Woman who sold vehicle ten days before buyer got into crash not covered by her insurance policy

On August 20, 2005, Judi Bavota sold a Chevrolet Blazer to Leo Callahan and assigned the title to him.  Bavota's license plates remained on the car, and neither party notified the registry of motor vehicles or Bavota's insurer, Liberty Mutual, of the sale. 


On September 1, 2005, while driving the Blazer, Callahan collided with a vehicle driven by Jennifer Vail.  There were no personal injuries, but both vehicles sustained substantial damage.  It was undisputed that Callahan caused the accident.


Vail submitted to Liberty a claim for damage to her car.  Liberty refused to pay the claim on the grounds that the Blazer was not owned by Bavota or insured by Liberty on the date of the accident.


Vail received an arbitration award against Bavota of $23,800.  Liberty paid the claim.  Vail then proceeded with a 93A/176D claim against Liberty. 


The standard auto policy issued by Liberty to Vail provided that the policy automatically terminates 30 days after the insured transfers title to the auto and does not register another auto.  While Liberty did not dispute that the transfer of title extended the term of the policy to encompass September 1, 2005, less than 30 days after the transfer, it argued that the extended coverage did not include Vail's loss.  It relied on a policy provision stating that it will pay a loss if a non-household member "using your auto with your consent is legally responsible for the accident."  It argued that "your auto" means an auto owned by an insured.  As Bavota no longer owned the auto, there would be no coverage.


In Vail v. Bavota, 2014 WL 729876 (Mass. App. Div.), the Massachusetts Appellate Division disagreed.  The term "your auto" is defined in the policy to mean "[t]he vehicle or vehicles described in the Coverage Selection Page."  The Blazer was listed on the coverage selection page. 


The court held, however, that there was no coverage because Callahan was not driving the vehicle with the "consent" of Bavota.  Because Callahan owned the Blazer, Bavota had no authority to approve or consent to his use of it.


While I don't disagree with the decision, it is probably contrary to the arbitration award under which Bavota must have been found to be liable for Callahan's negligence.  I assume that finding was made under Mass. Gen. Laws ch. 231 s. 85A.  That statute provides that the fact that a car involved in an accident is registered in the name of a defendant is prima facie evidence that it is being operated by and under the control of a person for whose conduct the defendant is legally responsible.  Absence of such responsibility is an affirmative defense.  While the prima facie language has stopped many a motion for summary judgment that would otherwise be successful, it is puzzling how the arbitrator found as a matter of fact that Bavota was indeed responsible for Callahan's actions. 


The takeaway:  When you sell a car, make sure you take care of your paperwork immediately.