Bermel v. Liberty Mutual Fire Insurance Company, 56 A.3d 1062 (Del. 2012).

The Delaware Supreme Court finds that an individual injured in an automobile accident while driving personal vehicle for non-work related purpose was not entitled to UM/UIM benefits under a business insurance policy covering his company issued vehicle.

In this appeal from a grant of summary judgment in favor of defendant-appellee Liberty Mutual ("Liberty Mutual"), plaintiff-appellants sought review of the trial court's decision denying them entitlement to underinsured motorists benefits provided by a business policy issued to plaintiff Bermel's employer.

Plaintiff-appellant Bermel ("Bermel") was involved in an automobile accident while driving his personally-owned and insured motorcycle and suffered significant personal injuries as a result. At the time, Bermel was an employee of Siemens Corporation ("Siemens") and was assigned a company car for his business and personal use. Liberty Mutual issued a business policy to Bermel's employer covering his company car. Siemens was the named insured on the policy. Following the accident, Liberty Mutual denied coverage under the Siemen's business policy on the ground that Bermel was not a covered insured under the policy while operating a personally-owned motorcycle outside of the course and scope of his employment.

In the underlying case, Bermel sought entitlement to underinsured motorist benefits from the business policy covering his work vehicle. Bermel argued that the business policy covering his company car was personal to him, even though Siemens was the named insured, because excluding coverage based upon the vehicle being occupied at the time of the accident was tantamount to an impermissible "other motor vehicle" exclusion. Secondly, Bermel argued he was entitled to personally access the business policy since Siemens automatically deducted a nominal fee from his paycheck for his personal use of his company vehicle. Finally, Bermel argued the policy was ambiguously drafted and should be construed in his favor.

In granting summary judgement, the trial court found that the exclusionary language of the policy was consistent with the Delaware Supreme Court's decision on Frank v. Horizon Assurance Co., 553 A.2d 1199 (Del. 1989) and, therefore, not tantamount to a "other motor vehicle" exclusion. Further, the trial court determined that Bermel was not a named insured under the terms of the policy, that the nominal fee deduction did not convert Bermel into a named insured, and that the policy was unambiguously drafted. On appeal, the Delaware Supreme Court affirmed the decision of the trial court. First, the Court found that Bermel was not a named insured under the business policy and, therefore, had no expectation of benefits under the policy. In so concluding, the Court relied upon the language contained in Delaware's UM/UIM statute (10 Del. C. §3902) limiting coverage to "protection of persons insured" and Delaware case law since Frank comporting with that interpretation. Further, the Court found Bermel had no expectation of benefits since he was not a named insured on the policy, did not pay the premiums for the policy and was not acting in his capacity as a covered employee when he was injured in the automobile accident. The Court further found that since Bermel had not purchased the policy and had no expectation of coverage, the policy's language limiting coverage to persons occupying fleet vehicles was not tantamount to an impermissible "other vehicle exclusion."

Second, the Court found that the minimal deductions from Bermel's paychecks did not qualify him as an insured under the policy. The Court's decision on this issue was one of first impression and it looked to Frost v. Dep't of Labor and Indus. of the State of Washington, 954 P.2d 1340 (Wash. Ct. App. 1998), as persuasive authority. In Frost, the issue was whether the employee or the employer owned the policy. In that case, the parties disputed the purpose of the deductions from plaintiff's paycheck (i.e. to cover insurance premiums or only to cover plaintiff's personal use of the car). If the payments were determined to be for insurance premiums, the plaintiff-employee would be the owner of the policy. The Washington Court of Appeals concluded the evidence was insufficient to find that the deductions were for insurance premiums. Here, there was no dispute that Bermel's deductions were for his personal use of the company car. Therefore, the Court followed the reasoning in Frost and found Bermel's payments did not qualify him as named insured under the Liberty Mutual policy.

Finally, the Court found the policy was not ambiguous. Bermel argued the policy was ambiguous because the named insured, Siemens, is a corporation that cannot sustain bodily injury or have family members. The Court found that since the policy defined the meaning of an insured when it is a corporation, the references in other sections of the policy to "bodily injury" and "family member" did not render the policy language ambiguous. Further, the Court found that even if the policy was ambiguous, Bermel would not be entitled to benefits under the "reasonable expectations" analysis. Under that analysis, the Court looks to the reasonable expectations of the insured at the time when he entered into the contract. In finding Bermel had no reasonable expectation of coverage, the Court followed Ruggiero v. Montgomery Mut. Ins. Co., 2004 WL 1543234 (Del. Super.). In that case, the Superior Court found plaintiff did not have a reasonable expectation of coverage under her employer's policy because she was not working for her employer or driving a company-owned vehicle at the time of the accident. The Court agreed with the trial court in following the persuasive analysis in Ruggiero and affirmed the grant of summary judgement.