Opinion ID: 2009983
Heading Depth: 1
Heading Rank: 5

Heading: Coverage after Death of Named Insured.

Text: Continental Western argues that even if the district court erred on the consent issue, its decision may be upheld because coverage after death of the named insured would in any event be limited to a surviving spouse or the decedent's legal representative. Grinnell counters that even if that is the general rule, the doctrine of reasonable expectations would have permitted the court to find coverage for Darcy under this record. We are convinced Continental Western has the better argument. It is indeed the general rule that, in the absence of language to the contrary, an automobile liability policy terminates with the death of the named insured. Oroian v. Allstate Ins. Co., 62 Md.App. 654, 490 A.2d 1321, 1323 (1985); Wilkins v. Inland Mut. Ins. Co., 253 F.2d 489, 490 (4th Cir.1958); see generally 7 Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 110:7, at 110-14 (3d ed. 2000 Supp.) [hereinafter  Couch ]; 7 Am. Jur.2d, Automobile Insurance § 12, at 456 (1980); P.G. Guthrie, Annotation, Automobile Insurance: Coverage as Extending Beyond Death of Named Insured, 30 A.L.R.3d 1047, 1073 (1970). As the court noted in Wilkins, however, insurers tend to recognize the preoccupations of bereavement by including policy language extending coverage under limited circumstances following death. Wilkins, 253 F.2d at 491. Continental Western concedes that is the case here. But while the policy discussed in Wilkins (and others cited by the treatises) includes coverage for any person having proper temporary control and custody of the vehicle, see id., the policy before us extends coverage in only two circumstances: to a surviving spouse who is resident of the same household at the time of death and to the deceased's legal representative. As found by the district court, the record before us reveals no facts obligating Continental Western under the extended coverage provisions of the Kapping policy. Darlene Kapping was a divorced person who died without a surviving spouse. Moreover, she had no will and her modest estate evidently warranted no administration. Thus, at the time of the accident, no one had been officially appointed legal representative of her intestate estate. Cf. Federated Mut. Implement & Hardware Ins. Co. v. Eng, 178 N.W.2d 321, 324 (Iowa 1970) (deceased's auto policy covered executor while driving on estate business). We note that at least one court has found the term legal representative to have no fixed meaning in the law and therefore sufficiently broad to include a sole heir not yet appointed administrator. See Merchant's Mut. Cas. Co. v. Egan, 91 N.H. 368, 20 A.2d 480, 482 (1941) (where policy language inconsistent with statute, spouse qualifies as legal representative prior to appointment during term of policy). Such a broad reading of Continental Western's policy, however, would not avail Darcy or Grinnell here. Neither Darcy nor her consent driver was using the vehicle for anything remotely involving estate business. At the time of the accident, they were on their way to a dance. We know of no case permitting qualification under the extended-coverage provision in these circumstances. Compare Eng, 178 N.W.2d at 324 (finding coverage where executor operating vehicle to collect sales price for hogs owned by estate), with Oroian, 490 A.2d at 1325 (no coverage for executor's consent driver who operated estate pickup on personal business). Grinnell nevertheless claims the district court properly applied the reasonable expectations doctrine to reach the consent issue and avoid this unjust result. We are not so convinced. The doctrine is a narrow one, employed by courts only when the insurance coverage provided eviscerates terms explicitly agreed to or is manifestly inconsistent with the purpose of the transaction for which the insurance was purchased. Monroe County v. Int'l Ins. Co., 609 N.W.2d 522, 526 (Iowa 2000). Applicability of the doctrine turns on proof that (1) an ordinary layperson would misunderstand the policy's coverage, or (2) circumstances attributable to the insurer fostered coverage expectations. Krause v. Krause, 589 N.W.2d 721, 728 (Iowa 1999); Benavides v. J.C. Penney Life Ins. Co., 539 N.W.2d 352, 357 (Iowa 1995). The district court recognized the record contains no proof whatsoever concerning Darlene's purchase of the policy or her coverage expectations. It decided, however, that an ordinary person would expect an insurance policy naming a particular vehicle to provide coverage throughout the policy period despite the named insured's death. The problem with the court's reasoning is that it overlooks plain language in the policy to the contrary, as well as settled law. Neither payment of the premium for the full term nor continued use of the vehicle consistent with the named insured's former practice will burden an insurer, on equitable grounds, with coverage outside the contract's terms. Collins v. Northwest Cas. Co., 180 Wash. 347, 39 P.2d 986, 990 (1935); see 7 Couch § 110:7, at 110-14 (fact that premium has been paid for full term does not, on equitable grounds, permit extension of coverage beyond insured's death during policy term).