“Temporary Substitute Vehicle” Not Excluded from Supplemental Uninsured/Underinsured Motorist Policy

The Second Department determined that the language of the policy did not exclude the driver (O’Brien) of a “temporary substitute” vehicle from coverage under the supplemental uninsured/underinsured motorist (SUM) policy.  O’Brien, an auto mechanic, was injured when returning a customer’s “loaner” car to the dealer (at the customer’s request). O’Brien was named as an additional driver on the loaner vehicle agreement:

“Generally, it is for the insured to establish coverage and for the insurer to prove that an exclusion in the policy applies to defeat coverage” … . Whether the burden of proof rests on the insured to establish coverage, or on the insurer to establish an exclusion, rests on the language of the policy (see id. ). “Where the provisions of the policy are clear and unambiguous, they must be given their plain and ordinary meaning, and courts should refrain from rewriting the agreement. The policy must, of course, be construed in favor of the insured, and ambiguities, if any, are to be resolved in the insured’s favor and against the insurer” … .

Here, State Farm bears the burden of establishing that O’Brien’s use of a “substitute temporary car” was excluded from SUM benefits. The opening language of the SUM endorsement states: “This endorsement is a part of the policy. Except for the changes it makes, all other provisions of the policy remain the same and apply to this endorsement.” Moreover, the opening language of the policy states: “We define certain words and phrases below for use throughout the policy. Each coverage includes additional definitions only for use with that coverage.” The general definition section includes a definition of “temporary substitute car,” which is to be applied throughout the policy: “Temporary Substitute Car means a car that is in the lawful possession of the person operating it and that: 1. replaces your car for a short time while your car is out of use due to its: a. breakdown; b. servicing; c. repair; d. loss; or e. destruction; and 2. neither you nor the person operating it own or have registered.”

This Court has held that the purpose of a provision relating to a “temporary substitute” vehicle “is to afford continuous coverage to the insured during the period that a vehicle scheduled under the policy is out of commission, and at the same time limit the risk to the insurer to one operating vehicle at a time for a single, fair premium. Coverage for a substitute vehicle ceases when the insured vehicle is repaired and returned to its owner” … . Here, the SUM endorsement fails to articulate any exclusion for a “temporary substitute car.” Matter of State Farm Mut Auto Ins Co v O’Brien, 2014 NY Slip Op 06096, 2nd Dept 9-10-14