2013 V.I. Supreme LEXIS 64
Supreme Court of The Virgin Is...2013Background
- On November 8, 2002, Camira Joseph permitted her 18-year-old relative to drive her insured car; he crashed, injuring two passengers and damaging a guardrail.
- Joseph’s liability policy included an endorsement excluding coverage for any driver under 25.
- Inter-Ocean (insurer) paid $10,287.25 to the injured passenger and government property claimant after receiving no timely response from Joseph, then sued Joseph for reimbursement under the policy’s subrogation/indemnification clause.
- At trial the Superior Court granted Inter-Ocean summary judgment, reasoning the Compulsory Automobile Liability Insurance Act required Inter-Ocean to pay but allowed subrogation against Joseph for breach of the endorsement.
- Joseph appealed; the Supreme Court reviewed de novo whether the statutory omnibus clause supersedes the under-25 exclusion and whether the insurer could seek reimbursement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the statutory omnibus clause (20 V.I.C. §703) overrides a policy endorsement excluding permissive drivers under 25 | Joseph: the endorsement is invalid as it conflicts with §703(b); permissive drivers must be covered to compulsory limits | Inter-Ocean: the endorsement is effective but insurer argues it nevertheless had to pay under statute and can seek reimbursement | Held: The endorsement conflicts with §703(b) and is invalid to the extent of the statutory minimum; permissive drivers are covered to those limits |
| Whether insurer may seek subrogation/reimbursement from its insured after paying claims for which the endorsement would have excluded coverage | Joseph: insurer had no obligation to pay under the endorsement, and because the exclusion is invalid insurer cannot subrogate against insured | Inter-Ocean: even if statute mandates initial payment, insurer may still pursue contractual subrogation/indemnity against insured | Held: Antisubrogation principles and the fact the endorsement was unenforceable to compulsory limits bar subrogation; insurer cannot recover from insured for payments made under the compulsory coverage |
Key Cases Cited
- Auto Owners Ins. Co. v. Rollison, 378 S.C. 600, 663 S.E.2d 484 (S.C. 2008) (statutory definition of insured controls when policy exclusion conflicts with statute)
- Fields v. W. Preferred Cas. Co., 437 So.2d 344 (La. Ct. App. 1983) (statutory omnibus clause supersedes policy endorsements excluding permissive drivers)
- Young v. Mid-Continent Cas. Co., 743 P.2d 1084 (Okla. 1987) (under-age driver exclusion invalid where it would limit recovery by innocent victims and contravene compulsory insurance statute)
- Remy v. Michael D’s Carpet Outlets, 571 A.2d 446 (Pa. Super. Ct. 1990) (insurer generally may not subrogate against its own insured)