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Non-Owned Vehicle Exclusion In Automobile Policy Where Covered Auto Is Not Out Of Normal Use Due To Breakdown, Repair Or Servicing

A non-owned exclusion in a motor vehicle policy did not violate Louisiana law when applied to the named insured in No. 2021-C-00621, Landry v. Progressive Sec. Ins. Co., 2021-00621 (La. 1/28/22), reh’g denied sub nom. CALVIN LANDRY & MARY LANDRY V. PROGRESSIVE SECURITY INSURANCE COMPANY, ET AL., 2021-00621 (La. 3/25/22). The named insured was driving a vehicle he did not own to the repair shop to fix a flat tire. He was doing this as a favor for the owner when he was involved in a collision. The named insured’s policy extended coverage to non-owned vehicles defined to mean a temporary substitute for a covered auto that was out of normal use due to a breakdown, repair or servicing. None of those definitions fit the situation since the covered vehicles insured under the policy were all in working order. The insured made the argument that to deny coverage would amount to a violation of Louisiana Motor Vehicle Safety Responsibility Laws, La. R.S. 32:851, et seq. The court focused on the financial responsibility laws distinction between an “automobile liability policy” which provides coverage for the vehicles, and a “motor vehicle liability policy” which provides coverage for an operator and is obtained when required to show proof of financial responsibility. Since it was undisputed that the policy was not required as proof of financial responsibility, the laws of Louisiana were satisfied that the vehicles under the policy were provided with the required levels of liability coverage. A non-owned vehicle exclusion in an automobile liability policy would not impact the public policy of the state or the requirements of Louisiana law.

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