What Does an “Owned but not Insured” Exclusion Mean in a Maryland Auto Insurance Policy

When someone purchases a Maryland auto insurance policy, the insured must provide the insurance company with the make and model of each vehicle that they want to be insured. Typically, people choose to purchase insurance on each of their vehicles; however, it is not uncommon for a vehicle owner to choose not to name a vehicle in a policy. This may be because the vehicle is used only seasonally or is used exclusively by someone who is away on military leave or at college.

When an insurance company writes a policy, the coverage will generally extend to all vehicles named under the policy. However, if a policyholder chooses not to name a vehicle in the policy, the insurance company will likely exclude that vehicle from coverage. This is commonly referred to as the “owned but not insured” exclusion. A recent case illustrates how this exclusion could impact an injury victim’s ability to recover for their injuries.

According to the court’s opinion, a teenager died after he was involved in a fatal accident while he was operating a 49cc moped. The teenager’s family filed a claim against the at-fault driver’s insurance policy, recovering the policy maximum of $100,000. The teenager’s family also filed an underinsured motorist (UIM) claim against their own insurance carrier, seeking benefits for the loss of their son’s life.

As it turns out, the family owned five automobiles, each of which were named on the insurance policy. However, the teenager’s moped was not listed in the policy. Thus, the insurance company denied coverage, noting that the policy’s UIM coverage was no broader than the underlying liability coverage, which contained an exclusion for vehicles that were owned by the insured but not listed in the policy. The administrator of the teenager’s estate filed an action for a declaratory judgment, seeking clarification that the policy covered the teenager’s fatal accident. The lower court agreed with the family and granted the motion, the insurance company appealed.

On appeal, the case was affirmed. The court explained that an insurance policy is just a contract between the insured and the insurance company, and that the dispute could be resolved under basic principles of contract interpretation. Thus, the court considered whether the language in the policy was ambiguous. If so, then any ambiguity would be resolved in favor of the insured.

After parsing the language of the insurance policy, the court held that the policy was ambiguous as to whether a 49cc moped would be considered a “land motor vehicle.” The court explained that just because the moped had a motor did not make it a “land motor vehicle” under the terms of the policy because other vehicles with motors were specifically excluded from that definition, such as farm vehicles. As a result of the court’s decision, the teenager’s estate may be eligible for substantial compensation under the insurance policy.

Have You Been Injured in a Maryland Motorcycle Accident?

If you or someone you love has recently been injured in a Maryland motorcycle accident, you may be entitled to monetary compensation through a Maryland personal injury lawsuit. The dedicated Maryland injury lawyers at the law firm of Lebowitz & Mzhen, LLC have extensive experience handling all types of Maryland motorcycle accident cases, including those involving claims that were initially denied by an insurance company. To learn more, call 410-654-3600 to schedule a free consultation today.

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