We have a client, we will call her Amanda. She just graduated from college and was looking for a job. She went on vacation with her boyfriend to Virginia Beach. On the way to Virginia Beach her boyfriend who was driving ran into the back of another vehicle. In the collision Amanda broke her leg. Amanda’s boyfriend was insured by State Farm and the car he was driving was insured by State Farm. Amanda had been staying with an aunt and uncle while at college and was on their State Farm policy. She had a car of her own which was also insured by State Farm. Amanda had also an apartment near school which was insured by State Farm. As Amanda’s medical bills began to roll in, she sought help from State Farm. State Farm told her that the coverage her boyfriend and the car he was driving had lapsed a few hours before the collision. Amanda sought our help. We told State Farm if their position was that the driver and his car were not covered at the time of the collision because it lapsed a few hours earlier then surely he was uninsured and Amanda should be covered under the uninsured provisions of the policy of which she was on. State Farm responded by telling us Amanda was not covered at that time for uninsured motorist coverage because she was not a named insured on the policy. She was only a named driver on the policy. The difference being that a named insured was provided full coverage. A named driver had to be a “resident relative”. A resident relative was defined as a blood relation that resided in the same house. Since Amanda had an apartment near school, she technically did not live in the same house as her aunt and uncle. Therefore, she was not covered. When we pressed State Farm on whose idea it was to name her as a “driver” as opposed to an “insured”, State Farm clammed up. We attempt to get this information from the State Farm agent who sold the policy and she refused to respond. The next thing we knew Amanda had been sued in Federal court by State Farm. The basis of the lawsuit was State Farm wanted the Federal court to declare that State Farm had no obligation to provide her any coverage. In that Federal court lawsuit, we are able to ascertain that it was the agent’s decision to name Amanda as a mere “driver” as opposed to an “insured”. Had she been named as an “insured” there would’ve been full coverage and no questions. The cost difference between naming her as a “driver” as opposed to an “insured?” None. Zero. Not a penny. So why have two classes of people covered under a policy? Those as a first class insured, that get full coverage and those who are only a driver and get some second tier of coverage? Seems to me it creates the opportunity for State Farm to deny coverage. I believe their desire to sue in Federal court was an effort to gain some backing for their position. This, however, failed and at the end of the day State Farm had to pay Amanda for her injuries under the uninsured motorist coverage of the policy under which she was covered.
I would suggest, especially if you’re insured by State Farm, that you demand that State Farm list all people in your family as “insureds” and not allow State Farm to spin them off as a “driver” that would get some second tier of coverage. Frankly, I think the agent involved in Amanda’s case really didn’t understand the difference. I believe many agents do not have the full knowledge of the workings of the policy they sell. Many agents are just doing what they’re told by the company who writes the policy.