INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
No recovery for injured party
In August 2019, James Cooper was injured in an accident while riding as a passenger in a car owned by Rick Huffman. Both Cooper and Huffman were employees of Pison Management, LLC, and were driving to a jobsite during their employment.
Cooper’s injuries exceeded the at-fault driver’s insurance limits, so he sought underinsured motorist (UIM) coverage under Pison’s commercial automobile policy, which was issued by Erie Insurance Property & Casualty Company. The policy provided $1 million in liability coverage for two vehicles owned by Pison and a class of non-owned vehicles associated with one to 25 employees, but UIM coverage was provided only for the owned vehicles. Erie denied Cooper’s claim for UIM coverage.
Erie filed suit in federal district court seeking a declaration that the policy did not provide the UIM coverage Cooper sought. Cooper counterclaimed, arguing that a section of the West Virginia code required Erie to offer UIM coverage for the class of non-owned vehicles.
The district court ruled in favor of Cooper, holding that the statute required Erie to make a commercially reasonable offer of UIM coverage for all vehicles covered by the liability policy, including non-owned vehicles. Erie appealed this decision to the United States Court of Appeals for the Fourth Circuit.
The Supreme Court of Appeals of West Virginia reviewed the case. It pointed out that UIM coverage is uniquely for the benefit of the named insured and permissive users of the named insured’s vehicle, and that this is reflected in “the requirements of our [UIM] statute, which recognizes the distinction between Class One and Class Two insureds.”
The discussion of the case included the following elements:
The Class I insured includes the named insured, his or her spouse, and their resident relatives, while in a motor vehicle or otherwise. For UIM purposes, a Class II insured is defined by the relevant section of the West Virginia code as “any person … who uses, with the consent, expressed or implied, of the named insured, the motor vehicle to which the policy applies.”
Accordingly, because Mr. Cooper was not using, with the consent, express or implied, of the named insured (Pison), either of the motor vehicles owned by the named insured to which the policy applies, he does not qualify as a Class II insured for purposes of UIM coverage.
Pison, the named insured, lacked the authority to consent to Cooper’s use of a motor vehicle Pison did not own. The fact that the non-owned vehicle in which Cooper was riding when he was injured by an underinsured motorist was insured for liability under the policy issued to Pison did not give Pison an interest in the vehicle such that it had possession and control of it and could consent to Cooper’s use or occupancy of it so as to entitle Cooper to UIM coverage.
The Supreme Court of Appeals held that the section of the West Virginia code did not require an insurer to offer UIM coverage for a class of non-owned vehicles when a commercial automobile policy insures certain owned vehicles and a class of non-owned vehicles for liability protection.
The court reasoned that UIM coverage is intended to protect the named insured and permissive users of the named insured’s vehicle, not to extend to non-owned vehicles. Therefore, the court answered the certified question in the negative and dismissed the case from its docket, returning the matter to the Fourth Circuit for further proceedings consistent with this opinion.
Erie Insurance Property & Casualty Company v. Cooper—Supreme Court of Appeals of West Virginia—No. 22-1129—April 29, 2025.
