Over a spirited dissent, the Houston [14th] Court of Appeals has overturned a trial court ruling that a “regular use” exclusion in a UM/UIM policy violated public policy and could not be enforced.
Progressive County Mutual Insurance Company v. Artemiz Freeman (No. 14-22-00450-CV; May 14, 2024) arose from a vehicle collision in which an underinsured driver rear-ended a Houston police officer in her police car. The officer received $50,000 in policy limits from the other driver’s policy, workers’ compensation benefits from the city, and personal injury protection benefits under her policy with Progressive. Progressive, however, declined to pay additional UM/UIM benefits, citing an exclusion in the policy for bodily injuries sustained by any person using or occupying a motor vehicle owned by or made available for regular use of the insured or the insured’s relative. The officer sued Progressive for breach of contract and extracontractual claims. The parties filed competing motions for summary judgment. The trial court granted the officer’s motion, holding that the regular use exclusion violated Texas public policy. Progressive appealed.
In an opinion by Justice Hassan, the majority reversed and rendered judgment in favor of Progressive. The court declined to strike down the exclusion as a matter of public policy, concluding that Plaintiff had failed to carry her burden to show how the exclusion “violates the state’s interest in protecting conscientious and thoughtful motorists from financial loss.” The majority pointed out that Plaintiff likewise failed to show that she had suffered any financial loss, in view of the other benefits that she received from Progressive, the other driver’s policy, and her employer.
Justice Poissant dissented. She would have held that the exclusion deprived Plaintiff of the protection required by the Texas UM/UIM statute. She interpreted the statute as providing that an insured’s UM/UIM coverage follows the insured, not the vehicle the insured happens to be driving at the time of an accident. In response to Progressive’s argument that the exclusion merely withheld coverage that the insured didn’t pay for (here the City of Houston owned and insured the police car), Justice Poissant argued that the statute explicitly requires the coverage to apply to any vehicle operated by an insured, no matter who owns it. She also pointed to a few other states that had struck down similar regular use exclusions, while noting that SCOTX has not yet considered the issue. She would also have held that the amount of workers’ compensation benefits Plaintiff received was irrelevant to the policy question.
Whether Justice Poissant has a point is a debate for another day, but in the absence of SCOTX or other relevant Texas authority dictating otherwise, the majority did the right thing in applying the law as it stands right now. Intermediate courts of appeals should be (and generally are) extremely wary of intruding into the public policy domain, as the court was asked to do in this case. If the Legislature thinks that regular use exclusions violate the statute, it can amend the statute to say so. After all, the purpose of the exclusion is to spread losses among covered vehicles so that coverage remains affordable and available to all drivers who are putting their premium dollars into the pot. If a driver spends most of his or her time operating an employer-owned vehicle, however, it doesn’t make much sense from a policy standpoint to extend UM/UIM coverage to that driver where one or more other policies already cover the employer’s vehicle and, as in this case, have already paid out. To put it another way, Plaintiff was already amply protected in her use of an employer-owned vehicle. The exclusion under these circumstances actually promotes the purpose of the UM/UIM statute by making sure everyone who pays for the coverage gets it when they need it.
