Utah Court of Appeals
Can corporate shareholders claim family member coverage under commercial insurance policies? Pollard v. Truck Ins. Exch. Explained
Summary
Melvin Pollard, sole owner of two corporations, was injured in a motorcycle accident and sought coverage under his commercial automobile insurance policy issued to his corporations. The trial court granted summary judgment for the insurer, finding no coverage under the policy’s plain language.
Analysis
The Utah Court of Appeals addressed a critical question of insurance coverage in Pollard v. Truck Ins. Exch., determining whether corporate shareholders can claim coverage as family members under commercial automobile insurance policies.
Background and Facts
Melvin Pollard owned two corporations and obtained commercial automobile insurance from Truck Insurance Exchange (TIE) covering fourteen business vehicles. While riding his personal motorcycle—not listed in the commercial policy—Pollard was injured in an accident with an unidentified motorist. After exhausting his motorcycle insurance policy’s $100,000 limit, Pollard sought additional coverage under the commercial policy’s uninsured motorist provision. TIE denied the claim, asserting Pollard’s motorcycle was not a covered vehicle under the policy terms.
Key Legal Issues
The central issue was whether the commercial policy’s extension of coverage to “family members” created an ambiguity when the named insured was a corporation rather than an individual. Pollard argued this language should be construed to provide him coverage as a family member of the corporate entities he owned.
Court’s Analysis and Holding
The court rejected Pollard’s argument, following the majority view that corporations cannot have family members. The policy clearly stated that family member coverage applied only “if you are an individual,” and the named insureds were Climate Source, Inc. and Pollard Mechanical, Inc.—corporate entities, not individuals. The court found no ambiguity in this language and refused to adopt the minority position that would extend coverage to corporate shareholders through family member provisions.
Practice Implications
This decision clarifies that Utah follows the majority rule rejecting coverage extensions to corporate shareholders through family member language. Practitioners representing business owners should ensure commercial policies explicitly include individual owners as named insureds if personal coverage is desired, rather than relying on potentially ambiguous family member provisions.
Case Details
Case Name
Pollard v. Truck Ins. Exch.
Citation
2001 UT App 120
Court
Utah Court of Appeals
Case Number
No. 20000167-CA
Date Decided
April 12, 2001
Outcome
Affirmed
Holding
A commercial insurance policy’s reference to ‘family members’ does not create coverage for individual corporate shareholders when the named insured is a corporation.
Standard of Review
Correctness for grant of summary judgment and contract interpretation
Practice Tip
When drafting commercial insurance policies for closely held corporations, ensure coverage extensions for individual owners are explicitly stated rather than relying on family member provisions.
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