Tenth Circuit Upholds Vehicle-Specific Liability Coverage in Colorado Auto Policies

The Tenth Circuit's decision in Scott v. Nationwide Agribusiness Insurance Company affirms that automobile insurance liability coverage in Colorado can be conditioned on the use of vehicles specifically listed in the policy without violating state public policy. This clarification emerged after a 2018 accident where the defendant driver, covered under multiple policies, was found liable, but the insurer denied coverage because the vehicle driven was not declared on one of the policies. The court upheld the insurer's position, emphasizing that liability coverage hinges on the vehicles declared in the insurance policy rather than solely on the insured status of the driver.

This ruling highlights the importance of the vehicle declarations page within auto insurance contracts in Colorado. If a vehicle is not listed as covered, liability protection may not apply in incidents involving that vehicle, even if the driver qualifies as an insured resident relative under the policy. This decision offers insurers substantial precedent to enforce vehicle-specific limitations on liability coverage while remaining compliant with Colorado's compulsory insurance requirements.

The decision distinguishes between vehicle-based liability coverage and person-oriented uninsured/underinsured motorist (UM/UIM) coverage, providing a legal framework to balance insurer contractual freedom with statutory mandates. It supports the ability of insurers to draft policies with precise vehicle declarations without negating coverage for insured persons but restricting it to the declared vehicles.

Legal advisors and insurance professionals should counsel policyholders to ensure all vehicles regularly used by the insured are properly declared to avoid coverage disputes. Meanwhile, insurers in Colorado may use this ruling to defend against indemnification claims when coverage issues stem from undeclared vehicles. The decision also signals potential legal scrutiny in future cases involving non-traditional vehicle use, such as ride-sharing or rental vehicles.

Overall, Scott v. Nationwide reinforces insurers' prerogative to manage underwriting risk tied to specific vehicles while respecting the compulsory coverage framework. The ruling clarifies vehicle-specific liability policy enforcement and guides stakeholders in navigating statutory and contractual intersections in Colorado auto insurance law.