UIM Benefits for Non-Relative Passenger? Denied!

From the desk of Cliff J. Wilson: The Washington Court of Appeals recently revisited the public policy lens as related to UIM exclusions in Washington automobile insurance policies.  In this case, the court examined Progressive’s decision to deny UIM benefits to a guest passenger injured by one of its insured drivers in a single-vehicle accident. Was Progressive’s denial of benefits proper? Read on to find out.

Claims Pointer: An individual involved in a single-car accident where he was a non-relative passenger was properly denied Underinsured Motorist Coverage (UIM) pursuant to an exclusion in the negligent driver’s policy.  The court undertook a review of Washington’s UIM statute, RCW 48.22.030, and determined that the UIM exclusion in Progressive’s policy was valid under the statute and public policy.

Thompson v. Progressive Direct Ins. Co., 8 Wn. App. 2d 521 (Apr. 9, 2019).

Joseph Thompson was injured in a single-vehicle accident while riding as a passenger in Stacie Haney’s car.  Ms. Haney was insured under a Progressive automobile liability insurance policy, that also contained underinsured motorist (UIM) coverage.  Ms. Haney was determined solely liable for the accident, so Progressive tendered the limits ($100,000) of its third-party liability coverage to Mr. Thompson.  Mr. Thompson, who was not a relative or household member of Ms. Haney, alleged that the liability policy limit did not fully compensate him for his injuries caused by the accident, so he initiated an underinsured motorist claim under Ms. Haney’s policy.  The policy contained terms excluding UIM benefits for non-relative guest passengers for injuries arising from the negligent operation of its named insured’s vehicle.  Based on that exclusion, Progressive denied Mr. Thompson’s UIM claim.

The trial Court granted summary judgment in favor of Mr. Thompson on the grounds that he met the definition of an “insured” under RCW 48.22.005 and Progressive could not use its policy to erode that statutory definition.  On appeal, both parties agreed that the language of Progressive’s policy excluded UIM coverage to a non-relative passenger riding in a vehicle that was insured under the policy.  However, Mr. Thompson argued that the exclusion violated public policy, and therefore, the exclusion should be stricken. 

In assessing Mr. Thompson’s claim, the court revisited the Washington Supreme Court decisions of Blackburn v. Safeco Insurance Co., 115 Wn.2d 82 (1990), and Millers Casualty Insurance Co. of Texas v. Briggs, 100 Wn.2d 1 (1983).  In those cases, the Supreme Court approved of UIM exclusions for third-party guest passengers, holding that the purpose of UIM coverage is to protect the named insured and others from damages caused by another vehicle which is underinsured.  Third parties have the option to contract with an insurance company for their own UIM coverage, but public policy does not require an insurance company to extend UIM benefits to an individual who has elected not to obtain that protection.  The Court of Appeals noted that while UIM coverage may have extended to named insureds of the policy and their resident relatives, Mr. Thompson was neither in this case.

Ultimately, the Court of Appeals determined that Washington’s UIM statute, RCW 48.22.030, applied to the case and that the statute contemplates coverage only for bodily injury, death, or property damage caused by the operation of third-party vehicles.  It does not require extending UIM coverage to a third-party passenger who has a liability claim against the operator of the covered vehicle.  In that instance, the third party’s recourse is to rely on liability insurance, responsibility of the negligent driver, and the third-party’s own insurance coverage.  RCW 48.22.030 does not provide an additional avenue for recovery.

The Court of Appeals reversed the trial court’s decision, holding that Progressive’s UIM claim denial was proper under these facts because the exclusion did not violate the Washington UIM statute or public policy.