearly indicating that the Petitioner's vehicle would not be a covered auto.²  The focus is on the New York Supplementary Uninsured/Underinsured Motorists Endorsement, which defines insured:

1.  Definitions:  For purposes of this SUM endorsement, the following terms have the following meanings:

     a.  Insured.  The unqualified term "insured" means:

         (1) you, as the named insured and, while residents of the same household, your spouse and relatives of either you or your spouse;

         (2) any other person while occupying:

              (a) a motor vehicle insured for SUM under this policy; or

              (b) any other motor vehicle while being operated by you or your spouse

The Respondent notes, and the Petitioner concedes, that the New York State Insurance Department issued an informal opinion, dated February 8, 2002, which interpreted the SUM language. The opinion found that an employee of the business operating their own vehicle during the course of employment and while acting within the scope of their duty would be covered under the SUM endorsement. Although the informal opinion does not demand stare decisis adherence, courts may defer to the government agency charged with the responsibility for administration of the particular statute, "[w]here the interpretation of a statute or its application involves knowledge and understanding of underlying operational practices or entails an evaluation of factual data and inferences to be drawn therefrom ..." Kurcsics v. Merchants Mut. Ins. Co., 49 N.Y.2d 451, 459. The analysis seems to be the reasonable construction of the policy language. Moreover, as the Respondent notes, SUM coverage was to apply to individuals, herein volunteers, of the named insured, since only individuals can have a spouse or a relative. Alternatively, an "insured" is "a person occupying ...any other motor vehicle while being operated by you." The phrase "other motor vehicle," would have to mean a non-covered vehicle and for a volunteer, would be his or her own vehicle while acting within the scope of his or her employment.³

Footnote #2 of the court's decision is especially important. AAIC apparently did not timely assert one of the exclusions that is found in the prescribed UM/SUM endorsement that would otherwise negate coverage for employees or volunteers of a named insured injured while using their own motor vehicles if those vehicles are not specifically insured for SUM coverage under their employers' or principals' business auto policy:

This SUM coverage does not apply:

2. to bodily injury to an insured incurred while occupying a motor vehicle owned by that insured, if such motor vehicle is not insured for SUM coverage by the policy under which a claim is made, or is not a newly acquired or replacement motor vehicle covered under the terms of this policy.

The "insured" as used in that exclusion would be the church employee in the OGC opinion letter and the volunteer firefighter in this case.

Oddly, on its face, this exclusion seemingly would not apply if the employee or volunteer of the named insured were using someone else's vehicle, i.e., a non-owned vehicle. I guess the underwriting intent is to not provide SUM coverage for the use of owned vehicles that employees or volunteers regularly use. Nonetheless, the implied requirement that the employee or volunteer be acting within the scope of his or her "employment" by the named insured at the time of the accident remains, regardless of the vehicle's ownership.

So, an employees who is injured in the course of his employment while driving someone else's car may be entitled to SUM coverage under his employer's business auto policy if it includes SUM coverage? Under this decision, it appears so.

H/t to Eric Turkewitz of the New York Personal Injury Blog for the heads up on this decision.

Note: The Fourth Department, Appellate Division, issued a decision on February 11, 2010 that calls this decision into question.  See this blog's post regarding the Gallaher v. Republic Franklin Ins. Co. case.