Fla. Court Rules Car Insurance Co. Must Pay Rental-Car Claim

Florida’s Supreme Court has ruled that insurance provider GEICO must pay injury costs resulting from a fatal crash involving a car rented by one of the company’s policyholders, even though another person was driving the vehicle without the permission of the rental company.

The high court’s 5-2 decision overturns an appellate panel’s ruling in the case, which focused on the extent to which a policy covers a so-called “temporary substitute auto.” The details of the case may be of interest to consumers who are doing a Florida auto insurance comparison but are unsure how any policy they buy would cover rentals.

Kutasha Shazier rented a Hyundai Sonata from Avis Rent-A-Car in August 2006 after her Ford Expedition, which was covered by a GEICO insurance policy, was disabled due to transmission problems. The rental agreement stipulated that “no additional operators are authorized or permitted without Avis’ prior written approval,” according to court documents.

Shazier allowed Frederick Royal to drive the rental car and he in turn allowed it to be driven by Tercina Jordan, who crashed the Explorer into a tree, “causing serious injury to minor passengers in the vehicle and the death of another,” the court stated.

The injured passengers and a representative for the person who was killed claimed the rental car was covered as a temporary substitute auto under Shazier’s GEICO policy, but the insurer denied liability on the grounds that Avis had not given Jordan permission to drive the Sonata.

Shazier’s policy stated that the insurer would cover damages for which she was liable because of bodily injury or property damage resulting from use of the “owned auto,” which it defined as either the vehicle named in the policy or a temporary replacement used while the covered vehicle was being repaired or was otherwise out of service.

A trial court found that the rental car met the definitions of both a temporary substitute auto and an owned auto under the terms of the policy and that Shazier’s decision to let others drive the car did not affect coverage because the use fell within the policy parameters.

The 1st District Court of Appeal reversed that decision, finding that, as the owner of the Sonata, Avis had the authority to determine what use was permissible. Because the rental company had stipulated that only Shazier was to drive the vehicle, the appeals court found, “Jordan’s use of the rental car automatically revoked the permission granted to Shazier by Avis … and no coverage existed under the policy,” court documents state.

The Supreme Court overturned that decision, however, with the majority opinion stating that it conflicted with earlier high court rulings dealing with the question of what constitutes a vehicle owner’s consent for the use of a vehicle. Under the judicial doctrine of dangerous instrumentality, the majority wrote, an owner is liable for damages caused as a result of voluntarily entrusting the vehicle to someone who operates it negligently.

“Although a temporary substitute auto is by definition not owned by the insured, GEICO’s policy provides that such a vehicle is treated as the insured’s owned auto under the policy and that GEICO will cover the insured and ‘any other person using the auto with (the insured’s) permission,’” the majority wrote.

About Matthew Morisset
Matthew Morisset is a proud alumnus of the University of Redlands, where he obtained a degree in English Literature. Utilizing his passion for analysis and writing, Matthew looks for important trends in the auto insurance industry and their implications for consumers and the market as a whole.

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