Allstate owes no defense or payout to a driver who crashed a dead policyholder's car without permission, a New York appeals court ruled. 

The Appellate Division, Second Department, handed down its decision on August 19, 2026, reversing a lower court in a dispute over who controls an auto policy after the named insured dies. 

The policy covered a car owned by a man who died on April 15, 2020. Months later, on October 9, 2020, his girlfriend was driving that car when it hit another vehicle. A passenger in the second car was hurt and later sued the driver, the estate, and the people in the other vehicle. 

Allstate first agreed to defend the driver, then changed course and asked a court to declare it owed her nothing - no defense, no payout. Its argument came straight from the policy. 

When the named insured dies, the "rights and duties [under the policy] will be transferred to [the named insured's] legal representative." Until that representative is named, the policy says, "anyone having proper temporary custody of [the named insured's] property will have [the named insured's] rights and duties but only with respect to that property." 

Allstate showed the court that the decedent's daughter became the estate's legal representative in January 2021, and that the driver did not have permission to use the car when the crash happened. On that record, the driver was neither the legal representative nor a person with proper temporary custody - so the policy's rights never passed to her. 

The lower court had refused to grant Allstate a default judgment against the driver, who never answered the suit, along with summary judgment against the other parties. It also flagged spelling differences in the driver's name across the paperwork. The appeals court disagreed, calling those differences "mere irregularities" and finding the insurer's proof of service solid. 

The court reversed and sent the case back so a judgment can be entered confirming Allstate owes no defense or indemnity to the driver.