Could a “Household Exclusion” Clause Limit Your Compensation for a Florida Car Accident?
Auto insurance companies often load their policies with a variety of exclusions and exceptions that purport to disclaim coverage for certain types of accidents. Not all of these exclusions are necessarily valid under Florida law. Keep in mind, the ultimate goal of the state’s auto insurance regulation is to ensure all drivers maintain “financial responsibility” and have adequate coverage in the event of an accident that injures themselves or others.
GEICO on the Hook for $4.9 Million Judgment After Denying Coverage
A recent decision from a federal judge in Tampa, Fether v. GEICO Indemnity Company, addressed one of the more commonly used auto insurance exemptions, the “household exclusion,” or as it was described here, the “family-owned auto exclusion.” This exclusion typically bars coverage of accidents between the insured driver and a member of their own household. Ostensibly, the purpose of this exclusion is to discourage household members from “colluding” and inventing an accident to obtain coverage.
In this case, the plaintiff was a passenger in a vehicle. The driver fell asleep at the wheel and drove his vehicle into a stack of construction pipes before coming to a stop on the highway. The plaintiff sustained serious injuries in the accident and required approximately $400,000 in medical care.
At the time of the accident, the plaintiff had his own auto insurance policy with GEICO. But he was actually driving his mother’s vehicle, which was separately insured by Allstate. The plaintiff offered to settle her personal injury claim for $200,000, which represented the combined limits of both the GEICO and Allstate policies. Allstate agreed to the settlement. GEICO did not.
The plaintiff subsequently filed a personal injury lawsuit against the driver and obtained a $5 million judgment. The plaintiff released Allstate in exchange for its $100,000 payment. She also offered to release GEICO if it agreed to pay $100,000, but again it refused. The driver then assigned his rights to file a bad-faith lawsuit against GEICO to the plaintiff, which she did.
GEICO denied coverage because its policy included a household exclusion that, it claimed, applied to the driver operating his mother’s vehicle. The federal judge assigned to the plaintiff’s lawsuit determined, however, that the exclusion “conflicts” with Florida law and was therefore invalid. The main flaw in GEICO’s argument, the judge explained, was that the plaintiff herself was not a family or household member. She was simply a passenger in a vehicle belonging to the driver’s mother.
Additionally, the court rejected GEICO’s position that it was not liable for any damages arising from the accident because the mother’s Allstate policy was in effect. The judge said that was irrelevant. Florida law required the driver to maintain his own auto insurance policy. And there was nothing in the law that relieved GEICO of its duty to honor that policy just because Allstate partially covered the same accident. The judge therefore issued a summary judgment holding GEICO in breach of contract for its failure to cover the plaintiff’s accident.
Contact a Pasco County Car Accident Attorney
It is not uncommon for a car accident to invoke coverage from more than one insurance company. A qualified Pasco County car accident lawyer can assist you in helping sort out who is responsible for your own damages. Call Wendy Doyle-Palumbo, Esq., today at (727) 233-2134 to schedule a consultation. We serve clients in Hudson, New Port Richie, and Pasco County.
Source:
scholar.google.com/scholar_case?case=15473513204428439288