An Undisclosed Intent Cannot Create Coverage

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Zarah-Marie Neme and Samuel Magura appealed the summary judgment dismissal of their claims against Progressive Direct Insurance Company.

In Zarah-Marie Neme and Samuel M. Magura, a married couple v. Progressive Direct Insurance Company, No. 38252-4-III, Court of Appeals of Washington, Division 3 (July 14, 2022) the Court of Appeals resolved the dispute over coverage for operation of a new vehicle.

FACTS

In 2019, Samuel Magura obtained an automobile insurance policy from Progressive. The policy period ran from May 23, 2019, to November 23, 2019. The policy’s declarations page listed Mr. Magura as the named insured and a 2016 Subaru Legacy as the covered auto. Prior to September 19, 2019, Mr. Magura’s wife, Zarah-Marie Neme, was listed as a driver on the policy but, as she had been living outside the country, she was not a named insured.

The policy provided that Progressive would pay damages for any bodily injury or property damage for which an insured person was found to be legally responsible. The policy also provided that Progressive would settle or defend any claim for damages. However, the policy excluded from coverage “bodily injury or property damage arising out of the ownership, maintenance or use of any vehicle owned by [the insured] . . . other than a covered auto.” The policy defined a “covered auto” to include an auto shown on the policy declarations page and “any additional auto.” An “additional auto” was defined as an auto you become the owner of during the policy period that does not permanently replace an auto shown on the declarations page if:

we insure all other autos you own;
the additional auto is not covered by any other insurance policy;
you notify us within 30 days of becoming the owner of the additional auto; and
you pay any additional premium due.

At no point during the conversation did Mr. Magura provide any specific information about a new vehicle he had purchased, or intended to purchase. After the phone call, the updated declarations page on Progressive’s website showed an increased premium of $93.53 with the 2016 Legacy as the only covered auto.

On September 20, the Appellants purchased a 2019 Subaru Impreza. On October 22, Ms. Neme was involved in a motor vehicle accident while driving the 2019 Impreza. Following the accident,

Mr. Magura called Progressive to file a claim. The customer service agent who received the call informed Mr. Magura the 2019 Impreza was not listed on the policy as a covered auto. Progressive later sent the Appellants a letter denying coverage for the claim, as the 2019 Impreza was not covered under the policy.

The Appellants later described the 2019 Impreza as a total loss, although they were required to continue to make payments on the vehicle. The following year, the Appellants were sued by the other party to the accident for damages arising out of the collision. Based on the previous denial of coverage, Progressive did not defend the Appellants in this suit.

The Appellants then sued Progressive.

ANALYSIS

The Appellants’ claims against Progressive all turn on whether the 2019 Subaru Impreza was a covered vehicle under Progressive’s policy, either by virtue of the terms of the policy or through Progressive’s specific assurances.

There is no evidence the 2019 Impreza was a covered auto under the terms of Progressive’s policy. The 2019 Impreza was not named in the policy as a covered auto. Nor did the Impreza qualify as an additional auto, given more than 30 days had elapsed since the Appellants became owners of the Impreza.

Because the Impreza was not a covered auto, the Appellants cannot sustain their claim for breach of contract.

Did Progressive Say Or Do Something To Suggest The 2019 Subaru Impreza Was A Covered Vehicle?

Progressive did not say or do anything that reasonably could have caused the Appellants to believe the 2019 Impreza was a covered vehicle under the terms of the policy. Progressive quoted an increased premium to Mr. Magura, but that was based on the addition of Ms. Neme to the policy. The subsequently-issued declarations page listed both Mr. Magura and Ms. Neme as named insureds, but the only covered vehicle listed was the 2016 Subaru Legacy.

If a person wishes to insure a new car he or she must advise the insurer of the purchase, the intent to insure it, the vehicle identification number of the vehicle and who was to be the insured. Magura added his wife as an insured but never told the insurer he had purchased and needed insurance for the operation of the 2019 Impreza. Failure to act properly deprived Magura and Neme of insurance coverage.