Dallas Fort Worth Insurance Lawyer Blog
Weatherford insurance lawyers know about the 515A Endorsement (a named driver exclusion) that applies to auto policies. These 515A Endorsements are discussed in a 2013, El Paso Court of Appeals opinion styled, Stadium Auto, Inc. v. Loya Insurance Company.
Olga Salazar purchased and financed a vehicle through Stadium. A Loya policy was issued which contained a 515A Endorsement listing Junior Sanchez as an excluded driver. Junior had a wreck in the vehicle after allegedly taking the keys from Olga’s purse without permission. Olga ceased payments to Stadium and Stadium sought payment from Loya. Loya refused coverage based on the exclusion of coverage for Junior.
Stadium sued Loya alleging violation of Texas Insurance Code, Section 541.060 and the Texas DTPA, Section 17.46(b). Stadium also alleged that Loya was estopped from denying liability based on the 515A Endorsement. Loya also asserted that they were entitled to payment based on the 530A Endorsement that provides coverage for the loss payee despite the named driver exclusion.
Loya was granted summary judgment and this appeal followed.
The issues on this appeal resolve around the construction of the named driver exclusion and the 530A loss payable clause and their application to the undisputed facts. If Loya is correct that it is not obligated under the 530A loss payable clause to pay Stadium the value of the vehicle because the loss occurred when an excluded driver was operating the vehicle, then Loya is not, as a matter of law, estopped from denying its liability under the policy.
The 515A Endorsement reads:
You agree that none of the insurance coverages afforded by this policy shall apply while The Excluded Driver is operating your covered auto or any other motor vehicle. You further agree that this endorsement will also serve as a rejection of Uninsured/Underinsured Motorist Coverage and Personal Injury Protection Coverage while your covered auto or any other motor vehicle is operated by the excluded driver.
The policy unambiguously states that none of the coverages afforded under the policy shall apply when the excluded driver is operating the vehicle. The only issue is whether the 530A loss payable clause obligated Loya to pay even though the insured had lost coverage because the vehicle was operated at the time of the accident by an excluded driver.
The relevant portion of the loss payable clause states as follows:
Loss or damage under the Coverage for Damage to Your Auto shall be paid as interest may appear to you and the loss payee shown in the declarations. This insurance covering the interest of the loss payee shall not become invalid because of fraudulent acts or omissions, unless the loss results from your conversion, secretion or embezzlement of your covered auto.
Stadium contends that it is protected from loss of coverage because Olga’s failure to stop Junior from driving amounted to an omission on her part. The evidence showed that Junior took Olga’s keys and the vehicle without her permission, but there is no evidence of any omission on the part of Olga. The policy did not prevent Junior from driving and it did not impose a duty on Olga to prevent him from driving. She simply agreed that there would be a loss of coverage if he drove. Olga’s failure to somehow prevent Junior from taking her keys and driving the car does not constitute an omission under the policy, and therefore, Stadium’s rights under the policy are the same as the insured’s rights. Loya conclusively established that Olga lost coverage under the 515A Endorsement because Junior drove the vehicle. Consequently, Stadium also lost coverage.