A federal court’s decision in a declaratory action filed in the U.S. District Court for the Western District of Virginia has resulted in a $2.8 million settlement of a personal injury claim in Encompass Independent Ins. Co. v. Dombrosky.
In June 2015, teenage driver Tanya Dombrosky crashed into a tree in Botetourt County, Virginia. Her passenger Matthew Green was unrestrained at the time; he was ejected from the vehicle during the accident and sustained serious injuries, including spinal cord injuries that left him a paraplegic.
At the time of the incident, Dombrosky lived with her grandmother and mother. She was insured under her mother’s USAA policy
with $300,000 limits. Her grandmother also had an auto insurance policy with $250,000 limits and a $2.5 million umbrella insurance policy with Encompass. Encompass denied coverage for the incident under either policy and filed a declaratory judgment action in federal court. In order to determine the applicability of the umbrella policy, the issue for the court was whether the grandmother maintained or regularly used the vehicle, which had only been in the household for nine days prior to the accident.
The court ruled that the Encompass umbrella policy did cover Dombrosky. Even though the vehicle was titled in Dombrosky’s mother’s name, the grandmother paid for it in full. The purchase price included an initial oil change and limited warranty. The vehicle was also garaged at the grandmother’s house, and the grandmother filled the vehicle with fuel at leastonce and drove it 2-3 times. The court found that the meaning of the word “maintain” in the umbrella policy was ambiguous, but ultimately the grandmother’s “dominion and control” over the vehicle were important factors in finding that the umbrella policy did apply.
At the conclusion of the declaratory action, USAA and Encompass settled the case for $2.8 million.