Progressive Gulf Insurance Company v. Faehnrich

(Mississippi Choice of Law Provision in Automobile Policy Controls Application of Household Exclusion to Bar Coverage of Automobile Accident Claims)

In Progressive Gulf Ins. Co. v. Faehnrich, 752 F.3d 746 (9th Cir. 2014), the United States Ninth Circuit Court of Appeals applied a Mississippi choice of law provision in an automobile insurance policy issued by Progressive Gulf Insurance Company (“Progressive”) and found that under Mississippi law the “household exclusion” in the policy barred coverage of personal injury claims filed by two minor children against the insured arising out of an automobile accident that took place in Nevada. The Court of Appeals had certified the following question to the Nevada Supreme Court in connection with the parties’ dispute:

Does Nevada public policy preclude giving effect to a household exclusion clause in an automobile liability insurance policy delivered in Mississippi to Mississippi residents and choosing Mississippi law as controlling, where Mississippi law permits household exclusions but the effect of the exclusion is to deny Nevada residents who were injured in Nevada recovery of the minimum coverages specified in NRS 485.3091?

Because the Nevada Supreme Court advised the Court of Appeals that Nevada public policy did not bar application of a household exclusion included in a policy (1) issued in Mississippi to (2) Mississippi residents and including (3) a Mississippi choice of law provision, the Court of Appeals reversed the district court’s entry of summary judgment in favor of the insured and ordered the district court to enter summary judgment in favor of Progressive.