Denial of Personal Auto Liability Coverage Based on Bodily Injury to Resident Relative of Insured Exclusion Upheld

PERSONAL AUTO – BODILY INJURY TO RESIDENT RELATIVE OF INSURED EXCLUSION – UNBORN CHILD 
Harrell v. State Farm Ins. Co.
(3rd Dept., decided 11/12/2015)

State Farm insured George Birdwell under a personal auto policy.  The policy excluded liability coverage for "bodily injury to: . . . c. any other person who both resides primarily with an insured and who: (1) is related to that insured by blood, marriage or adoption."  Birdwell also had a personal umbrella policy with State Farm.

Birdwell son, William Harrell, was involved in a two-car motor vehicle accident while driving Birdwell's car.  Harrell's wife, who was then pregnant with the couple's child, was a passenger in the Birdwell vehicle at the time. Thereafter, Trina Harrell commenced a personal injury action, individually and on behalf of the Harrell's child, against the driver of the second vehicle.  Eventually William Harrell and George Birdwell were joined as defendants in that lawsuit and sought liability coverage from State Farm.

Citing the BI to resident relative exclusion, State Farm denied liability coverage to Harrell and Birdwell, and they commenced this declaratory judgment action.  On cross motions for summary judgment Supreme Court granted judgment to State Farm and plaintiffs appealed.

In AFFIRMING judgment to State Farm, the Appellate Division, Third Department, agreed that Birdwell's auto policy unambiguously excluded liability coverage for injuries to the child:

Plaintiffs concede that they both qualify as "an insured" as defined in the policy. At the time of the accident, the child resided primarily with Harrell, who is her father. Thus, as the child both resided primarily with an insured and is related to that insured, there is no coverage for her injuries for either plaintiff (see Pfoh v Electric Ins. Co., 14 AD3d 777, 779 [2005], lv denied 4 NY3d 711 [2005]). This determination necessarily defeats the related claim under the umbrella policy. Accordingly, we find no error in Supreme Court's holding that defendant was not obligated to defend or indemnify plaintiffs under either of the subject policies.

The unborn child was residing with William Harrell, who qualified as an "insured" under his father's policy because Harrell was permissively operating the covered or insured auto.  Hence, the exclusion applied.