A Five-Year Lease is not Temporary

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This case involves an insurance dispute in which Appellant, Benjamin G. Dusing (Dusing), alleges that a 2016 leased Mercedes was properly insured by Appellee, Metropolitan Property & Casualty Insurance Company (Metropolitan). Metropolitan disclaims coverage for the vehicle, which was destroyed by fire on June 25, 2016.

In Benjamin G. Dusing v. Metropolitan Property & Casualty Insurance Company, No. 2021-CA-0200-MR, Court of Appeals of Kentucky (August 26, 2022) Dusing claimed he was driving the vehicle at the time it caught fire. As a of Metropolitan’s refusal to pay Dusing sued for declaratory judgment in Kenton Circuit Court on June 21, 2017. The court subsequently granted what is styled as Metropolitan’s “Motion for Judgment,” on the basis that there was no coverage pursuant to the terms of insurance policy with Metropolitan (hereafter, the Policy).

A motion for summary judgment should be granted if the pleadings, depositions, answers to interrogatories, stipulations, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

THE POLICY

The Policy at issue here provides the following relevant terms:

We will pay for loss to your covered automobile or to a non-owned automobile, including its equipment, not caused by collision, minus any applicable deductible shown in the Declarations. Coverage is included for a loss caused by but not limited to the following:

* * *

Fire, explosion or earthquake . . . .

The Policy defines “non-owned automobile” as:

an automobile or trailer while being used by you or a relative, with the owner’s permission, which is not owned by, furnished to, or made available for regular use to you or any resident in your household.

2.a commercially rented automobile or trailer used by you or a relative on a temporary basis.

In granting a judgment in favor of Metropolitan, the circuit court reasoned as follows:

On March 31, 2016, BGD Law, a law firm owned by [Dusing] leased the 2016 Mercedes for a period of five years or 60,000 miles. That lease also provided a 24-month service agreement. The lease also charged BGD Law fees for license and registration of the vehicle.

Dusing asserted that he is entitled to coverage for the loss of the 2016 Mercedes, claiming that that vehicle was a “non-owned” vehicle under the policy. In response Metropolitan takes the position that the 2016 Mercedes could not qualify as a “non-owned” vehicle for several reasons.

The 2016 Mercedes was not provided on a temporary basis, but rather was the subject of a 5-year, 60,000 mile lease, with a 24-month service agreement.
Metropolitan states that the vehicle was not “commercially rented.” Unlike a rental agreement, the 2016 Mercedes was provided to BGD Law and charged license and registration fees which are not standard for “commercially rented” vehicles. Having reviewed the evidence in this case and having considered the Briefs of the parties, this Court agrees with the position taken by Metropolitan that the 2016 Mercedes was not a “non-owned” vehicle which would allow it to be covered by the policy issued in 2015. In sum, there is no coverage for the loss to this vehicle under the Metropolitan policy.

It is undisputed that Dusing failed to purchase insurance coverage for the 2016 Mercedes. Therefore, it is not a “covered vehicle” pursuant to the Policy which, to be clear, is Dusing’s personal Policy.

The Court of Appeal was logically inclined to agree with the circuit court that a vehicle subject to a five-year lease cannot reasonably be considered as “non-owned” for purposes of the Policy. Indeed, it strains credulity to consider the 2016 Mercedes at issue here to be a “commercially rented” vehicle being used on a “temporary basis,” merely because it was being leased by Dusing’s law firm. Therefore, it was unreasonable to conclude that Dusing had a “reasonable expectation” of coverage.

ZALMA OPINION

This case is an example of a lawyer attempting to force an insurer to pay for a loss he knew, or reasonably should have known, was not covered by his personal auto insurance. A car leased by his law firm and provided for his use is not a personal auto, leased for five years could not be considered “temporary” under any concept of reason, and should have been insured by the law firm that leased it. Although he had an insurable interest in the Mercedes he failed to advise the insurer that it was leased for his use nor did he pay a premium for the policy. Taking the case up to the Court of Appeal was a waste of his time, the trial court’s time and the time of the Court of Appeal.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.