Court Opinion

ID: 9662625
Source: CourtListenerOpinion
Date Created: 2023-08-23 23:14:22.560714+00
Date Added: 2024-06-11T12:27:23.134921
License: Public Domain

Chief Justice PHILLIPS
filed a dissenting opinion, in which Justice O’NEILL and Justice SCHNEIDER joined.
The Court today holds that the “ordinary, everyday meaning” of a “temporary substitute” auto is “a vehicle used with the owner’s permission, or at least a reasonable belief that the owner consented.” 107 S.W.3d 548. Maybe this is true. But the insurance policy at issue does not condition coverage on whether permission was granted or not. Because the plaintiff in this case is entitled to recovery on the plain terms of the policy, I respectfully dissent.
I
As a basic tenet of insurance-contract construction, we have held that “[t]he purpose of an exclusion is to take something out of the coverage that would otherwise have been included in it.” Liberty Mut. Ins. Co. v. Am. Employers Ins. Co., 556 S.W.2d 242, 245 (Tex.1977). Here, the policy would clearly provide coverage regardless of whether or not the driver had permission, except for the reasonable-belief-of-entitlement exclusion. This exclusion states: “We do not provide Liability Coverage for any person: ... 8. Using a vehicle without a reasonable belief that that person is entitled to do so.” This exclusion is the only basis for a permission requirement.
If that were the entire text of the exclusion, then the Court would be correct in holding that the insured must have permission to drive a temporary substitute auto. *555But the policy includes an exception to the exclusion, which provides: “This exclusion (8.) does not apply to you or any family member while using your covered auto.” Because of this language, the relevant question becomes whether the car McCau-ley was driving was within the meaning of “your covered auto” at the time of the accident. If it was, this exception applies and he did not need permission from the owner for his coverage to apply.
Under the TPAP, the term “your covered auto” is defined as follows:
G. Your covered auto means:
1. Any vehicle shown in the Declarations;
2.
I. Any of the following types of vehicles on the date you became the owner:
a. a private passenger auto; or
b. a pickup or van....
3. Any trailer you own.
4. Any auto or trailer you do not own while used as a temporary substitute for any other vehicle described in this definition which is out of normal use because of its:
a. breakdown;
b. repair;
c. servicing;
d. loss; or
e. destruction.
Thus, the policy definition of “your covered auto” includes a non-owned “temporary substitute” used when the primary vehicle is out of commission for servicing or repair. Without dispute, McCauley’s own car was disabled and the borrowed car was a substitute for it.
While the Court’s opinion frequently uses the word “thief’ to describe one who borrows a car without permission, in this case there is no accusation that McCauley acted in a criminal manner. McCauley contended to Progressive that he used the car with the permission of his employer, Alamo Rent-A-Car, and that he had often been given permission to use Alamo cars in the past. According to the record, Sink also sought recovery under Alamo’s insurance, but the claim was denied after Alamo denied having given McCauley permission to drive its car. Progressive then sued McCauley, seeking a judicial declaration that it was not obligated to defend or indemnify him because of the permission exclusion. Progressive won a default judgment after McCauley failed to answer or appear. Progressive’s Requests for Admission — which included a request for an admission that McCauley did not have a reasonable belief of entitlement to use Alamo’s car — were deemed granted. At the trial between Sink and Progressive, Sink did not dispute the question of permission.
Regardless of the circumstances surrounding the car’s use, however, the borrowed car clearly fits the policy’s description of a “temporary substitute” and therefore qualifies as McCauley’s “covered auto” under the policy. The policy’s plain terms state that the reasonable-belief-of-entitlement requirement “does not apply to you or any family member while using your covered auto.” Consequently, under the policy’s plain language, McCauley was driving a “covered auto” and was therefore covered by his policy.
Another part of the policy shows that the Board did not intend for a temporary substitute auto to incorporate a permission requirement.1 In Part C, the policy pro*556vides that “[property damage” includes damage to “[y]our covered auto, not including a temporary substitute auto.” Had the Board intended the exclusion found today by the Court, it would have included additional language to explain that the reasonable-belief-of-entitlement requirement likewise “does not apply to you or any family member while using your covered auto not including a temporary substitute auto.” Since the Board chose not to use this language, the policy must be construed as written: that a reasonable belief of entitlement is not required for drivers using their “covered autos,” including temporary substitute autos.
Because the TPAP in 1981 and the Texas Family Automobile Policy (TFAP) before that both required permission for all temporary substitute vehicles, the Court concludes that the policy before us today must also be limited. But in 1983, the State Board of Insurance amended the policy to provide that the permission requirement “does not apply to you or any family member while using your covered auto.” State Board of Insurance, Board Order 43611 (Sept. 16, 1983). The Board expressed its overall intent as “an effort to clarify, to remove possible ambiguities and to broaden coverage.” Id. (emphasis supplied). The Board further explained its decision to add this exception to the permission requirement: “It is proposed to amend this liability coverage exclusion to make it clear that the exclusion does not apply to the insured or to any family member while using the covered auto.” Thus, through this amendment, the Board removed any permission requirement for an insured’s “covered auto.” The Board’s decision to amend the policy should be respected, as the Legislature gave the Board the authority to write policies and set rates for automobile liability insurance policies. Tex. Ins.Code art. 6.01, 5.06.
II
Although I believe that the policy language clearly excepts temporary substitute automobiles from the permission requirement, I would reach the same result if the exclusion were unclear. If an exclusionary clause in an insurance contract is ambiguous, we “ ‘must adopt the construction ... urged by the insured as long as that construction is not unreasonable, even if the construction urged by the insurer appears to be more reasonable or a more accurate reflection of the parties’ intent.’ ” Balandran v. Safeco Ins. Co. of Am,., 972 S.W.2d 738, 741 (Tex.1998) (quoting Nat’l Union Fire Ins. Co. v. Hudson Energy Co., 811 S.W.2d 562, 555 (Tex.1991)). Under this rule, Progressive must show that the interpretation urged by Sink — the exclusion of temporary substitute automobiles from the permission requirement — is itself unreasonable. Id.
Courts in other jurisdictions have held that such an exclusion is not unreasonable. Under similar facts, they have concluded that permission is not required under the insurance contract unless the contract itself contains such a requirement. See, e.g., Densmore v. Hartford Accident & Indem. Co., 221 F.Supp. 652, 657 (W.D.Pa.1963); Hardware Mut. Cas. Co. v. Hopkins, 106 N.H. 412, 213 A.2d 692, 698 (1965).
In Densmore, the driver had purchased an insurance policy for his car. He totaled the ear in an accident, went to jail, and “[a]fter discharge from the jail, ... stole an automobile, drove it to Pennsylvania, and became involved in [another] accident.” Id. at'654. The insurance company argued that the stolen car could not be a “temporary substitute” under the insurance policy, but the court looked to the plain language of the insurance contract and found “no provision therein which relates to a stolen vehicle.” Id. Consequent*557ly, the court found coverage, placing responsibility on the insurance company to “specifically set forth in the insurance contract that coverage would not exist” in such situations. Id. The court further noted that “when the accident occurred ... the insured ... was not being pursued by police officers, and the accident ... occurred solely through negligence, the theft being merely incidental to the occurrence.” Id. at 654-55.
In Hopkins, a teenager caused a fatal collision while driving a car that had been lent to his parents. Hopkins, 213 A.2d at 693. Although the owner had requested that the teenager not be permitted to drive the car, his parents allowed him to use it anyway. Id. at 694. The teenager’s insurance company argued that coverage was precluded because the owner had not given pel-mission to the driver. Id. Citing Dens-more, the court concluded that “[t]he fact that [the teenager] did not have permission from [the owner] to drive the garage car does not change its status as a ‘temporary substitute automobile.’ ... It has been held that [even] a stolen motor vehicle may become a temporary substitute automobile.” Id. at 698.
In fact, until today no court has enforced a permission requirement unless the insurance policy explicitly contained such a requirement for temporary substitute automobiles. See, e.g., Vidaum v. Maryland Cas. Co., 444 S.W.2d 767, 770 (Tex.Civ. App.-San Antonio 1969, writ refd n.r.e.); Mission Ins. Co. v. Mackey, 340 F.Supp. 824, 828 (W.D.Mo.1971). Vidaum dealt with the TFAP, which defined a temporary substitute automobile as “an automobile not owned by the named insured, while temporarily used with the permission of the owner_” Vidaurri, 444 S.W.2d at 768. Consequently, the court in Vidaum held that a driver who borrowed his brother’s car did not have insurance coverage, as his brother had not given him permission to use the car. Id. at 770. The policy in Mackey similarly contained an express permission requirement. Mackey, 340 F.Supp. at 828. The court noted that while Densmore “held that a stolen automobile could constitute a ‘temporary substitute automobile’ within the meaning of an insurance policy which did not place any other limitations on the definition of ‘temporary substitute automobile,’” that rule should not apply when a policy contained an express permission requirement. Id. Thus, “when the policy has specifically limited the meaning of ‘temporary substitute automobile’ to one used with permission of the owner, that limitation has been deemed to be effective.” Id.
Ill
The Court’s opinion today points out that exempting temporary substitutes from the permission requirement can lead to an inconsistent result: a person injured by someone driving a car without permission can recover from the driver’s insurance policy if the driver’s own car is disabled, but the victim cannot recover if the driver’s own car is in perfect working condition. While admittedly this is an anomaly, I do not believe that it renders the permission exception unreasonable. Instead, I believe that the State Board of Insurance may have simply wished to carve out a narrow exception in order to minimize proof problems.
Proof problems are obviously possible when the driver of a borrowed car gets into an accident. The car’s owner may be tempted to deny having given the driver permission to use the car, either to avoid suffering an increase in insurance rates or, in some cases, to avoid potential liability for negligent entrustment. Furthermore, a person responsible enough to purchase an insurance policy is unlikely to simply *558steal a car. On the other hand, family members often borrow each other’s cars in the event of a breakdown. Consequently, the State Board of Insurance may have reasonably decided to simply avoid such proof problems altogether by exempting all “covered autos” — including temporary substitute autos — from the permission requirement.
The Insurance Services Office (ISO), a national organization that publishes standard policy forms, was apparently aware of such proof problems when it amended its Personal Auto Policy to exclude “a ‘family member’ using ‘your covered auto’ which is owned by you” from its permission requirement. The ISO amendment is very similar to the Texas amendment, which provides that the permission requirement “does not apply to you or any family member while using your covered auto.” According to an insurance-industry analyst, the change in the ISO PAP was designed to provide “coverage ... to the usage of these vehicles with or without permission” so that “the carrier and the agent will no longer be in the middle of this type of family squabble.” Phyllis Van Wyhe, 1998 Auto Revisions, at http://w ww.insuran-cece.com/resources/articles/autoehang-es.pdf (last visited May 7, 2003). Consequently, it is not unreasonable to think that the Texas State Board of Insurance may have added its exception for the same reason.
The permission exception may also be an attempt to shift the responsibility for costs from an innocent victim to the insurance company that has specifically contracted to insure the driver. For example, one commentator argued that the comprehensive permission requirement originally found in the TPAP represented “an attempt to shift the loss to an innocent victim rather than having the insurance company pay for the negligent conduct of its insured.” Bob Roberts, The New “Texas Personal Auto Policy” — A Comparison of Benefits with the Old “Texas Family Automobile Policy”, 16 TRIAL L. FoRüm 2, 5 (1981). He advocated changing the policy to provide coverage to the named insured “no matter what vehicle he is driving or under what circumstances.” Id. While the State Board of Insurance never went that far, two years later it did amend the policy to except “you or any family member while using your covered auto” from the permission requirement.
For these reasons, I would affirm the court of appeals’ judgment.

. The policy at issue was drafted by the State Board of Insurance. In general, a Texas automobile insurer "may only use a form adopted by the Board” for auto insurance. Tex. Ins. Code art. 5.06(2).