The main issue we must decide in this case is whether a newly acquired vehicle is a “covered auto” under an insurance policy. Specifically, we must determine whether an insured receives automatic coverage for thirty days after becoming the owner of a vehicle even though he does not request coverage for the vehicle as required by the terms of his policy. Both the insured and the insurer filed motions for summary judgment in this case. The district court denied the insurer’s motion and granted the insured’s motion. We reverse.
I. Background Facts.
On the night of May 16, 1992, or the early morning of May 17,1992, a collision occurred between vehicles operated by Duston Anderson and Emilio Partida. Mr. Partida and his wife, who was a passenger in his car, claimed to have sustained injuries from the accident.
At the time of the collision Anderson had an insurance policy in force with Farm and City Insurance Company (Farm and City). The policy did not cover liability arising from the use of a vehicle owned by the insured unless the vehicle qualified as a “covered auto.” The relevant policy provision states:
J. ‘Tour covered auto” means:
1. Any vehicle shown in the Declarations.
2. Any of the following types of vehicles on the date you become the owner:
a. a private passenger auto; or
b. a pickup or van that
(1) has a Gross Vehicle Weight of less than 10,000 lbs.; and
(2) is not used for the delivery or transportation of goods and materials....
This provision (J.2.) applies only if:
a. you acquire the vehicle during the policy period;
b. you ask us to insure it within SO days after you became the owner; and
c. with respect to a pickup or van, no other insurance policy provides coverage for that vehicle....
(Emphasis added.) The vehicle listed in the policy was a 1983 Oldsmobile. However, Anderson was driving a 1982 Volkswagen pickup when the collision occurred.
In December 1991, Anderson’s father had offered him the Volkswagen pickup, then disabled, if he could get it running again. Anderson repaired the pickup and had it operational around April 10, 1992. The certificate of title to the pickup was transferred to Anderson on April 16. He began driving the pickup on April 23 after his Oldsmobile was vandalized. Anderson never asked Farm and City to insure the pickup.
Farm and City denied Anderson insurance coverage on the basis that the pickup was not a “covered auto” under the terms of the policy. Subsequently, Farm and City filed this action requesting a declaratory judg
Each party filed a motion for summary judgment. Based on a stipulation by Farm and City, since disputed, that the accident happened on May 16, the district court found there were no genuine issues of material fact. The court held that the policy provided automatic coverage for newly acquired vehicles during the thirty day period whether or not the insured made a request for insurance. The court then concluded that because the accident occurred within thirty days of April 16, the date Anderson obtained title to the pickup, the pickup was a “covered auto” under the insurance policy. Anderson’s motion for summary judgment was granted.
Farm and City appeals the ruling of the district court and primarily argues that the court erred in holding there was automatic coverage on the pickup even though Anderson did not give the insurer notice within thirty days of becoming the owner. Farm and City asserts notice was required and therefore the district court should have granted its motion for summary judgment rather than the summary judgment motion of Anderson. For simplicity we refer only to Anderson rather than all three appellees in the remainder of this opinion.
II. Scope of Review.
The parties dispute the proper scope of review. Farm and City argues that our review should be de novo because this case was an equity action. Anderson contends that our review of a summary judgment motion is on error. Even in an equity case we cannot find facts de novo in an appeal from a summary judgment motion.
Lyon v. Willie,
On appeal from summary judgment, we view the whole record in a light most favorable to the party opposing the motion. Our task on appeal is to determine whether a genuine issue of material fact exists, and whether the law was correctly applied.
Meylor v. Brown,
With these principles in mind we first address the question of whether the district court correctly applied the law in ruling that Anderson’s pickup was a “covered auto” under the insurance policy.
III. Newly Acquired Vehicle Coverage.
The parties dispute the effect of the insurance policy provision that defines a “covered auto” to include a vehicle acquired during the policy period if “you ask us to insure it within thirty days after you become the owner.” (Similar provisions have been referred to as automatic insurance clauses or newly acquired vehicle clauses.) Farm and City contends that this definition requires a request from the insured in order for the newly acquired vehicle to be a “covered auto.” Anderson argues that no request is necessary for coverage during the thirty day period.
It is true the majority of jurisdictions have held that insurance coverage automatically attaches during the notice period, and subsequently becomes void after the thirty day period of time if notice is not given.
See
James L. Isham, Annotation,
Construction and Application of “Automatic Insurance” or “Newly Acquired Vehicle” Clause (“Replacement, ” and “Blanket” or “Fleet” Provisions) Contained in Automobile Policy,
It is interesting that the earliest case which interprets the notice requirement of an automatic insurance provision reached a conclusion contrary to the current majority rule.
See Jamison v. Phoenix Indem. Co.,
40
An early decision which apparently gave birth to the majority position is
Hoffman v. Illinois National Casualty Co.,
The persuasiveness of the
Hoffman
case is further undermined when the cases cited as authority for its holding are reviewed. The
Hoffman
court relied on the decisions of three courts, none of which had before it the issue of whether notice was required for coverage to attach during the notice period.
See Union Auto. Indem. Ass’n v. Reimann,
Since the
Hoffman
decision, many courts have simply relied on the “general rule” in holding that notice is not required for coverage during the notice period. These courts have undertaken no independent analysis of the rationale for such a rule.
E.g., Central Nat'l Ins. Co. v. LeMars Mut. Ins. Co.,
Some of the few courts which have discussed the basis for holding that coverage is automatic during the notice period even in the absence of notice have found the policy provisions ambiguous.
E.g., Brown v. Security Fire & Indem. Co.,
Courts have also justified the general rule with the observation that the automatic insurance clause would not give “automatic” coverage if notice were required for coverage during the notice period.
E.g., Brown,
We are not persuaded by the reasoning used to justify the majority rule. First of all, we do not agree that the policy provision at issue here is ambiguous. We apply rules of construction to an insurance
The policy provides that a newly acquired vehicle becomes a “covered auto” “only if”: (1) the insured acquires the vehicle within the policy period; and (2) the insured asks the company to insure it within thirty days after the insured becomes the owner. The insured’s request for coverage is a condition that must be met in order for the newly acquired vehicle to be a “covered auto” under the policy. We fail to see how a reasonable person could read this provision to mean anything else.
Additionally, we do not believe that our interpretation renders the automatic insurance provision meaningless. Coverage for newly acquired vehicles is still automatic in the sense that the insurer is not at liberty to deny requested coverage on the basis that the vehicle is not listed in the policy. Moreover, coverage retroactive to the date of ownership is automatically extended upon the insured giving the required notice even though the insured may have been involved in an accident with the vehicle before such notice is given. Thus, this provision gives the insured valuable protection even under our interpretation of the policy. It assures coverage for an accident occurring during the notice period, provided notice is given. Without the automatic insurance clause, Farm and City would certainly not be required to extend coverage to an accident involving a vehicle owned by the insured but not listed in the policy.
We hold that under this policy provision a newly acquired vehicle becomes a “covered auto” only if the insured requests coverage for the vehicle within the thirty day period after the insured becomes the owner. The clear language of the policy dictates this result.
Garrote v. Liberty Mut. Ins. Co.,
IV. Existence of Disputed Material Fact.
The record on appeal reveals disputed issues of fact concerning when Anderson became the owner of the pickup and the date the collision occurred. We must determine whether these factual issues are material and preclude summary judgment. “An issue of fact is ‘material’ only when the dispute is over facts that might affect the outcome of the suit, given the applicable governing law.”
Fees v. Mutual Fire & Auto. Ins. Co.,
We find that neither of the disputed facts is material because of our holding in division III that absent notice there is no automatic coverage during the thirty day notice period. Regardless of whether Anderson became the owner of the pickup on April 10 or April 16, it is undisputed he failed to give the required notice within thirty days. Therefore, the pickup was not a “covered auto” under the policy. Whether the accident happened on May 16 or May 17 does not alter this conclusion.
V. Conclusion.
Anderson’s pickup was not a “covered auto” under the Farm and City policy because Anderson did not request Farm and City to insure the pickup within thirty days of his acquisition of the vehicle. There were no genuine issues of material fact in dispute. Because the policy did not cover liability arising from the use of a vehicle owned by the insured but not qualifying as a “covered auto,” the Farm and City policy did not insure Anderson’s potential liability to the Partidas.
We hold that the district court erred in denying Farm and City’s motion for summary judgment and in. granting summary judgment in favor of Anderson. Accordingly, we reverse the court’s ruling granting Anderson’s motion and remand to the district
REVERSED AND REMANDED.