In Medina v. GEICO Indemnity (No. F072548, filed 2/8/17), a California appeals court ruled that a work van admittedly furnished to an employee for both business and personal purposes, being used for personal purposes at the time of an accident, which was customary, was available for regular use and therefore not covered under the employee’s own personal auto policy.
In Medina, GEICO’s insured was employed by Pacific Bell. Her job required her to transport company equipment and tools, and she was not allowed to use her personal vehicle to do so. She was assigned a van owned by Pacific Bell, had her own set of keys and it was permanently assigned to her for her exclusive, regular use. The employee left the van at her Fresno office every night, but did keep it overnight for out-of-town assignments.
Pacific Bell did not place any restrictions on use of the van during the work day. When in Fresno, the employee used the van to drive home for lunch and to run errands. She was never told she could not do so and her supervisor knew that employees used the vans for personal purposes. On out-of-town assignments, employees were specifically authorized to use the company vans for coming, going and meals, but there was no express limitation on other usage.
While on an assignment in Bakersfield, the employee arranged to meet her daughter part way to Fresno to provide money for a personal emergency. The employee had been drinking wine at lunch, and was involved in an accident on the way.
In the ensuing lawsuit, Pacific Bell, which was self-insured, conceded that the employee was operating the van with permission, but asserted that she was not in the course and scope of employment, so there was no liability under respondeat superior. The court agreed, limiting Pacific Bell’s liability to the statutory $15,000 limit for ownership liability based on permissive use of a vehicle.
Meanwhile, the employee tendered the claim to GEICO, her personal auto insurer. The GEICO policy did not identify the van as an insured auto, but did provide coverage for bodily injury or property damage arising out of the use of a “non-owned auto” which the policy defined as “an automobile… not owned by or furnished for the regular use of either you or a relative….” GEICO denied coverage and the employee stipulated to liability in exchange for an assignment of rights, a covenant not to execute and an agreement to arbitrate damages. The arbitrator assessed damages of a half million dollars and judgment was entered on the award.
When GEICO refused to pay the judgment, the driver sued for bad faith. GEICO moved for summary judgment on the grounds that: (1) the van was furnished to the employee for her “regular use,” and (2) a business use exclusion applied, as the accident arose out of her occupation.
The plaintiff argued that the term “regular use” encompassed only the vehicle’s primary use not some incidental use, and the van’s primary use was for business purposes, while a family emergency was an incidental use. He further argued that because the employee did not have the vehicle on weekends or evenings, except when out-of-town, she did not have unrestricted access to the vehicle at all times and for all purposes. The plaintiff also argued that the business use exclusion did not apply since the court in the underlying action found that the employee was not in the course and scope of employment at the time of the accident.
The trial court granted summary judgment for GEICO, and the appeals court affirmed. The appeals court did agree that “’regular and frequent use’ is ‘the principal use, as distinguished from a casual or incidental use, in the regular course of the assured’s business.’” (Citing Kindred v. Pacific Auto. Ins. Co. (1938) 10 Cal.2d 463 and Pacific Auto. Ins. Co. v. Lewis (1943) 56 Cal.App.2d 597.) The Medina court stated that “As shown in Lewis, the elements to consider in determining whether a car was furnished for regular use ‘include time, place and manner of use, purpose or type of use, and restrictions on use. Primarily, the issue presents a question of fact which requires an interpretation of the language of the policy to the facts involved.’” (Quoting Highlands Ins. Co. v. Universal Underwriters Ins. Co. (1979) 92 Cal.App.3d 171.)
After citing numerous decisions both pro and con, the Medina court stated: “We agree with GEICO. The undisputed facts show Flores had the keys to the van, which was assigned to her exclusively, and she was authorized to use it for both business and personal purposes. While Pacific Bell furnished the van to Flores because she needed it to perform her job, it did not place any restrictions on her use of it. Even if, as Medina contends, she did not have unrestricted access to the van at all times because she was required to return the van to the Fresno office at the end of her work day while working in the local area and when she returned from out-of-town business trips, Flores had unlimited use of the van when it was in her possession and the van was assigned to her for her exclusive use. When she was out of town on business, the van was her only means of transportation since Pacific Bell refused to allow her to use any other vehicle. Since she could use the van while on out-of-town trips for business and personal use, at the time of the accident she was using the van in a manner permitted by Pacific Bell and within the scope of the purposes for which the van was furnished. These facts establish that the van was furnished to Flores for both business and personal reasons, and her use of the van at the time of the accident was a regular one.
We reject Medina’s assertion that because Flores was provided the van primarily for business purposes, her use of the van for personal purposes at the time of the accident was not a regular one. As Lewis instructs, whether a vehicle is furnished to an insured for regular use depends on the time, place and purpose for which it is to be used, and whether its use at the time of the accident was ‘a departure from the customary use for which the car is furnished.’ [] Here, the van was given to Flores for both business and personal use during her work days and while on out-of-town business trips, and her personal use of the van at the time of the accident was not a departure from the customary use, namely business and personal use while on out-of-town trips, for which the van was furnished. That business use was the reason she was given the van does not render her use at the time of the accident irregular when she was authorized to use the van for both business and personal purposes.”
The Medina court pointed out that the purpose of the policy limitation was to avoid exposing the insurer to a risk for which it receives no premium. The court also found no compelling public policy argument for coverage. While sympathizing with the employee, the court agreed with GEICO that the correct remedy would have been for Pacific Bell to obtain coverage for its employees’ personal use, or for the employees to obtain such coverage themselves.
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