Reasonable Definition of Damages
In State Farm Mutual Automobile Insurance Co. v. Rodriguez, Heriberto Rodriguez, Raul Diaz, Ramiro Victoriano, Leonel and Josefina Alvarez purchased their cars from a private individual. Following the purchases, the automobiles were seized by law enforcement. They did not steal the automobiles and were not aware that the vehicles were stolen at the time of purchase. Following the seizure of their automobiles, they each made claims for comprehensive coverage on their State Farm policies. State Farm issued automobile insurance policies to Heriberto Rodriguez, Raul Diaz, Ramiro Victoriano, Leonel and Josefina Alvarez. There was no dispute that the their State Farm policies were in force at the time of the seizures of the vehicles. State Farm provided rental car coverage, which was extended twice while their claim was being investigated. State Farm ultimately denied the claim. After the denial of the claim, State Farm filed two declaratory judgment actions. The court granted the declaratory judgments.
The court reviewed whether the seizure of insured’s automobile by law enforcement constituted damage to the automobile; and therefore, insured sustained an insurable loss. The claimants argue that they have an insurable interest in the vehicles, given that they were good-faith purchasers. They also argue that because the term damage is undefined in the policy, the court must look to the dictionary definition. In determining whether a good-faith purchaser of a stolen vehicle has an insurable interest in the vehicle, the question becomes whether seizure of a vehicle by law enforcement constitutes direct, sudden, and accidental damage to the covered vehicle. The court stated that although a seizure of a vehicle does constitute damage to the defendants, it does not constitute damage to the covered vehicle. The defendants have not claimed that the seizure resulted in physical damage to the vehicles. The defendant further failed to suggest a reasonable interpretation of the term “damage” under which their vehicles, as opposed to the defendants themselves, have been damaged.
Therefore, the court found that the seizure of the claimants’ vehicles did not constitute “damage to” the vehicles and, therefore, was not a loss for purposes of comprehensive coverage under the State Farm automobile insurance policies.
State Farm Mutual Automobile Insurance Co. v. Rodriguez, 987 N.E.2d 896, 2013 WL 1281826 (Ill.App. 1 Dist., 2013).
