State Farm v. Gruebele – Teen Driver Insurance Coverage Can Be Tricky

In many car accident cases, the question of insurance coverage is fairly straightforward. The individual is either insured or they are not. Each individual is typically only covered with a singular policy provided by one company, and the terms of that policy are usually standardized.
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Even in these situations, Montgomery car accident attorneys know there can be conflict with regard to interpretation of certain clauses as they apply to the circumstances.

But with teen drivers, the question of coverage can be even more complex. Some complicating factors include parental divorce, which could call into question whether the teen is a “resident household member.” In some instances, both parents have policies that cover the teen. In some cases, the vehicle may be insured on a separate policy. If the teen wasn’t driving according to the state’s graduated driver’s licensing laws, there could be questions about whether the insurance company is liable at all.

In State Farm Mutual Automobile Insurance Co. v. Gruebele, the North Dakota Supreme Court weighed some of these issues, following an incident in which a 15-year-old driver struck a motorcyclist, causing serious injury.

The crash happened in May 2011. It was later undisputed that the injuries sustained by the motorcyclist resulted in medical expenses that exceeded $1 million. Further, his ongoing expenses continued to climb.

The teen’s parents were divorced. Her father owned and insured the vehicle the teen was driving, though the teen had exclusive possession of it for six months prior to the crash. The father’s policy contained an underlying liability limit of $250,000, though there was an umbrella policy limit of $1 million. The father’s insurer offered that $1 million to settle the claims pending against him.

The teen lived with her mother, who had a separate motor vehicle insurance policy. The vehicle her daughter drove was not listed on that policy, but it did contain a provision promising to cover resident family members. Further, the mother had signed her daughter’s driver’s license application sponsorship form, which in North Dakota is issued to all drivers under 18. By signing this form, the mother agreed to assume financial liability for any negligent acts her daughter might commit behind the wheel.

The motorcyclist sued the mother’s insurer, seeking award for damages. The mother’s insurer requested a summary judgment, arguing there was no dispute that the vehicle involved in the crash wasn’t covered under its policy. The motorcyclist too requested summary judgment, arguing the policy should cover the crash.

The insurer didn’t deny that its insured was liable for her daughter’s negligent acts, but the question became whether it should be held responsible under the terms of its policy.

Because the vehicle wasn’t on the policy, the district court ruled, the mother’s insurance company shouldn’t have to pay for the crash.

The motorcyclist appealed.

The state supreme court affirmed, holding that although the mother personally assumed financial liability for her daughter’s negligence, the insurance company did not.

This means that the injured motorcyclist could potentially still pursue litigation against the mother personally. However, individuals are far less likely than insurance companies to be capable of paying the kind of large sums that are accrued in the course of medical care for serious injuries.

In Alabama, parents of teen drivers are required to provide their permission at every step of the graduated driver’s license program process (unless the child has reached the age of 18). Given the high rate of teen crashes and the liability that parents assume in these cases, it’s advisable to make sure your teen is prepared for the immense responsibility that driving a motor vehicle carries.

Call Allred & Allred P.C. at 1-866-942-9315 to speak with a Montgomery personal injury lawyer.

Additional Resources:
State Farm Mutual Automobile Insurance Co. v. Gruebele, May 29, 2014, North Dakota Supreme Court
More Blog Entries:
Liability and Pure Contributory Negligence in Alabama, May 12, 2014, Montgomery Car Accident Lawyer Blog