On May 15, 2003, the Texas Supreme Court issued a new opinion concerning the definition of a “temporary substitute” vehicle under a standard Texas Personal Auto Policy. In Progressive County Mut. Ins. Co. v. Sink, 107 S.W.3d 547 (Tex. 2003), the Supreme Court addressed the issue of whether the Texas Personal Auto Policy provides liability coverage when the insured, whose own vehicle is disabled, is involved in an accident while driving an automobile owned by a non-family member, without permission or a reasonable belief that he has permission.
McCauley's pickup truck became disabled. At the time, he was employed by Alamo Rent-A-Car. While on the job, he took one of Alamo's rental cars to drive to a location to get his tools so that he could attempt to repair his own truck. McCauley did not obtain permission from Alamo to use any of its vehicles nor did he believe he had permission to use the vehicle in question. While returning to work in Alamo's car, McCauley was involved in an automobile accident with Sink.
Sink sued McCauley and obtained a favorable judgment that was subsequently discharged in bankruptcy. Sink then filed an action against McCauley's auto insurer, Progressive, under its policy insuring McCauley's truck. Sink claimed he was a third-party beneficiary of the policy and sought benefits under the policy's liability coverage.
In the underlying trial, a jury was impaneled on Sink's third-party beneficiary claim against Progressive. After opening statements, the trial court dismissed the jury finding there were no fact issues and only a question of law existed. The trial court then determined that the vehicle owned by McCauley's employer was not covered by the insurance policy issued for McCauley's truck.
The Court of Appeals agreed that there were no factual disputes, but construed the policy provisions differently from the trial court. As a result, it reversed the trial court's judgment and remanded the case so that Sink's claim under McCauley's liability policy could proceed. The only issue presented to the Supreme Court was the proper interpretation of the policy.
Progressive's policy specifically excluded any person: using a vehicle without a reasonable belief that person is entitled to do so. This exclusion does not apply to an insured or an insured's family member while using a covered auto.
The policy defined covered auto as any auto or trailer you do not own while used as a temporary substitute for any other vehicle described in this definition which is out of normal use because of its: (a) breakdown; (b) repair; (c) servicing; (d) loss; or (e) destruction.
The Court of Appeals held that McCauley was a driving a temporary substitute vehicle because his own vehicle had become disabled. Further, the court reasoned that it did not matter that McCauley drove the “substitute vehicle” without permission. Progressive argued to both the Court of Appeals and the Texas Supreme Court that although there is no definition in the current policy of what constitutes a “temporary substitute” vehicle, courts should look to the definition of “temporary substitute automobile” used in the Texas standard policy form that preceded the current one. Alternatively, Progressive argued that the term “temporary substitute” should be given its commonly understood meaning, which, it argued, is that a substitute vehicle must be used with the permission of its owner or at least a reasonable belief that the owner consented.
The Supreme Court held that because the term “temporary substitute” is not defined in the policy, it would consider the ordinary, everyday meaning of the words used. The court noted, “It is common to rent a car, use a loaner car, or borrow a car from a friend or family member while one's primary vehicle is undergoing service or repair.
The generally accepted meaning of 'temporary substitute' vehicle does not, however, include taking a vehicle without at least a reasonable belief of entitlement to its use.”
The opinion was written by Justice Owen who was joined by Justices Hecht, Enoch, Jefferson, Smith and Wainwright. Chief Justice Phillips filed a dissenting opinion, joined by Justices O'Neill and Schneider. The majority's opinion seems to clarify that in order for a vehicle to serve as a “temporary substitute,” there must either be express permission to use the substitute vehicle or alternatively, a reasonable belief by the driver that he has permission to use the vehicle. This opinion is not a radical deviation from prior law, but does clarify the definition of a “temporary substitute” vehicle under the current Texas Personal Auto Policy.