South-Western Legal Studies in Business

Serious Deviation in Use of Company Vehicle Negates Insurance Coverage
Description Texas high court held that an insurer was not liable on its auto policy when an employee, who was permitted to drive a company vehicle for business purposes, went on an 80 mile trip while on a date and crashed when drunk. Such a deviation from normal use terminates liability responsibility for the insurer.
Topic Insurance
Key Words Coverage; Business Vehicle; Omnibus Clause; Personal Use
C A S E   S U M M A R Y
Facts Renfrow worked for CD, an oil field service business. Although his personal vehicle was parked at the company office, when he went home for the night he took a company pickup, which was permitted, as he was due back the next morning. His home was a half-mile from the office. It was general company policy that company vehicles not be used for personal business. That evening, Renfrow picked up his girlfriend and they drove 40 miles to another town. Renfrow got drunk and, on the way home, crashed and killed his girlfriend. His girlfriends beneficiaries sued Renfrow and CD for wrongful death. CD's insurer sued for a declaration that Renfrow was not covered by its policy because Renfrow did not have permission to use the truck for such personal business. The trial court ruled against the insurance company. The insurer appealed.

Reversed. An omnibus clause is a provision in a vehicle policy that extends coverage to all drivers operating the insured vehicle with the owner's permission. That clause was part of the commercial auto liability policy here. Renfrow was covered by that clause while he was making permitted use of the vehicle. A driver may deviate from the permitted use of an insured vehicle and still be covered if the use is not a material or gross violation of the terms of the initial permission to use the vehicle. A determination is made on a case-by-case basis of when a deviation was reasonable. Given that it was a long trip made for purely personal reasons, the deviation in the use of the vehicle in this case was not reasonable, so coverage was excluded under the policy.

Citation Old American County Mutual Fire Ins. Co. v. Renfrow, 130 S.W.3d 70 (Sup. Ct., Tx., 2004)

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