The United States Court of Appeals for the Tenth Circuit has affirmed that insurers can limit auto liability coverage to specific vehicles listed in a policy, even when a driver qualifies as an insured person. The ruling, issued June 25, offers clarity on how insurers in Colorado – and potentially in other jurisdictions with similar statutes – can lawfully manage risk by defining coverage around designated vehicles.
The case, Scott v. Nationwide Agribusiness Insurance Company, centered on a 2018 car accident in which Le’Onsha Scott suffered serious injuries. Ellen Cahill, the driver found at fault, was insured under two separate auto policies. One, issued by Hartford, covered the 2018 Hyundai Ioniq she was driving. The other, from Nationwide, listed her as a “resident relative” under her son’s policy.
After the arbitration process, Scott was awarded over $424,000 in damages. Hartford paid $25,000, the maximum under its policy. Scott then turned to Nationwide, seeking the remainder. But Nationwide denied the claim, arguing that while Cahill was indeed an “insured” under its policy, the coverage applied only to vehicles explicitly listed in the declarations: a 2009 Hyundai Sonata and a 2017 BMW 540xi. Cahill’s Hyundai Ioniq was not among them.
Scott filed a declaratory judgment suit in federal court, contending that the exclusion violated Colorado’s public policy by limiting liability coverage inappropriately. She pointed to Colorado statutes that define who qualifies as an insured and argued that limiting coverage based on the vehicle undermined those protections. The district court ruled in favor of Nationwide, and the Tenth Circuit upheld that ruling.
In its opinion, the appellate court made a clear distinction between who qualifies as an “insured” and what coverage applies to them. The court acknowledged that Cahill, as a resident relative, was covered under the policy, but emphasized that Colorado law allows insurers to extend liability coverage only to specified vehicles. The court pointed out that Colorado’s insurance framework focuses liability coverage on the vehicle itself, not solely the person driving it.
The panel was unpersuaded by Scott’s comparison to cases involving uninsured or underinsured motorist (UM/UIM) coverage, where courts have found that coverage should follow the person. The judges said those provisions differ in intent and structure and that it would be inappropriate to apply the same reasoning to standard liability policies.
Colorado statutes, the court noted, consistently refer to liability insurance as covering the use of a motor vehicle – specifically the vehicle designated in the policy. The state’s financial responsibility law also allows policies to describe explicitly which vehicles are covered, reinforcing the notion that coverage can lawfully be limited to certain cars.
For insurance carriers and professionals, this ruling reaffirms a standard practice that’s foundational to underwriting auto policies. By confirming that policyholders can’t extend liability coverage to vehicles not named in the declarations – even when the driver is covered under other definitions – the decision provides legal reassurance and a potential reference point in future disputes.
It also speaks to the importance of precise policy drafting. As the court observed, insurers are free to include conditions and exclusions in their contracts, as long as they do not conflict with public policy. This ruling confirms that naming specific vehicles as a condition for liability coverage is not only permissible but aligned with the structure of Colorado’s insurance law.
From an operational standpoint, the case highlights the need for agents and brokers to clearly explain to clients how coverage applies and what limitations may exist, particularly in households with multiple drivers and vehicles. Misunderstandings over who or what is covered can quickly become costly if assumptions don’t align with what the policy actually states.
The court’s decision in Scott v. Nationwide closes the door on this particular dispute, but it’s also a reminder that litigation over policy terms remains an ongoing risk area. For insurers, the outcome is a confirmation that longstanding coverage practices remain on solid legal footing—at least in Colorado. For other jurisdictions, the reasoning may offer persuasive authority as similar cases arise.
