Can Uninsured/Underinsured Motorist Coverage be Applied To a Temporary Substitute Vehicle?

For small business owners in the towing and logistics industry, a vehicle in the shop shouldn’t mean a total loss of insurance protection. However, insurance carriers often use the “Owned but Not Scheduled” exclusion to deny claims when an owner is driving a backup vehicle. The case of Arceneaux v. Turner provides a critical roadmap for how to successfully apply UM/UIM coverage to a temporary substitute vehicle. Insurance companies look for any technicality to deny high-value commercial claims. To see how we ‘pierce’ these denials by identifying every layer of coverage, visit our Louisiana Truck Accident Lawyer Practice Hub.

One of the joys of adulthood is figuring out insurance coverage for your vehicles. Selecting the right coverage can be incredibly challenging when you own a small business because there are unclear lines between personal and company vehicles. This can be especially challenging if an accident occurs when driving a different vehicle than you usually drive. Can your insurance policy cover you when driving a different vehicle because your regular vehicle is out of commission and needs repairs? The subsequent lawsuit helps answer this question.

Gerald Arceneaux owned Gerald’s Towing. Axis Plus Insurance sold him an insurance policy for the garage that included uninsured/underinsured motorist coverage. On the first day, the policy was in effect, Arceneaux got in a car accident in his Ford F250 while driving home from work. He claimed he was “on call” when the accident occurred, and his truck included tools and equipment sufficient to respond to service requests made to his towing company. He said he drove the Ford F250 when the accident occurred because the Ford F450 that Gerald’s Towing owned needed to be repaired.  Proving a vehicle was ‘out of service’ for repairs often requires subpoenaing maintenance and inspection logs from the repair shop.

Axis filed a summary judgment motion, arguing the insurance policy did not provide uninsured/underinsured motorist coverage to Arceneaux for the claim under La. R.S.22:1295. Axis argued they didn’t cover the accident because it was Arcenaux’s personal vehicle, and he was not on call for Gerald’s Towing. The trial court granted Axis’s summary judgment motion. Arceneaux appealed. 

On appeal, Arceneaux argued his Ford F250 was a temporary substitute vehicle such that the insurance uninsured/underinsured motorist coverage applied. Axis argued the Ford F250 was Arceneaux’s personal vehicle, so Arceneaux was not entitled to uninsured/underinsured motorist coverage under La. R.S.22:1295. However, the insurance policy language stated that coverage applied to a “temporary substitute” for a covered auto when the covered auto is out of service because of a repair, breakdown, service, or other similar issue. Arceneaux provided an affidavit that the Ford F450 was out of service at the time of the accident because it needed repairs.  A temporary substitute vehicle can often access the same Excess and Umbrella Insurance layers as the primary rig.

The “Temporary Substitute” Rule: Four Requirements

In Louisiana, a vehicle can qualify as a “covered auto” under a commercial policy even if it isn’t listed on the declarations page, provided it meets the definition of a Temporary Substitute Vehicle (TSV). Generally, the policy must show that the vehicle was:

1. Used Temporarily: The use must be short-term while the primary vehicle is unavailable.
2. Primary Vehicle Out of Service: The “covered auto” must be withdrawn from use due to breakdown, repair, servicing, loss, or destruction.
3. Non-Owned (Usually): Most policies require the substitute not be owned by the named insured (though the Arceneaux case highlights exceptions for business owners).
4. Substituted for the Covered Auto: The vehicle must be performing the same business function as the one in the shop.

The appellate court disagreed the evidence showed the Ford F250 was not a temporary substitute vehicle because Arceneaux regularly used it for business purposes. Based on the information in Arceneaux’s affidavit, the appellate court also found it was reasonable to conclude Arceneaux was “on call” for his company at the time of the accident. The court’s ruling in Arceneaux hinged on whether the driver was in the Course and Scope of Employment while ‘on call.’The appellate court held the vehicle Arceneaux was driving at the time of the accident was a temporary substitute vehicle, so the trial court erred in granting Axis’ summary judgment motion. Therefore, for purposes of ruling on Axis’s summary judgment motion, Arceneaux was insured.

The Arceneaux v. Axis Plus Case: A Win for Small Business

In this case, the owner of a towing company was driving his personal Ford F-250 because his commercial F-450 was being repaired. The insurer denied UM/UIM coverage, claiming the F-250 was a “personal” vehicle. However, the court ruled in favor of the owner because:

• He was “on call” for the towing business at the time.
• The truck contained tools and equipment necessary for his business.
• The commercial vehicle was indisputably out of service for repairs.

The case of Gerald Arceneaux highlights the complexities that arise when determining vehicle insurance coverage, particularly for small business owners. When an accident occurs while driving a different vehicle due to the regular vehicle being out of commission, the question of whether insurance coverage applies becomes crucial. It is essential for individuals facing similar insurance claim issues to consult with a knowledgeable attorney who can help navigate the intricacies of their policy, identify applicable coverage, and provide guidance on the evidence required to support their claim.

The Danger of the “Owned but Not Scheduled” Exclusion

Insurers frequently try to use La. R.S. 22:1295(1)(e) to exclude UM coverage for vehicles owned by the insured but not specifically listed on the policy. To overcome this, we must prove that the backup vehicle was a legitimate substitute and not just a secondary vehicle you use regularly without paying premiums.

Article Written By Berniard Law Firm 

Additional Berniard Law Firm Article on Uninsured Motorist Policies: Court Finds Uninsured Motorist Coverage Waiver Valid, Denies Coverage for Injured Worker Injured