Court Finds that Car Dealership’s Insurance Policy Did Not Cover Customers on a Test-Drive

Recently, a state appellate court issued an interesting opinion in a personal injury case raising an important issue that frequently arises in Maryland car accident cases. Specifically, the case considered whether motorists were covered under a third party’s uninsured/underinsured motorist (UIM) coverage. Finding that the third party specifically rejected obtaining coverage for those other than the named individuals in the policy, the court rejected the plaintiffs’ claims.The Facts of the Case

The plaintiffs arranged to test-drive a car from a local car dealership. While they were out on the test-drive, another motorist rear-ended the plaintiffs. The plaintiffs were injured as a result of the collision and filed a personal injury lawsuit against the driver who hit them.

That driver, however, did not have sufficient insurance coverage to fully compensate the plaintiffs for the injuries they sustained in the accident. Therefore, the plaintiffs then named the insurance company that wrote the policy for the car dealership as a party to the case, seeking to obtain coverage under that policy’s UIM coverage.

The insurance company denied the plaintiffs’ claim, explaining that the dealership’s policy afforded them no coverage. The plaintiffs then filed this case, seeking to compel the insurance company to approve their claim.

The Court’s Analysis

The court began by looking at the dealership’s insurance policy. The policy did provide for UIM coverage, but only for “directors, officers, partners or owners of the named insured and family members who qualify as an insured.” The policy also contained a clause specifically rejecting coverage for “any other person who qualifies as an insured.”

The plaintiffs acknowledged that they were not “directors, officers, partners or owners” or their family members. However, the plaintiffs argued that the clause conveying UIM coverage was invalid, and based on that, they should be covered under the policy.

The plaintiffs took issue with several aspects of the UIM clause. Primarily, the plaintiffs argued that, under state law (which requires UIM coverage to be offered), a policyholder must either accept or reject UIM coverage. Here, the plaintiffs argued that the UIM clause allowed for the dealership to pick and choose to whom UIM coverage is extended, which is contrary to the law’s intent.

The court was not convinced by the plaintiffs’ arguments and dismissed their case. The court explained that, had the legislature intended to make UIM coverage an “all or nothing” product, it could have done so. Instead, the court held, all that is required under the law is that UIM coverage be offered; an insured is free to accept the coverage for some and reject it for others, as long as the arrangement is in writing.

Have You Been Injured in a Maryland Car Accident?

If you or a loved one has recently been injured in a car accident, you may be entitled to monetary compensation. Given the complexities of how insurance policies are written, you may be covered under several policies. However, you should not expect the insurance companies to volunteer that information. The dedicated Maryland personal injury lawyers at Lebowitz & Mzhen, LLC have decades of experience handling Maryland car accident cases, and we know where to look to find potential avenues of recovery for our clients. To learn more, call 410-654-3600 to schedule your free consultation today.

More Blog Posts:

Court Finds Manufacturer Not Liable for Plaintiff’s Injuries Based on a Third-Party’s Misuse of the Product, Maryland Car Accident Attorney Blog, published July 3, 2018.

Appellate Court Discusses Employer Liability in Recent Pedestrian Accident, Maryland Car Accident Attorney Blog, published July 17, 2018.


Contact Information