INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Occupancy requirement doesn’t thwart public policy
Jason Rahimzadeh was on his bicycle when he was struck by a vehicle, suffering serious injuries. The owner of the vehicle that hit him was not adequately insured. After filing for coverage under his own auto policy, he also made a claim for Underinsured Motorists (UIM) under his employer’s commercial auto coverage. There was no issue with securing additional insurance from his personal policy; the opposite was the case under the commercial policy.
Rahimzadeh was insured by a commercial automobile policy with Ace American Insurance Company (Ace), as his job included an assignment of a company vehicle. The policy listed his employer (a corporation) as the named insured. Under that policy’s UM/UIM provision, besides employees, other insureds included persons who occupied covered vehicles with the company’s permission. Ace denied the claim and Rahimzadeh sued.
Specifically, Rahimzadeh’s complaint was that the insurer was guilty of breach of contract. Ace’s defense was that no actual claim could be made under its policy. A district court ruled in favor of Ace and Rahimzadeh appealed.
Rahimzadeh, again, argued that Ace owed coverage as a matter of public policy, similarly (again, as argued) to the duty owed for providing UIM protection under a personal policy. On the other hand, Ace pointed out that their policy stipulated that such a claim would have to involve loss connected to occupying a covered company vehicle (requiring ownership as well as being listed on the policy. The injury occurred while Rahimzadeh was on his bike, so no valid claim was possible).
The appellate court revisited the parties’ contrasting arguments, focusing much of its time on clarifying the intent of their state’s public policy as well as the applicability of a case that Rahimzadeh had presented as relevant.
In the higher court’s opinion, the case cited was not relevant as the loss and the decision was in regard to an initial denial of coverage to a family member under a father’s personal automobile policy.
The court reasoned that there was a significant distinction between the coverage goals of a personal and a commercial automobile insurance contract. Whereas the former’s coverage intent was to protect familial situations that could not be overridden by an occupancy requirement, such a stipulation was valid under a commercial contract designed to cover a business’s liability arising from use of its vehicles. Therefore, a public policy consideration did not exist.
The lower court’s decisions in favor of Ace were affirmed.
Rahimzadeh v. Ace American Insurance Company—US Court of Appeals, Seventh District—No. 24-1521—July 11, 2025.
