By: Roger D. Horgan
You have just landed a new job, or received a promotion, which has the added benefit of a company car. You even get to take it home and use it as your personal car. What could possibly be wrong with that set up?
A lot. You get in an accident while driving your shiny new company car. The other driver admits responsibility, and his insurance company tenders his policy limits, which, in Pennsylvania, may be as little as $15,000.00. Since the responsible driver has inadequate insurance, you want to look at the company car policy to see if it has any underinsured motorist coverage, known as UIM coverage. The policy covering the employer-provided vehicle may or may not have UIM coverage. Further, even if it has such coverage it still may be inadequate to cover the value of a serious injury claim. The next place to look is the policy you have purchased to cover your personal vehicles. You determine, thank goodness, that you have purchased a great deal of UIM coverage, and initially feel relief that you had such great foresight to protect you and your family.
Unfortunately, your relief is likely to be short lived because your insurance carrier is likely to deny your UIM claim. Virtually every automobile insurance policy issued in the state of Pennsylvania contains a limitation on UIM claims that applies when the insured is injured while occupying a vehicle that he does not own, but regularly uses. This is known as the Regularly Used/Non-owned Vehicle Exclusion. These exclusions are written into auto insurance policies because the insurance company does not want to be responsible for vehicles that it does not insure, and for activities of the driver beyond what the insurance company expects when the policy is issued. They contend that, if required to pay to such UIM claims, they would be forced to pay benefits for claims that were not anticipated by the premiums they charged.
The saddest examples of the Regularly Used/Non-owned Vehicle Exclusion have to do with police officers who are seriously injured in an automobile accidents while on the job. While the officer was entitled to the police equivalent of worker’s compensation, those benefits are not intended to and do not cover all of his damages. His only sources of compensation for his other damages is a claim against the defendant driver, plus any available UIM coverage. Most employers do not provide UIM coverage on their vehicles because it is not required by law, and therefore it is an avoidable expense. Even if the employer does have UIM coverage it may well be inadequate in serious injury cases. By operation of the Regularly Used/Non–owned Vehicle Exclusion in his personal policy the injured police officer cannot tap into the UIM coverage he purchased, and he can be left far from fully compensated for his losses.
This outcome was challenged by a police officer in the Pennsylvania Supreme Court case of Williams v. GEICO Gov’t Employees. Ins. Co., 613 Pa. 113 (Pa. 2011). The policy language prohibited recovery of UIM benefits, but the officer argued that enforcing that language, and denying such benefits, violated the strong public policy in favor of protecting police officers. The court sympathized with the officer’s predicament, but nevertheless found that public policy was not violated by the Regularly Used/Non-owned Vehicle Exclusion, and confirmed the denial of his claim for UIM benefits.
“In summary, we reaffirm the decision in Burstein, holding that the regular-use exclusion is not void as against public policy. A contrary decision is untenable, as it would require insurers to compensate for risks they have not agreed to insure, and for which premiums have not been collected.” Williams v. GEICO Gov’t Employees. Ins. Co., 613 Pa. at 135 (Pa. 2011).
This is now well-settled law in Pennsylvania, and the question is what can a person who regularly drives a vehicle which he does not own to protect himself? Unfortunately, there appears to be no perfect answer. One suggestion is to purchase accident disability coverage separate and apart from automobile insurance. However, recovery under such policies is generally limited to a particular, monthly dollar amount. Worse, some of them would reduce payments of benefits by the amount of workers compensation or similar benefits received by the victim. Another suggestion would be to convince the employer, if possible, to purchase adequate UIM coverage for the vehicles it provides to employees. This should be a part of any labor/management negotiations where employees are provided with vehicles by the employer, and it should be requested by any employee who regularly drives a vehicle provided by an employer. In any event, be careful out there!