California Court Rules Insurer Can’t Dodge Coverage Simply Because Injured Passenger Was Driver’s College Roommate

Crushed-Car_Road-Traffic-Accident_Auto accident cases, in most situations, involve dealing with insurance companies. While insurers try to carve out coverage exclusions when they can, California law limits the exclusions an auto insurer may include in its policies. In a case originating with an auto accident in Orange County, the California Court of Appeal ruled that the at-fault driver’s insurer could not evade paying the judgment recovered by the driver’s passenger, even though the two were residents of the same household. The law only permitted insurers to carve out exclusions for cohabitating persons if they were relatives, and the driver and passenger in this case were unrelated college roommates.

The case began, as many personal injury matters do, with an unfortunate accident. Hung Chu crashed his 1995 Honda Accord when he turned left in front of a vehicle driven by Krystal Nguyen Hoang in Garden Grove. Riding alongside Chu was his roommate, Tu Pham. Pham, who was injured in the accident, sued Chu, recovering a judgment in the amount of $333,300.

Chu’s auto insurer, Mercury Casualty Co., then asked the court for a determination that Chu’s policy did not require it to pay for the judgment Pham obtained because the policy contained an exclusion for people who lived in the same household as the insured person. Mercury also asked the court award it the costs and fees it racked up defending Chu against Pham’s lawsuit. The trial court agreed that the policy’s “resident exclusion” meant that the insurance had no duty to cover the judgment Pham obtained.

Pham appealed, and the appeals court reversed the ruling. California law only permits insurance companies to create a limited variety of policy exclusions. One of these scenarios occurs when the injured person seeking payment is a relative of the at-fault, insured person, and the two reside in the same household.

Mercury argued unsuccessfully that a non-relative resident exclusion was a reasonable extension of the “relative resident” exclusion. The court disagreed, pointing out that the relative resident exclusion exists to prevent potential lawsuits between close family members that might “not be truly adversary.” Non-relatives had no such relationship, and a similar risk did not exist. Specifically, the court opined that college roommates like Chu and Pham “often are complete strangers who do not have direct … interests or legal responsibilities with respect to each other.” Roommate relationships like that shared by Chu and Pham were transitory in nature, which made them clearly different from close family members who lived in the same household.

Auto insurance companies are, of course, in the business of making money, which inherently involves minimizing the claims they pay. If you’ve been injured in an accident, chances are significant that obtaining the recovery you deserve will involve dealing with a sophisticated insurance company. To best pursue the compensation you deserve, you need experienced legal counsel on your side. Consult the Oakland injury attorneys at the Law Offices of Stephen M. Fuerch. Our injury law attorneys have assisted many people injured in auto accidents, including helping them deal with insurance companies. Contact us through our website or call our office at (925) 463-1073 to schedule a confidential initial consultation today.

More Blog Posts:

Policy Language Stops California Widow’s Claim Against Insurer in Fatal Drunk Driving Crash, Oakland Personal Injury Attorney Blog, March 31, 2015

Improper Use of Driver’s Prior Traffic Offenses Derails $1.2M Award for Passenger, Oakland Personal Injury Attorney Blog, Jan. 30, 2015