Supreme Court Rules Owners Don’t “Furnish” Vehicles To Themselves

June 24, 2008

The Supreme Court published Williams v. State Farm, which dealt with an exclusion in an automobile insurance policy providing for underinsured motorist benefits. According to the SC, “The issue on appeal involve[d] whether or not the parents’ underinsured motor vehicle insurance (UIM) policy provided coverage to the passenger, or whether coverage was excluded because the vehicle was “furnished” to and operated by a family member who resided in the house, for his regular use.” In this tragic case, two brothers were killed in a one car collision. The driver (Aaron) owned the truck involved in the accident. The passenger (Paul) recovered under Aaron’s liability policy and sought benefits under the UIM coverage of his parents policy on a different vehicle. All the parties resided in the same household.

State Farm sought to enforce an exclusion in the Dodge Caravan policy which provided that underinsured coverage does not apply to a vehicle where the injury occurred in a vehicle (the pickup), “[f)urnished for the regular use of you, your spouse or any relative.” The issue with State Farm was whether the pickup was “furnished” to Aaron for his regular use. State Farm contended the pickup was excluded because it was owned by a relative (Aaron) that lived in the same house as the policy holders of the Caravan (the parents).

The circuit court agreed and pointed to the exclusion in the Caravan policy of underinsured vehicles furnished for the regular use of a relative, and concluded that a vehicle owned by Aaron was furnished for his use. The court of appeals agreed in a 2-1 decision. The SC agreed with the dissent in that opinion and noted that an owner can not furnish the vehicle to himself for regular use, and that furnish as used in ordinary terms required a third party, which did not exist here. The SC distinguished this from policies, which exclude both vehicles “owned by or furnished or available” for the regular use of the relative, noting that State Farm’s policy excluded only vehicles “furnished for” regular use.

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