Lee v. Geico Choice Insurance Company, N16C-09-061 ALR

On February 23, 2016, Jessica M. Lee was injured in a motor vehicle accident and settled with the tortfeasor for the tortfeasor’s $15,000 policy limits.
Plaintiff had a GEICO policy for her own vehicle that GEICO claims was cancelled for nonpayment before the accident.
Plaintiff lived with her sister, who had a separate GEICO policy that provided underinsured motorist (UIM) coverage to household relatives; Plaintiff qualified as an insured under that policy.
GEICO denied Plaintiff’s UIM claim under the sister’s policy based on an "owned-but-uninsured" exclusion (excluding coverage where the injured’s own vehicle is uninsured and owned by an insured).
Plaintiff sued; GEICO moved for summary judgment arguing the exclusion bars coverage. The court denied summary judgment.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Plaintiff is an insured under sister’s GEICO policy	Plaintiff is a household relative and therefore an insured entitled to UIM	N/A (status undisputed)	Plaintiff is an insured under the sister’s policy
Whether the owned-but-uninsured exclusion bars UIM recovery	UIM is personal to the insured; exclusion cannot defeat coverage for an insured	Exclusion applies because Plaintiff’s own vehicle was uninsured/ cancelled	Exclusion does not bar coverage because UIM is personal to the insured
Whether policy exclusions can limit UIM absent statutory authorization	Section 3902 requires UIM unless rejected; exclusions that undercut UIM are not authorized and are contrary to public policy	Exclusions are permissible contract terms to limit coverage	Exclusions restricting UIM must be specifically authorized by statute; owned-but-uninsured exclusion is not authorized and violates public policy
Whether court must decide if Plaintiff’s auto policy was cancelled	Plaintiff urges the court not to rely on vehicle status; cancellation disputed	GEICO asserts policy was cancelled and vehicle uninsured	Court did not decide cancellation because exclusion cannot be enforced; denial of summary judgment for GEICO

Frank v. Horizon Assur. Co., 553 A.2d 1199 (Del. 1989) (determined UIM coverage is personal to the insured and invalidated a vehicle-based exclusion not authorized by statute)
Fernandez v. Selected Risks Ins. Co., 412 A.2d 755 (N.J. 1980) (invalidated an owned-but-uninsured exclusion as contrary to UIM public policy)
State Farm Mut. Auto. Ins. Co. v. Abramowicz, 386 A.2d 670 (Del. 1978) (discussed public policy behind UIM protection)