Florida’s Household Exclusion Upheld

September 19, 2011

Florida’s highest court has upheld the so-called “household exclusion” clause in automobile policies that states the injuries suffered by family members residing with an insured driver are not covered under the policy.

The Florida Supreme Court in the case of State Farm Insurance Co. v. Gilda Menendez reversed a Third District Court of Appeals, which had ruled that the household exclusion as currently written is ambiguous and therefore should be interpreted in favor of the insured.

State Farm issued the policy to Menendez, who permitted her granddaughter Fabiola G. Llanes to use her vehicle. Subsequently, the granddaughter was involved in an accident that left her and her parents, Fabiola P. Llanes and Roger Llanes, injured. The granddaughter was living with her parents while her grandmother resided in her own home.

Menendez filed suit against State Farm, the granddaughter and her parents seeking a determination whether her policy covered the injuries suffered by the family.

The household exclusion clause states that there is no coverage for “any bodily injured” to “any insured or any member of an insured’s family residing in the insured’s household.”

State Farm asserted that since Menendez allowed her granddaughter to use her car as a permissive driver, the granddaughter was an “insured” driver covered by Menendez’s policy. State Farm argued that since the granddaughter lived with her parents, the insurer was not liable for the parents’ injuries since the coverage didn’t extend to “any member of an insured’s family residing in the insured household.”

In response, Menendez and the Llanes said that the exclusion clause is ambiguous since it doesn’t define who constituted the “insured” driver. They argued that since Menendez was the named insured, the household exclusion would only apply to relatives living with her. Since the granddaughter and her parents resided at a different address, the household exclusion didn’t apply.

When the case appeared before the Supreme Court, State Farm and Menendez agreed that the granddaughter was a permissive driver under the policy. Therefore, the insurer was liable for her injuries and any legal action taken against her.

The high court, however, declared that household exclusion was not ambiguous. The court said the policy had different definitions for the “named insured” as opposed to an “insured.” The exclusion clearly refers to the named insured and any permissive drivers, the court said.

Topics Florida

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Insurance Journal Magazine September 19, 2011
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