Present: Carrico, C.J., Compton, Stephenson, Whiting, 1 Lacy,
Hassell, and Keenan, JJ.
BARBARA E. COTCHAN, ET AL.
OPINION BY JUSTICE ROSCOE B. STEPHENSON, JR.
September 15, 1995
v. Record No. 941858
STATE FARM FIRE & CASUALTY COMPANY
FROM THE CIRCUIT COURT OF PRINCE WILLIAM COUNTY
Richard B. Potter, Judge
The sole issue in this appeal is whether an exclusion in an
automobile insurance policy respecting payment of medical expense
benefits conflicts with and is prohibited by statutory law.
State Farm Fire & Casualty Company (State Farm) filed a
declaratory judgment proceeding against Barbara E. Cotchan,
Wesley S. Cotchan, and Christopher J. Cotchan (collectively, the
Cotchans), seeking a declaration that Christopher was not
entitled to medical expense benefits under a family automobile
insurance policy. The parties stipulated the facts, and each
party moved for summary judgment. The trial court ruled in favor
of State Farm, and the Cotchans appeal.
The relevant facts, as stipulated, are as follows. State
Farm issued an automobile insurance policy to Barbara and Wesley
Cotchan as the named insureds. In accordance with Code § 38.2-
2201, the policy provides that State Farm will pay "to or on
behalf of each injured person, medical expense benefits as a
result of bodily injury caused by accident and arising out of the
1
Justice Whiting participated in the hearing and decision of
this case prior to the effective date of his retirement on August
12, 1995.
ownership, maintenance or use of a motor vehicle as a motor
vehicle." The medical expense coverage provided protection not
only to Barbara and Wesley, but also to other persons who are
related to them by blood, marriage, or adoption and who are
residents of the same household. See Code § 38.2-2201. An
exclusion in the policy, however, provides that such insurance
does not apply "to bodily injury sustained by the named insured
or any relative while occupying any motor vehicle owned by or
furnished or available for the regular use of such named insured
or relative and which is not an insured motor vehicle." The only
vehicle listed in the policy was a 1987 Chevrolet Cavalier.
On November 24, 1992, while the policy was in effect,
Christopher sustained bodily injury and incurred medical expenses
as a result of a motor vehicle collision which occurred while he
was operating a motorcycle. The motorcycle was owned by and
registered to Christopher and was insured for liability by
Progressive Insurance Company (Progressive). Christopher had
rejected medical expense coverage on his motorcycle under his
policy with Progressive, and, therefore, the Progressive policy
provided no medical expense benefits.
Christopher filed a claim with State Farm requesting payment
of medical bills incurred for the treatment of his injuries.
State Farm, relying on the subject policy exclusion, denied
medical expense coverage to Christopher because the motorcycle
was not an insured motor vehicle under the provisions of its
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policy.
Code § 38.2-2201 provides, in relevant part, that an insurer
shall provide medical expense coverage "(i) to persons occupying
the insured motor vehicle; and (ii) to the named insured and,
while resident of the named insured's household, the spouse and
relatives of the named insured while in or upon, entering or
alighting from or through being struck by a motor vehicle while
not occupying a motor vehicle."
The Cotchans contend that Code § 38.2-2201 mandates medical
expense coverage for the resident relatives of the named insured
while in or upon any motor vehicle. The Cotchans assert,
therefore, that the subject policy exclusion is invalid because
it attempts to exclude coverage that is mandated by Code § 38.2-
2201.
State Farm asserts, on the other hand, that Code § 38.2-2201
does not prohibit reasonable exclusions of medical expense
coverage that are clear and unambiguous. State Farm opines that
the subject policy exclusion is reasonable, clear, and
unambiguous.
We have considered the validity of policy provisions that
excluded medical expense coverage in two recent cases. In State
Farm Mutual Auto. Ins. v. Gandy, 238 Va. 257, 258, 383 S.E.2d
717, 717 (1989), the insurer agreed to pay all reasonable medical
expenses for the named insured for bodily injury caused by
accident through being struck by an automobile or by a trailer of
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any type. The insurance policy further provided, however, that
it "does not apply . . . to bodily injury . . . sustained by the
named insured . . . through being struck by . . . a farm type
tractor or other equipment designed for use principally off
public roads, while not upon public roads." Id. The insured was
injured when his foot was "run over" by a forklift while he was
standing on private property. Id.
In Gandy, like the present case, the insured contended that
the exclusion was invalid because it conflicted with the minimum
requirements imposed by statute. We rejected the insured's
contention and held that the exclusion was valid. In so holding,
we noted that the statute did not address or prohibit policy
exclusions and that the exclusion did not conflict with the
statutory provisions. Id. at 260, 383 S.E.2d at 718-19. We
further stated that an exclusion is valid if it is reasonable,
clear, and unambiguous. Id. at 261, 383 S.E.2d at 719.
In Baker v. State Farm Mut. Auto Ins., 242 Va. 74, 75, 405
S.E.2d 624, 624 (1991), the insured, while operating a bus in the
course of his employment, sustained a back injury "when the
steering on the bus locked up." The insured received workers'
compensation benefits for his medical expenses, and also sought
to recover a part of his medical expenses under his automobile
insurance policy. Id. at 75-76, 405 S.E.2d at 625. The policy,
however, provided that the medical expense benefits coverage did
not apply "to bodily injury sustained by any person to the extent
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that benefits therefor are in whole or in part payable under any
[workers'] compensation law." Id. at 75, 405 S.E.2d at 624. The
insurer, therefore, declined to pay under the policy, and the
insured contended that the exclusion was invalid because it was
not authorized by Code § 38.2-2201. Id. at 76, 405 S.E.2d at
625.
Relying upon Gandy, we held that "a clear and unambiguous
provision reasonably excludes medical payments coverage where
those benefits are payable under a workers' compensation
statute," and that, as in Gandy, the "`statute does not address,
or prohibit, policy exclusions. Nor is there a conflict or
inconsistency between the statutory provisions and the policy
exclusion.'" Id. at 76, 405 S.E.2d at 625 (quoting Gandy, 238
Va. at 260, 383 S.E.2d at 719). 2
We find the rationale in Gandy and Baker controlling in the
present case. The policy provision excludes coverage for the
named insured or any relative while occupying a motor vehicle
owned by or available for the regular use of the named insured or
relative and "which is not an insured motor vehicle." Nothing in
Code § 38.2-2201 prohibits such exclusion, and the exclusion is
clear and unambiguous. Moreover, as State Farm argues, the
2
In Gandy, the insurer voluntarily provided medical expense
coverage without a specific request by the insured. Therefore,
our analysis proceeded under Code § 38.2-124(B)(1). 238 Va. at
259, 383 S.E.2d at 718. In the present case, medical expense
coverage was required to be provided under the provisions of Code
§ 38.2-2201. In Baker, we held that this distinction makes no
difference. 242 Va. at 76-77, 405 S.E.2d at 625.
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exclusion of substantial risks that are unknown to it and for
which it receives no premium are clearly reasonable.
Accordingly, we will affirm the trial court's judgment.
Affirmed.
CHIEF JUSTICE CARRICO, with whom JUSTICE LACY and JUSTCE KEENAN
join, dissenting.
I would reverse. The majority acknowledges that the policy
exclusion involved in this case is valid only if there is no
conflict or inconsistency between the exclusion and statutory
provisions. As pertinent here, Code § 38.2-2201(A) provides that
medical expense coverage shall be extended: "(i) to persons
occupying the insured motor vehicle; and (ii) to the named
insured and, while resident of the named insured's household, the
spouse and relatives of the named insured while in or upon,
entering or alighting from . . . a motor vehicle."
In other words, the coverage provided by (i) is extended to
all persons occupying the insured vehicle while the coverage
provided by (ii) is extended only to the named insured and to his
or her resident spouse and relatives. However, the coverage
under (ii) is extended while the persons specified are occupying
a motor vehicle, meaning any motor vehicle, whether insured or
not. Yet, State Farm's policy exclusion would deny coverage to
the persons specified in (ii) while occupying a vehicle that is
not insured. Hence, there is a direct conflict or inconsistency
between the policy exclusion and the statute, and the exclusion
cannot stand.
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