Public Policy is Vague and Uncertain
Post 4805
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Artemiz Freeman sought to collect uninsured/underinsured motorist benefits under her policy with appellant Progressive County Mutual Insurance Co. (“Progressive”). Progressive denied coverage under the policy’s regular-use exclusion and Freeman sued. Resolving the parties’ cross-motions for summary judgment, the trial court concluded that the regular-use exclusion violated public policy and Progressive appealed the trial court’s determination.
In Progressive County Mutual Insurance Company v. Artemiz Freeman, No. 14-22-00450-CV, Court of Appeals of Texas, Fourteenth District (May 14, 2024) the Court of Appeals explained the importance of protecting legislative actions.
BACKGROUND
Freeman is a police officer with the City of Houston. On February 13, 2018, Freeman was in her police vehicle when she was rear-ended by another car. The driver of that car had an insurance policy that provided $50,000 in liability coverage.
Freeman’s expenses from the accident exceeded $50,000. Freeman filed for uninsured/underinsured motorist (“UM/UIM”) and personal injury protection benefits under her personal automobile insurance policy issued by Progressive. The policy provides UM/UIM motorist benefits and states that Progressive “will pay for damages that an insured person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury” that is sustained by an insured person in an accident arising out of the use of an uninsured motor vehicle.
The policy also includes a regular-use exclusion applicable to this coverage which states, in relevant part, as follows:
EXCLUSIONS – READ THE FOLLOWING EXCLUSIONS CAREFULLY. IF AN EXCLUSION APPLIES, COVERAGE WILL NOT BE AFFORDED UNDER THIS PART III.
Coverage under this Part III [regarding UI/UIM benefits] will not apply:
to bodily injury sustained by any person using or occupying:
* * *
a motor vehicle that is owned by or available for the regular use of you or a relative. (emphasis added).
Progressive denied Freeman’s claim for UM/UIM benefits on the grounds that her policy excluded bodily injury sustained while a person was using or occupying a motor vehicle “owned by or available for the regular use” of the insured. Progressive concluded that Freeman’s police vehicle fell within the exclusion’s definition of a vehicle “available for [her] regular use.”
Progressive paid Freeman personal injury protection benefits pursuant to her policy. Freeman also received workers’ compensation benefits from the City of Houston.
Freeman sued Progressive in June 2019, asserting claims for breach of contract, breach of the duty of good faith and fair dealing, and violations of the Texas Insurance Code. Freeman also requested a declaratory judgment stating that she is entitled to an award of UM/UIM benefits.
ANALYSIS
The trial court determined that although the patrol vehicle was available for Ms. Freeman’s regular use, that the “regular use” exclusion as applied in this case violates public policy since it operates to deprive an insured of the protection required by the Texas Uninsured Motorists Statute. As a result, the trial court granted Artemiz Freeman’s motion for summary judgment and motion for declaratory relief and denied Progressive’s motion for summary judgment.
GOVERNING LAW
To protect motorists from financial loss when they are involved in car accidents with uninsured or underinsured motorists, Texas law requires automobile insurers to include UM/UIM coverage in their policies unless the insureds reject that coverage in writing. The underlying policy behind this statute is the state’s interest in protecting conscientious and thoughtful motorists from financial loss.
The trial court concluded that, although the patrol vehicle involved in the accident was available for Freeman’s regular use, the “regular use” exclusion as applied in this case violates public policy. Public policy can be a vague and uncertain term. Courts are apt to encroach upon the domain of that branch of the government if they characterize a transaction as invalid because it is contrary to public policy, unless the transaction contravenes some positive statute or some well-established law.
Based on this record, the Court of Appeals could not conclude that Freeman has met her burden that she has suffered any financial loss, or that Progressive’s policy violates the state’s interest in protecting conscientious and thoughtful motorists from financial loss. The trial court erred when it held that the regular use exclusion as applied in this case violates public policy.
The judgment was reversed and Freeman will take nothing on her claims for UM/UIM benefits and attorney’s fees.
Insurance policies are contracts that must be interpreted as written. The trial court felt sorry for Ms. Freeman’s injuries and decided that the public policy of the state of Texas was that the regular use exclusion violated the policy for which the Legislature enacted UM/UIM laws. The Court of Appeals, found that the use of the concept of public policy to reverse a clear and unambiguous statute and policy wording. The Court of Appeals intelligently supported the separation of powers between the Legislative and Judicial parts of the state government.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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About Barry Zalma
An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
