Case Law Dispatch: Payne v. Erie Insurance

Court: Maryland Court of Appeals
Date of Decision: 3/30/15
Appellate Panel: Barbera, Harrell, Battaglia, Greene, Adkins, McDonald, Watts
Opinion by: McDonald
Concurrence by: Harrell, Battaglia, and Watts

Facts:

Karen, the adult daughter of Alan and Maureen, lives with her parents and has unrestricted access to drive their vehicle. Karen asks the father of her children, Ameen, to pick the kids up from school using Alan and Maureen’s vehicle. Alan and Maureen have previously forbidden Ameen from driving the vehicle. While Ameen is using the vehicle, he is involved in a collision.

Issue:

Whether the “omnibus clause” of a Maryland auto insurance policy extends coverage to a “second permittee” driver? [Note: A second permittee is created when an insured person (Alan or Maureen) gives permission to a person to drive (Karen), who then gives permission to another person to drive the vehicle (Ameen).]

Holding:

The omnibus clause in the policy in this case extends coverage to a second permittee who drove the car for the benefit of the first permittee at her request, regardless of whether the first permittee happened to be physically in the car at the time. Insurance coverage is not extended to the second permittee when he drives the car for a purpose other than at the request of the first permittee.

Injury Law Around the Beltway Commentary:

When faced with the option to expand or restrict insurance coverage, the court decided to expand it in accordance with principles espoused in past cases. This seems to me a fair result. When a vehicle is uninsured for any reason, the real victims are usually the people outside the vehicle that causes the collision. Had the court chosen to restrict the scope of permissive use, it would have caused greater loss to anyone struck by vehicles driven by “second permittees.” In an unfortunate factual twist in this case, the Court determined that Ameen was driving outside the scope of his permission, and thus was not covered by Alan and Maureen’s policy. The Paynes, who were in a vehicle that Ameen struck, are the real losers in this matter.

Follow this link, if you are interested in a an overview of permissive use in Washington DC, Virginia, and Maryland.

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