Beverly Hughes v. Essentia Insurance Company

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.

SUMMARY
May 5, 2022

2022COA49

No. 20CA1356, Hughes v Essentia Ins. — Insurance — Motor
Vehicles — Automobile Insurance Policies —
Uninsured/Underinsured

In this appeal from a trial court’s grant of summary judgment

in an automobile insurance coverage dispute, a division of the court

of appeals rejects the proposition that a vehicle-based restriction on

uninsured/underinsured motorist (UM/UIM) coverage is consistent

with section 10-4-609, C.R.S. 2021. Instead, the division concludes

that the supreme court’s holding in DeHerrera v. Sentry Ins. Co., 30

P.3d 167 (Colo. 2001), prohibits a limitation of UM/UIM coverage

that purports to tie protection against an uninsured or

underinsured motorist to the insured’s occupancy or use of a

specific vehicle or type of vehicle. To the extent that this conclusion
is inconsistent with the holding in Cruz v. Farmers Ins. Exch., 12

P.3d 307 (Colo. App. 2000), the division declines to follow it.
COLORADO COURT OF APPEALS 2022COA49

Court of Appeals No. 20CA1356
Boulder County District Court No. 19CV30790
Honorable Thomas F. Mulvahill, Judge

Beverly Hughes,

Plaintiff-Appellant,

v.

Essentia Insurance Company,

Defendant-Appellee.

JUDGMENT REVERSED AND CASE
REMANDED WITH DIRECTIONS

Division V
Opinion by JUDGE WELLING
Dunn and Yun, JJ., concur

Announced May 5, 2022

Bachus & Schanker, LLC, Corey A. Holton, Scot Kreider, Denver, Colorado, for
Plaintiff-Appellant

Sutton|Booker P.C., Jacquelyn S. Booker, Rachel T. Jennings, Denver,
Colorado, for Defendant-Appellee
¶1 This is an appeal from a trial court’s grant of summary

judgment in an automobile insurance coverage dispute. The

plaintiff, Beverly Hughes, was injured in a car accident and sought

to recover uninsured/underinsured motorist (UM/UIM) benefits

under her auto insurance policy from defendant, Essentia

Insurance Company (Essentia), which insured her two classic cars.

At the time of her injury, Hughes wasn’t driving either of the classic

cars and was, instead, driving her “regular use vehicle” — a vehicle

she was required to have and separately insure in order to maintain

her classic car insurance policy.

¶2 The classic car insurance policy explicitly excepted “regular

use vehicles” from UM/UIM coverage, and therefore Essentia

refused to provide Hughes with UM/UIM benefits for her injuries

because she wasn’t using one of the classic cars at the time of the

accident. Hughes filed suit, alleging that she was entitled to the

UM/UIM benefits under the Essentia classic car insurance policy

regardless of what vehicle she was driving at the time of the

accident.

¶3 Relying on Cruz v. Farmers Insurance Exchange, 12 P.3d 307

(Colo. App. 2000), the trial court concluded that a “regular use

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vehicle” exclusion in a classic car insurance policy adheres to both

section 10-4-609, C.R.S. 2021, and the supreme court’s

interpretation of section 10-4-609, because Hughes was still

protected through her “regular use vehicle” insurance policy.

¶4 This case raises an issue of first impression: whether an

automobile insurance policy restriction that insureds can only

access their UM/UIM benefits when they are injured in the covered

vehicle is valid under section 10-4-609. We conclude that it isn’t.

¶5 We reject the proposition that a vehicle-based restriction is

consistent with section 10-4-609. Instead, we conclude that the

trial court erred by failing to apply our supreme court’s holding in

DeHerrera v. Sentry Insurance Co., 30 P.3d 167 (Colo. 2001), which

provides that UM/UIM benefits cover persons injured by uninsured

or underinsured motorists and can’t be tied to the occupancy or use

of a particular vehicle or type of vehicle.

¶6 Therefore, we reverse the summary judgment and remand the

case to the trial court for further proceedings consistent with this

opinion.

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I. Background

¶7 Hughes alleged that she was seriously injured in an

automobile accident caused by another driver. At the time of the

accident, Hughes was driving a Ford Edge owned by her employer

but provided to her for her regular use. The driver who caused the

accident was insured by an auto policy with bodily injury limits of

$25,000. Hughes alleged that her injuries and losses substantially

exceeded the negligent driver’s insurance coverage limit.

¶8 At the time of the accident, Hughes was insured by two

automobile insurance policies: one issued by Travelers Insurance

(Travelers) and another issued by Essentia. Both policies provided

for UM/UIM coverage. Hughes filed suit against both Travelers and

Essentia for UM/UIM benefits. Hughes settled her claim against

Travelers.

¶9 The Essentia policy insures two classic cars — a 1967 Ford

Mustang and a 1930 Ford Model A. Under the Essentia policy,

Hughes’ husband is the named insured and Hughes is a named

driver. The Essentia policy requires that the policy holder own a

“regular use vehicle,” which must be “insured by a separate

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insurance policy which must be in effect for the entire time [the

Essentia classic car] policy is in effect.”

¶ 10 Essentia moved for summary judgment on Hughes’ claims,

arguing that Hughes wasn’t entitled to UM/UIM benefits under the

Essentia policy because, at the time of the accident, she wasn’t

driving one of the covered cars (the 1967 Ford Mustang or the 1930

Ford Model A) but was driving her “regular use vehicle.”

¶ 11 The trial court granted summary judgment in favor of

Essentia, concluding that enforcing the Essentia policy as written is

consistent with section 10-4-609 and Colorado public policy, and

protects Hughes’ interest in two ways.

¶ 12 First, the trial court found that the Essentia policy is

specifically for classic cars, and the Essentia policy states that the

insured cars are not considered “regularly used vehicles.” Thus,

the clear language of the policy states that the insured classic cars

wouldn’t be regularly used, lowering the likelihood and risk of an

accident and, in turn, lowering the insurance rates and premiums

for cars in this category.

¶ 13 Second, the trial court reasoned, Hughes’ interest was

protected through the Essentia policy’s requirement that she

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maintain a separate and more substantial insurance policy for her

regularly used vehicle.

II. Analysis

¶ 14 Hughes contends that the trial court erred by granting

Essentia’s motion for summary judgment based on an erroneous

application of Colorado law. Specifically, Hughes contends that the

policy’s exclusion of coverage when the insured is using a “regular

use vehicle” (1) directly contradicts the plain language of section 10-

4-609 and (2) violates Colorado public policy. We agree that the

trial court erred.

A. Standard of Review

¶ 15 Because we are reviewing the trial court’s grant of summary

judgment, we review each contention de novo, applying the same

standard as the trial court. Poudre Sch. Dist. R-1 v. Stanczyk, 2021

CO 57, ¶ 12. A court may grant a motion for summary judgment

when the pleadings and supporting documents establish that there

is no genuine issue as to any material fact and that the moving

party is entitled to judgment as a matter of law. See C.R.C.P. 56(c);

Gibbons v. Ludlow, 2013 CO 49, ¶ 11.

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B. Legal Principles

¶ 16 An insurer must offer UM/UIM coverage in an automobile

liability or motor vehicle liability policy. § 10-4-609(1)(a);

DeHerrera, 30 P.3d at 173–74. If the insured purchases UM/UIM

coverage, then an insurer must provide those UM/UIM benefits

when an insured person is “legally entitled to recover damages from

owners or operators of uninsured [or underinsured] motor vehicles.”

§ 10–4–609(1)(a), (4). In other words, an insured is entitled to

recover UM/UIM benefits when the at-fault driver either doesn’t

have any liability insurance or is underinsured. § 10–4–609(4);

DeHerrera, 30 P.3d at 173–74.

¶ 17 UM/UIM coverage is “in addition to any legal liability coverage

and shall cover the difference, if any, between the amount of the

limits of any legal liability coverage and the amount of the damages

sustained . . . up to the maximum amount of the [UM/UIM]

coverage obtained pursuant to this section.” § 10-4-609(1)(c); see

Mullen v. Metro. Cas. Ins. Co., 2021 COA 149, ¶ 30. Put differently,

UM/UIM coverage fills the gap between a tortfeasor’s insurance

liability limit and the amount of damages sustained by the insured,

up to the amount of the UM/UIM coverage purchased. Mullen,

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¶ 31; see also Jordan v. Safeco Ins. Co. of Am., Inc., 2013 COA 47,

¶ 30.

¶ 18 By enacting section 10-4-609, the General Assembly’s purpose

was to guarantee the widespread availability to the insuring public

of insurance protection against financial loss caused by motorists

who are financially irresponsible by failing to carry adequate

liability insurance. Bernal v. Lumbermens Mut. Cas. Co., 97 P.3d

197, 201 (Colo. App. 2003). Put differently, the purpose of the

UM/UIM statute is to ensure that individuals injured in an

automobile accident will be compensated for their losses even if the

other motorist is underinsured or uninsured. Peterman v. State

Farm Mut. Auto. Ins. Co., 961 P.2d 487, 492 (Colo. 1998).

¶ 19 Our supreme court interpreted the breadth of section 10-4-

609 in DeHerrera. In that case, the named insured — DeHerrera —

had a Sentry insurance policy that provided UM/UIM coverage to

DeHerrera, her spouse, and her son who lived with her. 30 P.3d at

169. DeHerrera’s son, while riding his off-road motorcycle, was

injured in an accident involving a pickup truck driven by a third

party. Id. The motorcycle wasn’t a vehicle covered by the Sentry

policy. Id. The third-party driver paid the limit of his automobile

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liability policy, and DeHerrera made a claim for underinsured

motorist benefits under the Sentry policy. Id. at 168. Sentry

denied coverage, asserting that its policy excluded from coverage

persons occupying a vehicle other than a car. The trial court

granted summary judgment in favor of Sentry, and DeHerrera

appealed. Id. at 169. A division of this court affirmed the trial

court’s decision, concluding that the Sentry policy unambiguously

denied UM/UIM coverage to an insured who is neither a pedestrian

nor an occupant of a car.

¶ 20 Our supreme court reversed, determining that section 10-4-

609 mandated coverage irrespective of the vehicle occupied by the

insured at the time of injury because the statute provides coverage

for persons, not vehicles. Id. at 175. In reaching this conclusion,

the supreme court noted that “[t]he UM/UIM statute contains no

provisions excluding protection for an insured based on the kind of

vehicle an insured occupies at the time of injury.” Id. DeHerrera

goes on to say that

UM/UIM coverage, if not waived by the named
insured, must protect “persons insured
thereunder who are legally entitled to recover
damages from owners or operators of
uninsured motor vehicles.” § 10–4–609(1).

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This phrase, “‘persons insured thereunder’
means that insurers must provide UM/UIM
coverage for the protection of persons insured
under the liability policy that the insurer is
issuing.” Aetna Cas. & Sur. Co. [v. McMichael],
906 P.2d [92,] 97 [(Colo. 1995)] (emphasis
added). Thus, the statute provides coverage for
persons; it does not place geographical limits on
coverage and does not purport to tie protection
against uninsured motorists to occupancy in
any kind of vehicle.

Id. (emphasis added).

¶ 21 Against this backdrop, we turn to the Essentia policy at issue

in this case.

C. Essentia’s UM/UIM Provision

¶ 22 The UM/UIM provision in the Essentia policy states that

Essentia will pay for damages resulting from an accident with an

uninsured or underinsured motorist that the “insured” is legally

entitled to recover. “Insured” is broadly defined as including

(1) “[y]ou or a ‘family member’ while using or ‘occupying’ ‘your

covered auto’”; (2) “[y]ou or a ‘family member’ while not ‘occupying’

a motor vehicle”; (3) “[a]ny other person while ‘occupying’ ‘your

covered auto’ with permission from you”; and (4) “[a]ny person, for

damages that person is legally entitled to recover because of ‘bodily

injury’ to a person described in this definition in 1., 2., or 3. above.”

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The policy also contains an exception that provides that “insured”

shall not mean and does not include “you” or “any other person”

while operating or using “any vehicle . . . available for the regular

use of you, or any person related to you who resides with you, if

that vehicle is not ‘your covered auto’.” In other words, the policy

broadly includes members of a household as insured, but excludes

them when they are occupying, operating, or otherwise using a

“regular use vehicle.” We will refer to this as the “regular use

vehicle exclusion.”

D. The Regular Use Vehicle Exclusion Violates Section 10-4-609

¶ 23 The regular use vehicle exclusion is squarely contrary to

DeHerrera’s central holding: that section 10-4-609 provides

coverage for persons and doesn’t tie protection against uninsured

motorists to the insured’s occupancy of any particular type of

vehicle. DeHerrera, 30 P.3d at 175.

¶ 24 Similarly, cases decided post-DeHerrera demonstrate that the

regular use vehicle exclusion found in the definition of “insured” in

the UM/UIM provision of the Essentia policy violates section 10-4-

609. In Jaimes v. State Farm Mutual Automobile Insurance Co., 53

P.3d 743, 744 (Colo. App. 2002), for example, a division of this

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court invalidated an “owned but not insured provision” of an

automobile insurance policy. The Jaimes court recognized that

[u]nder [section 10-4-609], the status of the
insured at the time of the accident, whether
the occupant of the insured motor vehicle as
operator or passenger, the occupant of a
nonowned motor vehicle as operator or
passenger, a pedestrian, or the operator of an
owned but not insured vehicle, is not germane
to the insurer’s obligation to provide UM/UIM
benefits.

Id. at 746-47.

¶ 25 In Bernal, a division of this court voided a restriction in a

business automobile policy purporting to limit UM/UIM coverage to

persons occupying owned private passenger automobiles while

excluding UM/UIM coverage for persons occupying a company

vehicle. 97 P.3d at 203.

¶ 26 Essentia argues that because Hughes was able to recover

under her Travelers policy — a policy that Essentia required

Hughes to have for her “regular use vehicle” — Hughes was

essentially protected by Essentia, and therefore Essentia’s policy is

in line with section 10-4-609. We reject this logic. Even though

Essentia required a second policy, Essentia can’t escape its own

statutorily mandated duty to provide UM/UIM benefits (if the

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policyholder elects to purchase them) to persons, rather than cars,

by attempting to tie its provided UM/UIM coverage to the

occupancy of “your covered auto” (in this case, one of the classic

cars). Essentia’s urged interpretation is contrary to the central

holding of DeHerrera — namely, that UM/UIM benefits cover people

and can’t be tied to the occupancy of a certain vehicle.

¶ 27 We aren’t persuaded otherwise by Essentia’s reliance on Jacox

v. American Family Mutual Insurance Co., 2012 COA 170, and

Rivera v. American Family Insurance Group, 2012 COA 175, for the

proposition that a different outcome is warranted or that DeHerrera

is subject to a narrower reading. The facts of Jacox and Rivera are

similar, and both cases hold that it is a valid and enforceable limit

of uninsured motorist coverage for a policy to cover an insured

vehicle for liability while excluding it from UM/UIM coverage.

¶ 28 In Jacox, the plaintiff was a passenger in a vehicle when the

driver fell asleep at the wheel, resulting in a one-car accident in

which the plaintiff was injured. Jacox, ¶ 2. The plaintiff filed a suit

against the driver that was ultimately settled, and she was able to

collect the policy limit for bodily injuries under the driver’s

automobile insurance policy. Id. The plaintiff also sought UM/UIM

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coverage under that same policy. The driver’s policy contained a

UM/UIM exclusion that applied to vehicles “insured under the

liability coverage of this policy.” Id. A division of this court held

that the plaintiff wasn’t entitled to recover UM/UIM benefits under

the driver’s policy because the exclusion of a vehicle insured under

the liability terms of a policy from uninsured motor vehicle coverage

was a valid and enforceable limit of uninsured motorist coverage.

Id. at ¶¶ 8-29.

¶ 29 Similarly, in Rivera, the plaintiff was a passenger in a vehicle

when she was injured in a one-car accident in which the driver of

the vehicle she was in lost control. Rivera, ¶ 2. The driver’s

automobile insurance policy provided a $100,000 liability limit and

$100,000 in UM/UIM coverage. Id. The policy in Rivera contained

an exclusion similar to the one in Jacox. Id. The driver’s insurance

carrier paid the plaintiff the liability limit. Id. at ¶ 3. But that

didn’t cover the plaintiff’s losses, so she sued to recover under the

UM/UIM provisions of the driver’s policy, contending that the

exclusion wasn’t enforceable and she was also covered under the

UM/UIM section of the driver’s policy. Id. at ¶¶ 6-7. The division in

Rivera rejected the plaintiff’s effort, holding that “[w]ithin a single

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policy . . . an insurer and an insured may contract to restrict what

types of injury the policy covers — and, thus, may except certain

events or conditions from coverage in the first instance — without

flouting [section 10-4-609].” Id. at ¶ 19; see also id. at ¶ 20

(“[B]ecause a named insured would be bound by such a policy, it

follows that an injured third-party plaintiff, like Rivera, who is not a

named insured but who claims entitlement to UM/UIM coverage

only because she was a passenger in a named insured’s vehicle,

also would be bound by such a policy.”).

¶ 30 Jacox, Rivera, and our case have one thing in common: all

three plaintiffs are seeking to obtain coverage they didn’t bargain

for. Indeed, we concede and fully recognize that what Hughes is

seeking is more than she bargained for. But there are two reasons

that we aren’t persuaded to follow Jacox and Rivera in this case.

First, we are bound by DeHerrera, not Jacox or Rivera; thus, to the

extent Jacox and Rivera support a different outcome, we decline to

follow them. See People v. Gladney, 250 P.3d 762, 768 (Colo. App.

2010). (For reasons unapparent to us, neither Jacox nor Rivera

discusses or cites — much less distinguishes — DeHerrera.)

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¶ 31 Second, Jacox and Rivera are factually distinct. The plaintiffs

in both Jacox and Rivera were seeking to recover UM/UIM benefits

under the same policy that insured the vehicle in which they were

injured and from which they had already collected under the

liability provisions. Here, Hughes isn’t seeking to invoke the

liability provisions of the Essentia policy, just its UM/UIM benefit.

And she is doing so because the at-fault driver’s coverage is

inadequate, not because of any alleged shortcoming of the Essentia

policy itself.

¶ 32 Simply put, under section 10-4-609, as interpreted by

DeHerrera, Hughes is entitled to recover UM/UIM benefits under

the Essentia policy for the injuries she sustained when she was

involved in an accident with an underinsured motorist. And

because the regular use vehicle exclusion in the Essentia policy

violates section 10-4-609, the trial court erred in granting summary

judgment in Essentia’s favor.

E. Public Policy Doesn’t Save Essentia’s Regular Use Vehicle
Exclusion

¶ 33 Essentia argues that Colorado public policy encourages

freedom of contract and that even within the context of statutorily

15
mandated insurance, insurance companies must be free to include

conditions and exclusions that are not inconsistent with Colorado’s

mandatory insurance laws. Essentia cites to Cruz, 12 P.3d at 312,

in support of the proposition that certain exclusions in UM/UIM

insurance contracts are permissible in Colorado, including

exclusions for a regularly used vehicle that is not insured (and for

which no premium is paid) under the policy.

¶ 34 In Cruz, the plaintiff was injured in a car accident while on

duty as a police officer and driving a car that was assigned for his

regular use by the police department. Id. at 309. Cruz filed a claim

for UM/UIM benefits under his wife’s insurance policy. Id. The

insurer denied the claim based on the “regular use exclusion”

contained in Cruz’s wife’s UM/UIM endorsement, which provided

that “[t]his coverage does not apply to bodily injury sustained by a

person: . . . . Arising out of the ownership, maintenance, or use of

any vehicle other than your insured car . . . which is owned by or

furnished or available for regular use by you or a family member.”

Id. A division of this court held that provisions excluding coverage

for regularly used cars that are not listed on the policy and for

which premiums are not paid are enforceable in Colorado because

16
they protect the insurer from a situation in which the insured pays

only for coverage on one vehicle but regularly drives other vehicles

not listed on this policy. Id.

¶ 35 However, we aren’t persuaded by the analysis in Cruz for two

reasons. First, Cruz was decided before our supreme court’s

decision in DeHerrera, and the portions of Cruz that Essentia relies

on to support its policy argument conflict directly with DeHerrera,

which — unlike Cruz — is binding on us. See In re Estate of

Ramstetter, 2016 COA 81, ¶ 40. We see no way to reconcile the

holding in Cruz with the broad protections outlined in DeHerrera.

¶ 36 Second, apart from Cruz, it’s clear that the Essentia policy

limits statutorily mandated coverage under section 10-4-609 by

tying the UM/UIM coverage to occupancy in certain vehicles,

something that DeHerrera explicitly precludes. Whether an

insurance policy is void as against public policy depends on

whether the provision attempts to “dilute, condition, or limit

statutorily mandated coverage.” Terranova v. State Farm Mut. Auto.

Ins. Co., 800 P.2d 58, 60 (Colo. 1990) (quoting Meyer v. State Farm

Mut. Auto. Ins. Co., 689 P.2d 585, 589 (Colo. 1984)). Because the

Essentia policy doesn’t meet the coverage requirements under

17
section 10-4-609, public policy doesn’t dictate that the exclusion

must be enforced. Whether DeHerrera reflects wise, fair, or prudent

public policy is a question for the legislature (or the supreme court

in the event it wishes to revisit DeHerrera); in the meantime, we are

bound by DeHerrera.

III. Conclusion

¶ 37 For the reasons discussed above, the summary judgment in

favor of Essentia is reversed and the case is remanded for further

proceedings consistent with this opinion.

JUDGE DUNN and JUDGE YUN concur.

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