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Lee v. GEICO Choice Insurance Co.

Superior Court of Delaware

September 7, 2017

JESSICA M. LEE, Plaintiff,
v.
GEICO CHOICE INSURANCE COMPANY, a foreign corporation, Defendant.

          Submitted: August 23, 2017

         Upon Defendant's Motion for Summary Judgment DENIED.

          Samuel D. Pratcher, III, Esq., Weik Nitsche & Dougherty, Attorney for Jessica M. Lee.

          Michael K. DeSantis Esq., Law Office of Dawn L. Becker, Attorney for GEICO Choice Insurance Company.

          MEMORANDUM OPINION

          THE HONORABLE ANDREA L. ROCANELLI JUDGE.

         This is an insurance dispute arising out of a motor vehicle accident that took place on February 23, 2016. Prior to the accident, Plaintiff Jessica Lee ("Plaintiff") had an automobile insurance policy with Defendant GEICO Choice Insurance Company ("GEICO") that covered her vehicle ("Plaintiff's Auto Policy"). Following the accident, Plaintiff settled with the tortfeasor for his policy limits of $15, 000. Plaintiff also submitted a claim to GEICO under Plaintiff's Auto Policy, but GEICO informed Plaintiff that Plaintiff's Auto Policy had been cancelled prior to the accident for her failure to make premium payments.

         At the time of the accident, Plaintiff resided in the same household as her sister, Amie Lee ("Plaintiff's Sister"). Plaintiff's Sister had a separate insurance policy with GEICO that provided Underinsured Motorist ("UIM") coverage for those qualifying as insureds ("Sister's Policy"). Plaintiff submitted a claim to GEICO as an insured under her Sister's Policy for UIM coverage. GEICO denied Plaintiff's claim based on an exclusion in the Sister's Policy that voided coverage for bodily injury sustained in an accident with a vehicle that is owned by an insured, but which is uninsured ("owned-but-uninsured exclusion"). That denial led to the instant lawsuit, in which Plaintiff seeks UIM coverage under her Sister's Policy.

         Procedural Background

         GEICO has moved for summary judgment contending that Plaintiff's vehicle was uninsured at the time of the accident and, therefore, that the owned-but- uninsured exclusion acts to bar coverage. Plaintiff opposes GEICO's motion on two grounds. First, Plaintiff's Auto Policy with GEICO had not been effectively cancelled at the time of the accident. Second, even assuming Plaintiff's Auto Policy had been cancelled, GEICO failed to meet its burden to show that the owned-but-uninsured exclusion applies to bar coverage. This is the Court's decision on GEICO's Motion for Summary Judgment.

         Standard of Review

         The Court may grant summary judgment only where the moving party can "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."[1] The moving party bears the initial burden of proof and, once that is met, the burden shifts to the non-moving party to show that a material issue of fact exists.[2] At the motion for summary judgment phase, the Court must view the facts "in the light most favorable to the non-moving party."[3]

         Discussion

         I. Plaintiff is an insured under her Sister's Policy with GEICO.

         It is undisputed that Plaintiff is an insured under her Sister's Policy, which defines "insured" to include "[r]elatives of [the named insured] if residents of his household."[4] Plaintiff and Plaintiff's Sister are relatives and were residents of the same household on the date of the accident.[5] Therefore, Plaintiff qualifies as an insured entitled to UIM coverage under her Sister's Policy.

         II. GEICO cannot meet its burden to establish that the owned-but-uninsured exclusion applies to bar coverage.

         Under Delaware law, the insured bears the burden of establishing that a loss falls under the coverage provisions of an insurance policy.[6] Once the insured does so, the burden shifts to the insurer to establish that a policy exclusion applies to bar coverage.[7] Plaintiff met her burden in this case by establishing that she is an insured under her Sister's Policy and thereby entitled to UIM coverage.

         GEICO denied UIM coverage for Plaintiff because of the owned-but-uninsured exclusion in the Sister's Policy which provides: "Bodily injury sustained by an injured while occupying, or through being struck by an uninsured motor vehicle owned by a insured or a relative is not covered."[8] GEICO cannot meet its burden with respect to this exclusion for two reasons. First, under Delaware law, UIM coverage is personal to the insured rather than vehicle-related.[9] Therefore, Plaintiff's UIM coverage does not depend on the coverage status of her vehicle. Second, any restrictions on UIM coverage are narrowly construed, [10] such that a policy exclusion affecting UIM coverage must be specifically authorized by statute and not against public policy.[11] GEICO cannot establish that the owned-but-uninsured exclusion meets this test.

         A. UIM coverage is personal to the insured.

         The owned-but uninsured exclusion cannot bar UIM coverage for Plaintiff because UIM coverage is personal to the insured under Delaware law.[12] In Frank, the plaintiff was injured in an accident while driving a vehicle insured with Hartford Insurance Company, which paid the policy limit to the plaintiff.[13] Then the plaintiff sought to recover UIM coverage under a separate policy with a different insurer that covered two vehicles she jointly-owned with her husband ("Defendant Insurer").[14]Although the plaintiff qualified as an insured under that policy, the Defendant Insurer denied coverage based on an exclusion ("other-motor-vehicle exclusion") that denied ...


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