Rental Car Not ‘Temporary Substitute’ For Insured’s Vehicle

May 6, 2020 / Writing and Speaking

By Don R. Sampen, published, Chicago Daily Law Bulletin May 5, 2020

The 5th District Appellate Court recently held that an insured’s use of a rental car to take a lengthy road trip, instead of making use of the insured’s own high-mileage vehicle, did not qualify the insured’s vehicle as being “out of use,” and that underinsured coverage that may have applied if the insured’s vehicle had been “out of use” therefore was not available.

The case is State Farm Mutual Automobile Insurance Co. v. Osborne, 2020 IL App (5th) 190060 (March 25). The insurer, State Farm, was represented by attorneys at Reed Armstrong Mudge & Morrissey P.C. in Edwardsville. Attorneys at Sam C. Mitchell & Associates of West Frankfort, Ill., and Mark D. Hassakis and James Ruppert of Hassakis & Hassakis P.C. in Mt. Vernon represented the insureds and claimants.

In June 2015 defendant insured Michael Osborne rented a Hertz passenger car to make a trip from Illinois to Florida. He was accompanied by another adult and three children. On their way to Florida, their vehicle was struck head on by a truck driving the wrong direction on an interstate highway. The other adult and two children were killed and the third child sustained injuries.

State Farm issued a policy on a vehicle owned by Osborne and his wife, a 2004 Chevrolet Suburban. The State Farm policy provided medical and underinsured motorist coverage for Osborne and his “resident relatives” while driving in the Hertz rental vehicle. But apart from Osborne himself, the only relative in the car at the time of the accident was one of the deceased children.

Thus, the issue in the case was the availability of medical and underinsured motorist coverage for the accompanying adult and other two children. In addition to Osborne and resident relatives, the State Farm policy provided coverage for persons occupying the rental car only if that car qualified as “a temporary substitute car” for Osborne’s own car.

Evidence in the case showed that Osborne’s wife was the primary user of the Suburban, that it had more than 130,000 miles on it at the time of the crash, it had various mechanical problems, including that the backseat air conditioning did not work, and that both Osbornes were concerned about the car’s ability to make a lengthy trip and worried about a potential breakdown along the way.

In addition, however, the evidence was undisputed that Osborne’s wife drove the suburban around on the day he rented the Hertz car and the suburban was not “broken down” on that day.

State Farm brought this declaratory action seeking a determination that it owed no medical or underinsured motorist coverage for the two children and accompanying adult, because the Hertz vehicle did not qualify as “temporary substitute car.” Upon cross-motions for summary judgment, the trial court held in favor of coverage and against State Farm, which took this appeal.


In an opinion by Justice Mark M. Boie, the 5th District reversed. He initially observed that the only potential category of coverage available was for a “temporary substitute car.” That term, in turn, was defined in the policy to mean a car replacing the insured’s own vehicle because it is “out of use” due to its breakdown, repair, servicing, damage, or theft.

Focusing on the term “out of use,” Boie pointed out the testimony of the Osbornes to the effect that Mrs. Osborne continued to use the suburban after her husband rented the Hertz vehicle, that repairs had recently been made to the suburban and that the backseat air-conditioning malfunction did not prevent the car from being used. He found that under these facts the Hertz car was not being used as a temporary substitute.

The defendants contended that the suburban was “out of use” in light of the Osbornes’ concern about that car being unfit for long, out-of-town trips. Boie rejected this interpretation because it would require State Farm to bear the risk of loss on two vehicles being operating on the roadways simultaneously. He said the unambiguous language of the policy showed that the intent was that the coverage applied to only one operating vehicle at a time.

The defendants also relied on Economy Fire & Casualty Co. v. Dean-Colomb, 269 Ill.App.3d 603 (1995), where the court found that a rented vehicle qualified as a “temporary substitute,” even though the insured’s own car was found to be “drivable.”

Boie, however, distinguished that case on two grounds. One was different policy language, which required the insured’s car to be “out of normal use,” instead of simply “out of use.” In addition, in that case no facts suggested that the insured continued to use the insured’s own car while also using the rental car.

The court therefore reversed the trial court and remanded with instructions to enter summary judgment for State Farm.

Key point

For a vehicle to qualify as a “temporary substitute” for the insured’s own vehicle, such as will extend coverage to the vehicle’s occupants not otherwise entitled to coverage, the insured’s own vehicle must be “out of use” and not operated at the time the temporary substitute vehicle is being operated.

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