At the end of June, an Indiana U.S. district court ruled that a father’s repeated verbal warnings to his daughter about not letting anyone else drive her car were strong enough to allow his insurer to deny coverage for an accident that occurred while her boyfriend was driving. The case has implications for insurers as well as parents who want to control their liability when their children are in possession of their insured car.

The case was brought by Allstate Insurance against the Agoston family (which owned the car that was insured by Allstate), Michael Hahn (the boyfriend of Sarah Agoston who ended up causing the crash), and Samantha Smythe (who was riding in the car at the time of the accident and was “seriously injured”). The court ruled Allstate did not have to pay for damages caused in the accident because Hahn was at the wheel, not one of the insured drivers under the policy.

Case Background

More than three years before the accident, when Sarah Agoston turned 16 and started driving, her father, Vincent Agoston, repeatedly warned her that she was to allow no one else to drive their cars. Court documents indicate that he reminded her of this restriction repeatedly.

But when Sarah started dating Hahn, who lacked a valid license, he would continually insist on driving, and she eventually gave in, allowing him to drive the car. She did this without letting her parents know about the existence of Hahn, much less the fact that she was allowing him to drive the car. After a party at Sarah’s apartment one night in March 2010, she gave in again and let him drive the car with she and Smythe riding as passengers. The court documents say that the group of friends at Sarah’s apartment that night had consumed alcohol and pills, and while on the way to a friend’s house, Hahn crashed the car. The accident was serious, with Hahn having to be transported by lifeline to the hospital.

Smythe ended up seeking compensation from Hahn, the Agostons, and American Commerce Insurance for her medical expenses. (The court documents do not explain who was insured by American Commerce, however.) And at the same time, Allstate filed this case, arguing that it did not have to provide compensation since Hahn was the one in the driver’s seat. Ultimately, the court agreed.

Why the Accident Was Not Covered

Whether someone else who drives your car will be covered by your insurance policy is one of the most common auto insurance claims questions that get asked. And, usually, they would be covered as long as they had your permission. But since Sarah’s parents had explicitly restricted her ability to let others drive the car, that general principle did not apply in this case, the court said. In the court’s decision, it cited a handful of cases in which coverage was negated because individuals who had borrowed a car under specific restrictions had lent the car out in spite of those restrictions. Sarah, after all, wasn’t the actual policyholder; her parents were.

Sarah’s parents “expressly prohibited anyone but Sarah from driving the vehicle, and Sarah had been continually reminded of this,” the court wrote. “Because of this restriction, Sarah herself did not have the right to grant anyone else permission to use the vehicle.”

When addressing the argument submitted by Smythe that Allstate had to cover the accident because Sarah’s parents had not listed Hahn as an excluded driver, the court said that her parents had made the rule so clear that it was “not necessary to explicitly list excluded drivers in the policy to make this restriction effective.”

This is only one case, though, and other incidents may have crucial details that affect who is covered. When you’re unsure, it’s always best to contact your insurer and go over who’d be covered in the event of an accident.