OAI: Auto Insurance Case Underscores Need to Understand Policy Terms

August 29, 2011 (PRLEAP.COM) Business News
A decision handed down by the Florida State Supreme Court on Thursday effectively frees State Farm from the obligation to pay for a bodily injury claim filed for two people who were injured while riding in one of their policyholder's cars. The case, which revolves around perceived ambiguity in an auto insurance policy, highlights the importance of understanding the terms of these contracts, according to OnlineAutoInsurance.com.

The terms of policies can often be hard to parse for the average driver, but the complicated wording can make the difference between having thousands of dollars of medical bills covered by an insurer and having to pay for them out of pocket.

The issue in the Florida auto insurance case decided by the state Supreme Court was whether it was clear in the policy language who the term "any insured" referred to-the policyholder, or the person who the policyholder had given permission to drive the insured car.

In the case, State Farm policyholder Gilda Menendez sought coverage for her granddaughter's parents' bodily injury damages. The two had been injured in an accident involving Menendez's insured vehicle.

At the time of the accident that left the couple injured, the car was being driven by Menendez's granddaughter, Fabiola Llanes, who had permission to drive the vehicle and was in effect covered under the policy.

But Menendez's contract with State Farm contained an exclusion saying that the liability insurance coverage would not extend to "any insured" or the relatives of any insured who reside in the same household as him or her.

Since the parents did not live with Menendez, she asserted that they did not fall under the terms of the exclusion and should receive compensation.

Not so, said State Farm.

According to the car insurance company, the insured person mentioned in the exclusion included Llanes, since she was the driver covered under the policy at the time of the accident. And because Llanes lived in the same household as her parents at the time of the accident, this would mean they fall under the exclusion and would not have their damages covered.

A lower court had said the policy was ambiguous and that the policyholder should get the benefit of the ambiguity.

But the state Supreme Court declared that the wording was not ambiguous and that the policy language made a clear distinction between the main policyholder and any driver covered under the policy.

Motorists who are unclear or have an issue with the terms of their policies should contact their insurers or agents first and then state regulators if the issue cannot be resolved. A directory of those regulatory offices can be found at http://www.usa.gov/directory/stateconsumer/index.shtml

To learn more about this and other coverage issues, readers can go to http://www.onlineautoinsurance.com/florida/ where visitors will find informative resource pages and a quote-comparison generator that can help shoppers find an affordable policy.