6.11 Temporary Substitute Vehicles

• Jurisdiction: Arizona

Automobile liability policies routinely provide coverage for temporary substitute vehicles. Although the exact definition for "temporary substitute vehicle" may differ when specific policies are compared, temporary substitute vehicle coverage is typically provided when the insured uses a non-owned automobile, temporarily, as a substitute for a designated insured vehicle when that vehicle is "withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction." Some policies define temporary substitute status as requiring the designated insured vehicle to be "out of service."

In Fulton v. Woodford,^[168] the court of appeals discussed the purpose of temporary substitute vehicle coverage:

The purpose of the substitution provision is to extend coverage temporarily and automatically, without the payment of an additional premium, to the insured to protect him when he uses a vehicle not specified in the policy in place of the specified vehicle he intended normally to use but did not because of its withdrawal from use for a reason stated in the policy. [Citations omitted.] A substitute automobile within the meaning of the policy is one actually but only temporarily used in place of the specified automobile, i.e., for the same use the insured car would have been used except for its withdrawal from all normal use and while such withdrawal is because of its breakdown, repair, servicing, loss or destruction. In other words, it is a vehicle put in place of another. [Citations omitted.]^[169]

In Fulton, Sanner Contracting Co. subcontracted with Conway to furnish trucks to do some paving and supply some necessary dirt fill. Conway did not have sufficient trucks for the job and hired Fulton to supply additional trucks. Fulton had a general liability insurance policy issued by Harleysville Insurance Co. One of Fulton's trucks was inoperable on the day in question, so Fulton engaged Patterson to supply his truck for part of the hauling project. The Patterson truck collided with a motorcycle, resulting in the motorcyclist's death. The question presented to the court was whether Patterson's truck was a temporary substitute under Fulton's policy. In holding that the truck qualified as a temporary substitute automobile, the court stated:

We agree with Harleysville that it is not the purpose of the substitution clause to give the substitute vehicle a wider coverage. Here the undisputed facts indicate Fulton was employing Patterson's truck to perform Fulton's undertaking with Conway. The only reason for the use of Patterson's truck on the day in question was the disablement of one of Fulton's trucks which would have been used, had it been available, to the same extent as was Patterson's truck. Under these circumstances, Patterson's vehicle was a temporary substitute for Fulton's vehicle and therefore insured under the Harleysville policy.^[170]

However, where the facts reveal that the insured was not driving the substitute vehicle and the substitute was not being used for the purpose of fulfilling a prior undertaking or legal obligation, the result might be different.^[171] The determination whether the use of a borrowed non-owned automobile will qualify as a temporary substitute is fact-intensive.

A significant number of courts have refused to cover an automobile borrowed to make a business trip because the insured vehicle was considered mechanically unfit to travel long distances but remained in use for local travel.^[172]

A significant number of courts have also refused to interpret temporary substitute vehicle coverage as requiring coverage for both the designated insured vehicle, which is not completely withdrawn from use, and the temporary substitute vehicle at the same time. Addressing this issue, some courts have found that if the designated insured vehicle is still operable, the owner must take steps to preclude the vehicle's use during the substitution period. For example, in State Farm Mutual Automobile Insurance Co. v. Lietz,^[173] the Georgia Court of Appeals held:

[I]f a vehicle is operable, the owner must take some step to preclude its use by another during the substitution period or there will be a material increase in the risk contemplated by the insurer. "If the vehicle insured can be operated, some overt act is required to prove its withdrawal from service, although this would not necessarily require its being garaged." 7 Appleman 95 Sec. 4293.5, citing Lewis v. Bradley,7 Wis. 2d 586, 97 N.W.2d 408.^[174]

In Lietz, the daughter testified that the mother could have used the insured car, which was left at home, at any time because she had both a set of keys and implicit permission. The court stated:

The fact that the mother did not actually have occasion to go out does not alter the basic fact that the car was not withdrawn from normal use (which, in a passenger vehicle, would include local driving as well as a long trip to work) and that coverage of the risk remained on this automobile under the daughter's policy.^[175]

The Oklahoma Supreme Court took a different position in Mid-Continental Casualty Co. v. West.^[176] Instead of focusing on whether the designated insured vehicle could have been driven when the substitute vehicle was used, the court focused on whether the insured vehicle was in fact used while...