Published by The Pellegrin Firm May 16, 2020

On April 8, 2020, the Louisiana Third Circuit Court of Appeal in Lafayette ruled against GoAuto Insurance in its bid to deny insurance coverage in a Lake Charles car accident. The GoAuto policy listed the driver of the car (a Nissan Altima) at the time of the accident, Jermika Mayne, as an excluded driver. Therefore, GoAuto argued it was not responsible for any property damage caused to the Nissan Altima by the accident.

Harvest Motors was the owner of the vehicle and Jermika’s mother, Theresa Harmon, was leasing the vehicle pursuant to a lease-purchase agreement. Pursuant to the agreement, Harvest Motors was listed as an additional insured under the lienholder designation under the policy. The trial court held, and the court of appeal agreed, that the policy was ambiguous as to whether the named driver exclusion applied to damages sustained by an additional insured under the lienholder designation in the policy.

The trial court granted summary judgment for Harvest Motors finding that coverage did indeed exist for Harvest Motors’ damages due to ambiguities in the policy. Louisiana case law dictates that insurance contracts should be construed in favor or coverage if there are any ambiguities. The court of appeal affirmed. The courts relied largely on a reimbursement provision in the policy which obligates the named insured to reimburse GoAuto for any amount that GoAuto may have to pay to the additional insured/lienholder for damage caused by the named excluded driver. The courts reasoned that this provision means the policy must contemplate GoAuto paying for damages incurred by additional insureds listed in the lienholder designation.

The case is Ken Comer Auctioneers, Inc. d/b/a Harvest Motors v. Theresa Ann Harmon & GoAuto Insurance Company, Docket No. 19-811 in the court of appeal.