Grange Insurance v. MacKenzie

Pearson, J.

The issue presented is whether a "use of other automobiles" clause in an automobile insurance contract is effective to deny coverage where the named insured was the exclusive driver of a car that was not covered under the policy and was owned by a member of that insured's household. We hold that the facts here bring this case squarely within the exception clause. Accordingly, we affirm the Court of Appeals decision that summary judgment should have been granted to the insurer.

At the time this case arose, James MacKenzie had been living with his brother, petitioner George MacKenzie, and George's wife, for IV2 years. James suffered from Parkinson's disease, was unable to drive, and had no driver's license.

James owned one car, a Ford Fairmont, which was insured by Farmers Group Insurance. James bought the car after he could no longer drive; George was the only driver and was listed on James' insurance policy as the primary driver of the Ford. In fact, George was the only licensed driver in the household. Whenever James' car was driven, it was driven by George; however, it was driven for James' purposes only. Whenever George assisted James in getting to appointments, he drove James' car.

George owned two cars which were insured by the respondent, Grange Insurance Company (Grange). The contract of insurance included the following clause:

V Use of Other Automobiles

If the named Insured . . . owns a private passenger automobile covered by this policy, such insurance as is afforded by this policy with respect to said auto *710 mobile applies . . . with respect to any private passenger automobile subject to the following provisions:

(b) This insuring agreement does not apply:

(1) to any automobile owned by or furnished for regular use to either the named Insured or a member of the same household other than a private chauffeur or domestic servant of such named Insured or spouse;

(Italics ours.)

On July 26, 1980, George, his wife, and James were riding in James' Ford. George, as always, was driving. They were going to a restaurant for dinner, at James' request. En route to the restaurant, they collided with a motorcycle driven by Stanley Sermonti, and Sermonti was killed. Stanley Sermonti's parents recovered the full amount under James' insurance policy with Farmers Insurance Group.

In order to obtain payment of additional damages, Stanley's parents sued George; George tendered the claim to Grange Insurance Company. The insurance company commenced a declaratory judgment action asserting that under the facts presented in this case the "use of other automobiles" clause in its policy with George relieved Grange of its duty to defend and indemnify George. Both parties moved for summary judgment.

Based on Dairyland Ins. Co. v. Ward, 83 Wn.2d 353, 517 P.2d 966 (1974), the trial court found the "use of other automobiles" clause ambiguous and resolved the ambiguity in favor of extending coverage to George. Thus, the trial court granted George's motion for summary judgment.

Grange appealed the adverse judgment. The Court of Appeals reversed the trial court, ordering that summary judgment be granted to Grange. Grange Ins. Ass'n v. Mac-Kenzie, 37 Wn. App. 703, 683 P.2d 221 (1984). The court held that Ward must be limited to its particular facts and that the policy considerations controlling in Ward are inapplicable here. Grange, at 706. We agree that Ward is not controlling on the facts of this case.

*711In Ward, we held that a clause identical to the one at issue in this case was ambiguous and should be construed in favor of the insured.1 In Ward, a father loaned his pickup truck to his minor son for the day to use for the son's purposes. The son lived at home with his parents. While driving the truck, the son was involved in an accident and fatally injured a child. The child's parents sued both father and son. The insurance on the father's truck had lapsed; however, the son owned another vehicle which was insured by Dairyland. Dairyland refused to defend the lawsuit brought against the son. Instead, it commenced a separate action seeking declaratory judgment on its liability for coverage under the "use of other automobiles" clause. The trial court found the son's use of the truck was infrequent. However, it denied coverage based on the "member of the same household" language. This court reversed.

In Ward, this court sought to ameliorate the harsh rule that would automatically deny coverage whenever members of the same household drove the uncovered car, even on an isolated occasion. As a matter of public policy, we held the insurer must specifically state such a rule, since an ordinary insured would be shocked to learn that his insurance coverage was so severely circumscribed. Ward, at 359. The ambiguity in Ward was directly related to whether an isolated use was a regular use in the common understanding of an insured.

The facts of the present case are so different from those in Ward as to render the policy considerations articulated in Ward inapplicable here. The use here was far *712from isolated; George drove James' car at least 4 to 6 times per month. More importantly, George was the exclusive driver contemplated by the owner of the car; James even named George as the primary driver on James' own insurance policy covering the car. As a matter of law, such exclusive use constitutes regular use.

While it is possible that the phrase "regular use" might be ambiguous under some factual situations such as in Ward, it is not at all ambiguous here. Exclusive use necessarily constitutes regular use, regardless of the purposes of that use. See Westhaver v. Hawaiian Ins. & Guar. Co., 15 Wn. App. 406, 549 P.2d 507 (1976), correctly holding that it is the fact of regular use and not the purpose of that use that is the relevant issue. An insurance company's legitimate interest is in preventing an increase in the quantum of risk without a corresponding increase in the premium; the risk to the insurance company is related only to the amount of time the car is driven, not to the reason that car is driven. Westhaver.

An examination of the purposes of the "use of other automobiles" clauses supports the analysis and result reached in this case. The purposes of these clauses have been described as twofold:

(1) to prevent an insured from receiving coverage on all household cars or another uninsured car of the insured by merely purchasing a single policy, and (2) to provide coverage to the insured when engaged in the infrequent use of nonowned vehicles.

Ward, at 359. Thus, the purpose of these provisions is to provide coverage for isolated use without the payment of an additional premium, but to disallow the interchangeable use of other cars which are not covered by the policy. Ward, at 362 (Hamilton, J., dissenting).

These purposes are not met in this case, where George admittedly drove James' car at least 4 to 6 times per month, knowing he was the only driver available in the household. Such use by George is not the type of sporadic, isolated incidence of driving of a noncovered car that was *713contemplated in the clause. Rather, this use significantly increased the risk to the insurer, without a corresponding increase in premiums. This court recognized in Ward, in stating the purposes behind these clauses, that such use unfairly burdens the insurer.

George and James MacKenzie were undisputedly members of the same household; the exclusive use of the uncovered car was by George. The clause is unambiguous as applied to these facts for the reason that the insured drove a car owned by a household member, where that use was not at all isolated. This type of use was not at issue in Ward. See Rocky Mt. Fire & Cas. Co. v. Goetz, 30 Wn. App. 185, 633 P.2d 109 (1981); Westhaver. The clause is also unambiguous here for the reason that George's use of the car is necessarily regular use because it is the only use.

The Court of Appeals is affirmed for the above reasons. The case is remanded to the trial court with instructions to grant summary judgment in favor of Grange.

Dolliver, C.J., Utter, Brachtenbach, and Andersen, JJ., and Cunningham, J. Pro Tern., concur.

The Court of Appeals quoted the following as the language of the clause in its opinion in Grange Ins. Ass'n v. MacKenzie, 37 Wn. App. 703, 704, 683 P.2d 221 (1984).

(d) This insuring agreement does not apply:

(1) To any [other] automobile owned by or furnished for regular or frequent use to either the named insured or a member of the same household other than a private chauffeur or domestic servant of such insured or spouse.

(Italics ours.) This is incorrect. The clause in the present case does not include the "or frequent" language. It is identical to the clause in Ward.