Arbitrator umpire’s action was authorized

Arbitrator umpire’s action was authorized

In April 2018, Le’Onsha Scott sustained severe injuries in a car accident with Ellen Cahill. The latter, who admitted that she was at fault, was a named insured under an auto policy provided by The Hartford Insurance. The vehicle involved in the accident was owned by her and was listed on The Hartford policy. Cahill was also listed under a Nationwide auto policy as a “resident relative” (she was the named insured’s mother). Cahill’s vehicle appeared only under her own policy and was not listed under her son’s insurance.

While the parties agreed that Cahill caused the accident, they also agreed to determine the damages owed to Scott via arbitration. The process resulted in an award of more than $420,000. While The Hartford paid its policy limits of $25,000, Nationwide did not contribute to the award. Scott sued for the balance, but a district court found in favor of Nationwide. Scott appealed.

During the appeal, both parties maintained their original arguments. Scott asserted that Nationwide’s refusal to make any payments was against state (Colorado) law and was contrary to public policy. Nationwide held to its position that Cahill, as a resident relative, failed to qualify for coverage since, during the loss, she was not driving a vehicle that appeared in her son’s auto policy.

The higher court considered both arguments. It did recognize that, per policy language, Cahill did have standing as an insured. This was due to the Nationwide policy including resident relatives (those living in the named insured’s household) as insureds. However, the insured status was contingent upon whether a loss involved the operation or use of a covered vehicle.

The court reviewed Scott’s position that allowing a restriction on a person that has been defined as an insured was against public policy and was contrary to the state’s UM/UIM laws. Scott referenced previous cases that, allegedly, supported her argument.

An examination of statutory language did not result in a finding that aligned with Scott’s interpretation. The court shared that state law on UM/UIM and financial responsibility recognized that it is valid to identify vehicles that are eligible for protection under an insurance policy. This fits with an insurer’s need to be able to control the exposure it takes on, based upon valid rating characteristics of the vehicles owned and operated by named insureds. Doing so does not violate statutory language and conforms with public policy.

Similar results were found with the cases presented by the plaintiff. In the court’s opinion, the circumstances of the cases were not related to the case under consideration. Therefore, their rulings were inapplicable. The lower court’s ruling in favor of Nationwide was affirmed that the insurer’s policy had no obligation to respond to Scott’s loss.

Le’Onsha Scott v. Nationwide Agribusiness Insurance Company—US Court of Appeals, Tenth Circuit—No. 24-1358—June 25, 2025.