Louisiana Automobile Insurer Cannot Restrict the Definition of “Temporary Substitute Auto” in Its Policy

White’s vehicle was having mechanical problems, so he borrowed his mother’s vehicle and was involved in an accident. His mother’s insurer, State Farm, argued that a White’s insurer, Safeway, provided primary coverage pursuant to Louisiana law, which requires that policies extend primary coverage to rental vehicles and temporary substitute motor vehicles “as that term is defined by the applicable policy.” Safeway’s policy defined a temporary substitute automobile to only include vehicles that replaced the owned vehicle while it was being serviced or repaired by a person engaged in the business of selling, repairing or servicing motor vehicles. Because White’s vehicle was not in a repair shop when he borrowed his mother’s vehicle, Safeway argued that it did not meet the definition of a temporary substitute automobile under its policy. Accordingly, it argued that State Farm, as the insurer of the mother’s vehicle, provided primary coverage.

The Louisiana Second Circuit Court of Appeal held that Safeway’s definition of a temporary substitute automobile violated Louisiana public policy. The court looked to the legislative intent and found that the Legislature did not intend to allow insurers to narrow or restrict the insurance coverage mandated by Louisiana law. Therefore, Safeway, as White’s insurer, was required to provide primary coverage on his mother’s vehicle.

If you ever wondered whether you should purchase the optional liability insurance offered by rental companies when renting a vehicle, Louisiana law makes clear that your personal automobile insurance coverage will apply to that rental vehicle and will be primary. Accordingly, unless there are reasons to get additional coverage over and above your personal automobile liability limits, purchasing supplemental insurance through the rental company is likely not necessary.

Litton v. White

Gerard J. Dragna