Essentials: Determining Insured Status on Auto Liability Coverage

Coverage questions arise in automobile liability where family members, as additional insureds, are living apart from the household of the named insured. Courts have reached differing results regarding insured status for the separated spouse or family members. Often, the reason for the separation is because there is marital discord that results in the non-named insured spouse living apart from the named insured. This was the situation before the Court in Aetna Cas. & Sur. Co. v. Miller, 276 F.Supp. 341 (D. Kan. 1967) (applying Kansas law).

In Miller, the non-named spouse was living apart from her husband at the time of an auto accident during the pendency of a divorce. The Court found that the non-named insured spouse was a resident of the household and therefore insured for the accident. The Court looked at several factors to support its determination: 1) notwithstanding the fact that the wife and children had left the named insured’s home, they left a substantial amount of the couple’s mutual property at the home while taking limited mutual property upon separation; 2) the couple visited together after the separation occurred; 3) the insurance company policy in question was titled “family automobile policy,” which implied to the Court that the policy was to protect all family members as long as the family relationship legally existed; and 4) prior to the couple’s separation, the policy had been in effect.

The Court noted that insurers should not require the equivalent of a “bed check” to determine whether the motorist is insured based on whether “conjugal bliss” existed in the home at the time of the accident.

Residency

A similar granting of coverage was made by the Court in Lumbermens Mut. Cas. Co. v. Continental Cas. Co., 387 P.2d 104 (Alaska 1963), where the Court found that a non-named insured spouse was still a resident of the same household as her insured husband during marital discord and intended dissolution. In this case, the wife had filed for divorce from her husband, who was living outside the residence at that time. The husband had left the family home prior to the divorce filing and was staying with relatives or at a hotel, while the wife and children lived in the family home. In determining that the household continued to exist, the Court observed that the husband: 1) had visited the home several times a week and spent Sundays there; 2) paid the house and utility bills 3) bought groceries for his family; 4) kept his tools and equipment in the home; 5) occasionally took his wife and children out for meals; and 6) the husband received most of his mail at the home. Additionally, during the separation, both spouses used the insured automobile. Thus, the Court found the usual place of residence had not been abandoned.

A relevant consideration in adjusting claims where a marital separation has occurred is whether the separation was intended to be permanent or temporary with a possible reconciliation. Compare, Miroff v. State Farm Fire & Cas. Co., 471 N.Y.S.2d 807 (1984) with Marlowe v. Reliance Ins. Co., 15 N.C.App. 456, 190 S.E.2d 417 (1972), cert denied, 282 N.C. 153, 191 S.E.2d 602.

In Marlowe, the Court found that the non-named insured husband was not a resident of the household because he had been separated from his wife for approximately two months at the time the motor vehicle accident had occurred. Additionally, the Court noted: 1) the insured wife and children moved into a trailer following the couple’s separation; 2) at the time of the accident the husband was not paying rent or support to his family; 3) the husband did not live with his wife in the trailer; and 4) during the separation period leading to the motor vehicle accident, evidence established that the wife did not know where her husband was living. In reaching its decision that the non-named insured husband was not a resident of the house, the Court found that “residence” required some kind of abode between the parties, which the husband did not have with his wife at the time of the accident.

Children of Divorced Parents

Determining the insured status of minor children of divorced parents who maintain dual residency also presents some difficulty. In determining the insured status of a minor child, courts will focus on the amount of time the child spends at the insured household, child’s age, intent of the parties, and whether the named insured is legally obligated to the minor child. See, e.g., Auto-Owners Ins. Co. v. Merillat, 167 Ohio App.3d 148, 2006-Ohio-2491, 854 N.E.2d 513 (6th Dist. Fulton County 2006).

When the child lives with the non-custodial parent during weekends, courts have found that the child is a resident of both parents’ household for purposes of automobile liability coverage. See, e.g., Alava By and Through Alava v. Allstate Ins. Co., 497 So. 2d 1286 (Fla. Dist. Ct. App. 3rd Dist. 1986). The fact that one parent has legal custody is not dispositive of the question of whether a child may be a resident of the household of the non-custodial parent. See, e.g., Simmons v. Ins. Co. of North America, 17 P.3d 56 (Alaska 2001). Therefore, custody is not dispositive of the final coverage determination.

Additionally, joint custody alone has been found not to be sufficient to establish that the child was a resident of the mother’s household at the time the automobile accident happened, where the child’s presence in the mother’s household was minimal, the child’s visits with the mother were sporadic and irregular, and the child’s own testimony was that he lived with his father. See, e.g., Aetna Cas. & Sur. Co. v. Crafton, 551 N.E.2d 893 (Ind. Ct. App. 1990).

Where the spouses are separated due to military duty, or where a child is living apart from the named insured’s household while serving in the military, courts have found that the household remains intact. See, e.g., State Farm Mut. Auto. Ins. Co. v. Holloway, 423 F.2d 1281 (10th Cir. 1970) (interpreting Oklahoma law) (separated spouses), and Beck v. Pennsylvania National Mut. Cas. Ins. Co., 429 F.2d 813 (5th Cir. 1970), reh’g denied, 432 F.2d 563 (1970) (applying Pennsylvania law) (a separated child).

One court provides guidance in determining insured status where additional insureds are not living in the residence at the time of the accident. In Mid-Century Ins. Co. v. Duzykowski, 131 Ariz. 428, 641 P .2d 1272, 1274 (1982), the Court found the following should be considered in determining whether the individual is a “resident of the same household:” [T]he individual’s presence in, or absence from, the named insured’s home on the date of the occurrence; reasons or circumstances relating to the absence or presence; relationship of the individual to the named insured; living arrangements of the individual in earlier time periods; individual’s subjective or declared intent of place of residence; [and] the existence of a second place of lodging.

The claim representative should inquire as to the reasons for the putative insured’s absence from the residence, including temporary or permanent separation; reasons or circumstances relating to the absence or presence, i.e., current living arrangements including support and visitation both before and after the separation; and the subjective or declared intent of the putative insured and the named insured. The claim representative should not jump to a premature conclusion that if the putative additional insured is not living with the named insured at the house listed on the declarations page, that the putative additional insured is not insured under the automobile policy.