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Thompson v. Progressive Direct Insurance Co.

Court of Appeals of Washington, Division 3

April 9, 2019

JOSEPH M. THOMPSON, an individual, Respondent,
v.
PROGRESSIVE DIRECT INSURANCE COMPANY, Appellant.

          Pennell, J.

         Under Washington's casualty insurance code, chapter 48.22 RCW, a guest passenger injured in an automobile accident is considered a third-party "insured, "[1]and is eligible to make a claim for underinsured motorist (UIM) benefits through the policy covering the vehicle in which he or she was a passenger. But the mere fact that a guest passenger qualifies as an "insured" does not mean the passenger is automatically entitled to UIM benefits. The long-standing rule in Washington is that a third-party guest passenger can be excluded from UIM coverage if that passenger has already been compensated through the named insured's liability coverage. This rule has been codified in a somewhat convoluted manner by a vehicle-based (as opposed to a person-based) exclusion, providing that a vehicle insured for liability purposes can, by definition, be excluded from also being a source of UIM benefits to third parties.

         Here, Joseph Thompson was injured as a third-party guest passenger in a vehicle insured through Progressive Direct Insurance Company. Progressive tendered the limits of its third-party liability coverage to Mr. Thompson. However, Progressive denied Mr. Thompson's claim for UIM benefits based on the terms of its policy, which excluded UIM benefits to guest passengers for injuries arising from the negligent operation of its named insured's vehicle. Because Progressive's denial of coverage was consistent with the terms of its policy, public policy, and state law, we uphold Progressive's benefit decision. The superior court's judgment to the contrary is reversed.

         FACTS

         Joseph Thompson was injured in a single-vehicle accident while traveling as a guest passenger in a vehicle driven by Stacie Haney. Ms. Haney was the "[n]amed insured" under an automobile insurance policy (the Policy) issued by Progressive, and the vehicle driven by Ms. Haney met the definition of a "[c]overed auto" under the general terms of the Policy. Clerk's Papers (CP) at 24, 31. Mr. Thompson was not a named insured under the Policy, and he was not a relative of Ms. Haney, but he met the statutory and policy definition of an "insured" and "insured person." RCW 48.22.005(5)(b)(i); CP at 37, 40. Progressive agreed, for purposes of these proceedings, that its named insured was solely responsible for the accident giving rise to Mr. Thompson's claims.

         The Policy issued to Ms. Haney included both liability coverage, for bodily injury and property damage to others, and UIM coverage. Progressive tendered to Mr. Thompson the $100, 000 liability limits of the Policy for his bodily injuries sustained in the accident. Because Mr. Thompson alleged that this liability payment did not fully compensate him for the damages resulting from these injuries, he subsequently initiated a claim under the UIM portion of the Policy.

         In relevant part, the UIM portion of the Progressive Policy defines an "[i]nsured person" as including "any person occupying, but not operating, a covered auto." CP at 40 (bolded terms are defined terms in the Policy). The Policy defined an "[u]nderinsured motor vehicle" as "a land motor vehicle or trailer of any type:"

a. to which no bodily injury liability bond or policy applies at the time of the accident;
b. to which a bodily injury liability bond or policy applies at the time of the accident, but the bonding or insuring company:
(i) denies coverage; or
(ii) is or becomes insolvent;
c. that is a hit-and-run vehicle whose owner and operator cannot be identified and which strikes:
(i) you or a relative;
(ii) a vehicle that you or a relative are occupying; or
(iii) a covered auto;
d. that is a phantom vehicle; or
e. to which a liability bond or policy applies at the time of the accident, but the sum of all applicable limits of liability under all applicable bonds and policies is less than the damages that the insured person is legally entitled to recover.

Id. at 41. The UIM portion of the Policy also excludes certain vehicles from the definition of an "underinsured motor vehicle." Id. In relevant part, this exclusion states:

         An "underinsured motor vehicle" does not include any vehicle or equipment:

a. owned by you or a relative or furnished or available for the regular use of you or a relative. However, this exclusion to the definition of underinsured motor vehicle does not apply to a covered auto with respect to bodily injury to you or a relative;
. . . .
f. that is a covered auto. However, this limitation on the definition of underinsured motor vehicle does not apply to a covered auto with respect to bodily injury to you or a relative.

Id. The UIM coverage agreement within the Policy states that Progressive:

will pay for damages that an insured person is legally entitled to recover from the owner or operator of an underinsured motor ...

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