Unambiguous Commercial Auto Policy Provisions Upheld

In a rather tragic case, the Delaware Supreme Court has upheld the Superior Court’s order granting Federated Insurance Company’s motion for summary judgment on the grounds that the provisions in a commercial auto policy excluding the plaintiff’s decedent from receiving uninsured motorist coverage were unambiguous.

Plaintiff’s decedent was a finance manager at a car dealership in Dover, Delaware.  He was struck and killed by an uninsured motorist while driving a vehicle owned by the car dealership but given to him for personal use.  The vehicle was insured by a Federated Insurance issued commercial auto policy.

Per the language of the policy, Federated denied the plaintiff (decedent’s wife) uninsured motorist benefits due to the fact that the policy did not provide such benefits to those who were not directors, officers, partners or owners of the dealership.  In fact, the dealership expressly rejected such benefits for anyone not in those designated positions.

Plaintiff sued on the grounds that 1) the exclusion of certain classes from uninsured motorist benefits was against public policy, and 2) that the terms “directors” and “officers” were not clearly defined.

The Superior Court found, and Supreme Court upheld, that Title 18, Section 3902 expressly allows purchasers of insurance to reject uninsured motorist coverage and there is no public policy argument because “that argument has no foundation in the governing statutes, which must be the source of public policy in this realm that is highly regulated by the Code.”

Additionally, the Supreme Court upheld the Superior Court’s finding that when read in the context of the policy, the terms “officer” and “director” should be given the definitions used in corporate law.  Since Plaintiff’s decedent’s title was finance manager, and not something identifying him as an “officer” or “director” (such as Vice President), the language of the policy was not ambiguous and he was not entitled to uninsured motorists benefits.

Read the case here.

Chris Lee

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