Laura R. Coltelli
Stephen A. Arnold
Coltelli & Associates
Martinsburg, West Virginia
Attorneys for Plaintiff
Susan R. Snowden
Martin & Seibert, L.C.
Martinsburg, West Virginia
Attorney for Defendants
JUSTICE MILLER delivered the Opinion of the Court.
1. "It is well settled law in West Virginia that
ambiguous terms in insurance contracts are to be strictly construed
against the insurance company and in favor of the insured."
Syllabus Point 4, National Mutual Insurance Co. v. McMahon & Sons,
Inc., 177 W. Va. 734, 356 S.E.2d 488 (1987).
2. "Where the policy language involved is exclusionary,
it will be strictly construed against the insurer in order that the
purpose of providing indemnity not be defeated." Syllabus Point 5,
National Mutual Insurance Co. v. McMahon & Sons, Inc., 177 W. Va.
734, 356 S.E.2d 488 (1987).
3. Where an employee of an automobile dealership is
returning a vehicle to the dealership and is involved in an
automobile accident, the medical payments provision under the
employee's personal automobile liability policy will not afford
coverage where there is an exclusion under the medical payments
provision for anyone while working in a business that sells,
repairs, services or parks autos, unless the business is yours.
In this case we consider four certified questions which
arose from a motion for summary judgment made by the defendants,
Erie Insurance Company and Smallwood-Small Insurance, Inc. (Erie).
The questions certified by the trial court pursuant to W. Va. Code,
58-5-2 (1967), address the applicability of a certain exclusion
clause contained within the medical payments insurance coverage
endorsement included within an automobile liability insurance
policy purchased by the plaintiff from Erie.
The undisputed facts of this case are as follows.See footnote 1 The
plaintiff purchased automobile liability insurance from Erie. The
policy was in effect on October 20, 1987, when the plaintiff was
involved in a one-vehicle accident while driving a vehicle owned by
her employer, Apple Valley Chevrolet-Olds, an automobile
dealership. The dealership's vehicle was used by the plaintiff the
evening before the accident in order to show it to a potential
buyer. The plaintiff did not return the vehicle to the dealership
after showing it to the potential buyer, but instead drove it to
her home. The accident occurred the next morning on her way to
As a result of the accident, the plaintiff received injuries for which medical expenses were incurred. Her medical expenses in the amount of $18,192.19 were reimbursed to her by the West Virginia Workers' Compensation Fund. She also was paid the $1,000 medical payments coverage limit under an insurance policy held by her employer. She now seeks $18,192.19 from Erie pursuant to the medical payments coverage endorsement of her own automobile insurance policy.
The questions certified by the trial court deal with an
exclusion clause within the medical payments coverage endorsement.
The relevant exclusion clause within the section of the medical
payments coverage endorsement entitled "Limitations On Our Duty to
Pay" states: "We do not cover injuries sustained by: * * * (5)
anyone while working in a business that sells, repairs, services or
parks autos, unless the business is yours." (Emphasis in
The trial court has certified four questions to this
Court concerning the applicability of the foregoing exclusion
clause to the facts of this case.See footnote 2 The plaintiff argues that the
exclusion clause is ambiguous and should be construed liberally to
be inapplicable under the facts of this case, thus permitting
coverage of the plaintiff's accident. Erie, on the other hand,
contends that the exclusion clause is clear and unambiguous and
must be held to apply to the facts of this case, thereby precluding
coverage of the plaintiff's accident. We agree with Erie.
Erie does not dispute that as a permissive user of the
vehicle, the plaintiff is covered by the policy. Its position is
that there is no coverage under the exclusion because the plaintiff
sustained her injury while she was driving a vehicle owned by Apple
Valley Chevrolet-Olds, her employer, to the dealership's vehicle
sales lot. Therefore, it contends that the plaintiff was working
at the time of the accident. Erie also contends that the exception
to the exclusion, providing that the exclusion applies "unless the
business is yours," is not applicable because the plaintiff did not
own the automobile business.
It is generally held that the medical payments provision
in an automobile liability insurance policy is separate from the
liability provisions of the policy and is akin to a personal injury
accident policy.See footnote 3 Customarily, medical payments coverage gives a
defined amount of coverage for a stated premium. It also, as is
the case here, defines the scope of coverage for persons and
vehicles and sets out exclusions, which in the Erie policy are
termed "LIMITATIONS ON OUR DUTY TO PAY."
We are not cited nor are we aware of any statutory
provision that regulates medical payments coverage issued as a part
of an automobile liability policy.See footnote 4 Such a situation also exists
in other states. See, e.g., Karabin v. State Auto. Mutual Ins.
Co., 10 Ohio St. 3d 163, 462 N.E.2d 403 (1984). See generally 8A
J. Appelman & J. Appelman, Insurance Law & Practice § 4902 at 231.
Thus, in the construction of coverage under a medical payments
provision of an automobile liability insurance policy, it is the
language of that provision which ordinarily controls the payment of
Both parties refer to National Mutual Insurance Co. v.
McMahon & Sons, Inc., 177 W. Va. 734, 356 S.E.2d 488 (1987), where
we reiterated in Syllabus Points 4 and 5 some of our traditional
laws with regard to the construction of insurance contracts:
"4. It is well settled law in West Virginia that ambiguous terms in insurance contracts are to be strictly construed against the insurance company and in favor of the insured.
"5. Where the policy language involved is exclusionary, it will be strictly construed against the insurer in order that the purpose of providing indemnity not be defeated."
The plaintiff's main attack on the language of the
exclusion is based on a series of rhetorical questions.See footnote 5 There is
no factual dispute that the injury occurred while the plaintiff was
working, i.e., returning the car to the automobile dealership. She
sought and obtained workers' compensation benefits for the injury.
The type of exclusionary language relating to the
automobile business found in the plaintiff's policy is quite common
in automobile liability policies. The reasoning behind such an
exclusion is set out in some detail in 7 Am. Jur. 2d Automobile
Insurance § 90 at 558 (1990):
"Automobile insurance policies
sometimes exclude from their coverage vehicles
which are used in the 'automobile business.'
Such an exclusion may apply either to a
vehicle owned by the insured or to a vehicle
which is not so owned, but which otherwise
would fall within the coverage of the policy.
With respect to owned vehicles, it has been
said that such policy exclusions have their
genesis in the assumption that an automobile
turned over by its owner to a service station
or other automobile business is more apt to be
driven by an irresponsible person in ways
unpredictable by the owner, who thus
relinquishes control over its times and
manners of operation. Such potential
liability was thought to be too great to
impose on the insurer the obligation of
covering the automobile business as an
additional insured." (Footnotes omitted).
In several cases involving similar factual scenarios to
the one herein, courts in other jurisdictions have held that
coverage is not available. The Virginia Supreme Court in
Nationwide Mutual Insurance Co. v. Federal Mutual Insurance Co.,
204 Va. 879, 134 S.E.2d 253 (1964), had a situation where an
automobile salesman was test driving the automobile of a
prospective customer which was being considered as a trade-in on
another car. The central issue was whether the prospective
customer's motor vehicle liability insurance, issued by Federal
Mutual, covered the salesman. The policy contained an exclusion
for coverage to an "automobile while used in the automobile
business." 204 Va. at 883, 134 S.E.2d 255. The court found that
the customer's car was "being used by [the salesman] in his
automobile business within the terms of [the] Exclusion[.]" 204
Va. at 886, 134 S.E.2d 257. See also Universal Underwriters Ins.
Co. v. Strohkorb, 205 Va. 472, 137 S.E.2d 913 (1964).
The Kansas Supreme Court evaluated a similar exclusion
under the collision coverage of an automobile policy in Kipper
Chevrolet, Inc. v. Patrons Mutual Insurance Association, 193 Kan.
637, 396 P.2d 348 (1964). Kipper Chevrolet had a policy covering
the personal automobile of its employee, a Mr. Bennett. It asked
Mr. Bennett to garage a new car until it could be displayed in the
company showroom. On the day he was returning the car to the
showroom, Mr. Bennett was involved in an accident.
Suit was filed when the insurance company refused to pay
on the collision coverage portion of the policy. The company
conceded that there was coverage except for the exclusion which
disallowed coverage "to loss to a non-owned automobile out of its
use by the insured in the automobile business[.]" 193 Kan. at 639,
396 P.2d at 350. The court found that the car was being used in
the automobile business, i.e., "Bennett, as sales agent for
plaintiff, was driving the automobile for no other purpose than to
bring it from its place of concealment to the showroom floor." 193
Kan. at 639, 369 P.2d at 350.
Much the same result occurred in Hodapp v. Shelby Mutual
Insurance Co., 166 So. 2d 772 (Fla. App. 1964), where the insured
was test driving a car owned by an automobile dealership to
determine if he would buy it. An accident occurred damaging the
car and the insured was sued by the automobile dealership for the
damage to the car. The insured's policy had an exclusion "to any
automobile while used in the automobile business[.]" 166 So. 2d at
773. The court concluded that the exclusion precluded coverage.
See also Haley v. State Farm Mut. Auto. Ins. Co., 130 Ga. App. 258,
202 S.E.2d 838 (1973); Continental Nat'l Am. Group v. Allied Mut.
Ins. Co., 95 Idaho 251, 506 P.2d 478 (1973); Trolio v. McLendon, 9
Ohio St. 2d 103, 224 N.E.2d 117 (1967). See generally Annot., 56
A.L.R.4th 300 (1987).See footnote 6
Thus, we conclude that where an employee of an automobile
dealership is returning a vehicle to the dealership and is involved
in an automobile accident, the medical payments provision under the
employee's personal automobile liability policy will not afford
coverage where there is an exclusion under the medical payments
provision for "anyone while working in a business that sells,
repairs, services or parks autos, unless the business is yours."See footnote 7
Having answered the certified questions, this action is, therefore, dismissed.
Certified questions answered
Footnote: 1Because the facts of this case are undisputed, we need not address the applicability of Syllabus Point 7 of National Mutual Insurance Co. v. McMahon & Sons, Inc., 177 W. Va. 734, 356 S.E.2d 488 (1987), which states: "An insurance company seeking to avoid liability through the operation of an exclusion has the burden of proving the facts necessary to the operation of that exclusion."
Footnote: 2The questions certified and the answers given by the circuit court in the certification order are as follows:
"1. Under the [National Mutual Insurance Co. v. McMahon & Sons, Inc., 177 W. Va. 734, 356 S.E.2d 488 (1987)] case, is the exclusionary language of Erie's policy of insurance of sufficient clarity to place [the Plaintiff]
on notice that she would not receive medical
payments insurance coverage if she was
involved in an automobile accident while
operating a vehicle owned by [her employer]?
"2. Was [the Plaintiff] working in a
business that sells, repairs, services or
parks autos at the time of the motor vehicle
accident giving rise to this civil action?
"3. Does [the Defendant's] policy of
insurance exclude medical payments coverage
for injuries sustained by [the Plaintiff]
while operating a vehicle owned by [the
Plaintiff's employer], and if so, did [the
Defendant] correctly deny payment of medical
payments benefits to [the Plaintiff]?
"4. Is [the Defendant's] policy of insurance
ambiguous in defining the precise exclusion
upon which [the Defendant] relies in denying
medical payments benefits to the extent that
the Circuit Court should have considered
whether or not the Plaintiff was entitled to
rely upon a reasonable expectation of
coverage? Answer: No."
We find it necessary only to answer Certified Question Nos. 1 and 2 as they are dispositive of the case. In Syllabus Point 5 of Anderson v. Moulder, 183 W. Va. 77, 394 S.E.2d 61 (1990), we said: "'"In a certified case, this Court will not consider certified questions not necessary to a decision of the case." Syllabus Point 6, West Virginia Water Serv. Co. v. Cunningham, 143 W. Va. 1, 98 S.E.2d 891 (1957).' Syllabus Point 7, Shell v. Metropolitan Life Ins. Co., 181 W. Va. 16, 380 S.E.2d 183 (1989)."
Footnote: 3See, e.g., Roberson v. United Servs. Auto. Ass'n, 330 So. 2d 745 (Fla. App. 1976); Hein v. American Family Mut. Ins. Co., 166 N.W.2d 363 (Iowa 1969); Morin v. Massachusetts Blue Cross, Inc., 365 Mass. 379, 311 N.E.2d 914 (1974); Desmond v. American Ins. Co., 786 S.W.2d 144 (Mo. App. 1989); Motto v. State Farm Mut. Auto. Ins. Co., 81 N.M. 35, 462 P.2d 620 (1969); Harkavy v. Phoenix Ins. Co., 220 Tenn. 327, 417 S.W.2d 542 (1967); Foundation Res. Ins. Co. v. Cody, 458 S.W.2d 214 (Tex. Civ. App. 1970). See generally 8A J. Appelman & J. Appelman, Insurance Law & Practice § 4902 (1981).
Footnote: 4Whether W. Va. Code, 33-6-30 (1973), which deals with the type of persons rendering surgical care, is applicable to a medical payments provision is not before us. Erie cites W. Va. Code, 33-6-29(c) (1992), as being useful to show legislative policy. We do not find it applicable to a medical payments provision.
Footnote: 5After quoting the exclusion, the plaintiff's argument proceeds in this fashion:
"Does this mean that anyone who works for a
car dealership is excluded from coverage? It
can not possibly mean that unless Erie is
willing to admit that it intentionally and
unconscionably defrauded the Plaintiff is
[sic] selling her a coverage and charging her
a premium for coverage she could never use.
Does it mean that the Plaintiff is not
covered during regular work hours (which we
contend it must mean)? If so, then coverage
should attach as Pamela Carney was not
injured during her regular work hours. Does
it mean that the Plaintiff is excluded from
coverage if she is injured 'in the course of
and as a result of' her employment? If yes,
then why does the policy not say as much?
Does it exclude the Plaintiff only to the
extent that Worker's Compensation pays for
her medical bills? If so, then why does it
not say that?"
Footnote: 6Where a salesperson is using the automobile dealership's car on a purely personal mission, then the salesperson's automobile policy's exclusion on use in the automobile business does not apply because the vehicle use at the time of the accident is the focal point. See, e.g., Universal Underwriters v. Farmers Ins. Co. of Idaho, 108 Idaho 249, 697 P.2d 1263 (App. 1985); Annot., 56 A.L.R.4th 293 (1987). Here, the facts show that the insured was returning the car to the dealership after demonstrating it to a customer. This action was not a personal mission.
Footnote: 7We do not address the plaintiff's argument that Erie's in-house claims adjuster waived the exclusion by initially agreeing to pay the medical payments coverage. This argument is
not part of the certified question. See generally 46A C.J.S. Insurance § 1345 at 210 (1993).