What’s a Policy Exclusion in an Insurance Contract?
A recent appeal concerned the applicability of an exclusion in an automobile liability policy. An exclusion is a clause in an insurance policy that lists the risks or conditions that aren’t covered.
Background
The plaintiff’s son died in an automobile accident. He had been the passenger in a vehicle owned by the car owner and the driver of the vehicle. The plaintiff brought a wrongful death action against the driver and the car owner, alleging among other things that the car owner had negligently entrusted the vehicle to the driver. The car owner’s automobile liability insurer then brought an lawsuit for a declaratory judgment that the driver wasn’t covered under the terms of the policy, which excluded from coverage persons who lacked a reasonable belief that they were entitled to use the vehicle.
The trial court granted summary judgment to the car owner’s automobile liability insurer (insurer) in the declaratory judgment action, and the plaintiff appealed.
The insurer issued a personal auto policy to the car owner. It included liability coverage for a truck that he let his employee use for his work for the owner. The car owner owned a number of rental properties, including the trailer park where the driver lived, and his employee was sometimes asked to perform day labor around the properties, such as picking up trash, weed-eating, and helping to retrieve tools.
The car owner didn’t let anyone other than his employee to drive his vehicles, including the truck in question, while they were in the owner’s employee’s possession—unless he specifically said otherwise. The car owner never gave the driver permission to drive the truck. He also hadn’t given his employee permission to let the driver drive the truck. Instead, he specifically told the employee that the driver wasn’t allowed to drive it. Also, the employee never gave the driver permission to drive the truck. To the contrary, the car owner and his employee testified that the driver was known to drink on the job and that they wouldn’t let him operate vehicles or equipment such as a riding lawn mower. There was no evidence that the driver ever drove the truck before the day of the accident.
On the day of the accident, the employee and the driver did some work at the trailer park, and the employee left the truck parked there with the keys inside. Later that day, the driver took the truck while intoxicated. There was no evidence to suggest that he took the truck in connection with any work for the employee and the car owner. Instead, the car owner reported the truck stolen, and the driver subsequently was charged with theft.
The driver and two passengers, including the plaintiff’s son, were traveling in the truck at the time of the accident, which killed the plaintiff’s son.
After the plaintiff sued the driver and the car owner for wrongful death, the insurer brought this declaratory judgment action, arguing that the policy it issued to the car owner excluded the driver from liability coverage. The policy provided that the car owner’s automobile liability insurer “will pay damages for ‘bodily injury’ … which any ‘insured’ becomes legally responsible to pay because of an auto accident.” It defined “insured” to mean “[a]ny person using ‘your covered auto,’” which would include a person using the truck that the driver crashed. However, the policy also contained an exclusion stating that the insurer didn’t provide coverage for any insured “using a vehicle without a reasonable belief that the insured is entitled to do so.”
The insurer moved for summary judgment in the declaratory judgment action, arguing that the policy didn’t provide liability coverage to the driver because he didn’t have a reasonable belief that he was entitled to use the truck. In response, the plaintiff argued that there was evidence showing the car owner had negligently entrusted the truck to the driver, precluding summary judgment. The trial court granted summary judgment to the insurer. The plaintiff appealed.
The Court of Appeals Affirms
On appeal, the plaintiff again argued that summary judgment wasn’t appropriate because a genuine issue of material fact existed as to whether the car owner permitted the driver to use the truck. That question was relevant to the claim for negligent entrustment that the plaintiff asserted against the car owner in her underlying wrongful death lawsuit.
However, Presiding Judge Christopher J. McFadden of the Georgia Court of Appeals wrote that the appeal didn’t concern the plaintiff’s underlying wrongful death lawsuit or her claim in that action that the car owner negligently entrusted the truck to the driver.
It concerned a different lawsuit — the insurer’s action for a declaratory judgment on the applicability of a policy provision that excluded from coverage drivers who use a vehicle without a reasonable belief that they had the permission of the owner or apparent owner to do so. As such, this action involved principles of contract, not tort. So the plaintiff’s framing of the relevant question wasn’t on point for this action, the judge wrote (although it would be on point for the underlying wrongful death action).
In construing the type of auto insurance policy at issue here, Judge McFadden explained that the test wasn’t whether the car owner gave the driver permission to use the truck, as the plaintiff argued, but rather whether the driver reasonably believed he had such permission. If the driver knew he wasn’t entitled to drive the vehicle, or if he claimed he believed he was entitled to drive the vehicle, but didn’t have reasonable grounds for such belief or claim, then he didn’t have coverage under the car owner’s insurance policy.
At trial, there was no testimony from the driver or other evidence that the driver actually believed he’d been given permission to use the truck. And even if he had such a belief, there was no evidence that such a belief was objectively reasonable, Judge McFadden concluded. Neither the car owner nor his employee ever gave the driver express permission to drive the truck. In fact, the car owner reported it as stolen after the driver took it. Both testified that they never did or said anything to the driver that could have given him the impression he had such permission. And there was no evidence that the driver had ever driven the truck before the day of the accident.
The plaintiff pointed to evidence that the employee was hired to work for the car owner and to evidence that the car owner’s employee gave the driver access to the truck by leaving it unlocked with the keys inside. But under the facts of this case, Judge McFadden said that this wasn’t enough to permit an inference that the driver had an objectively reasonable belief that he was entitled to use the truck in a manner unrelated to his employment and while intoxicated. The judgment was affirmed. Dol lar v. Ga. Farm Bureau Mut. Ins. Co., 2025 Ga. App. LEXIS 376 *; 2025 LX 359324; 2025 WL 2610635 (Ga, App. September 10, 2025).
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