Cincinnati Insurance Company had issued an auto liability policy to Natalie Deem. She was 18 years old at the time of the accident and had a valid driver's license. She was accompanied by Courtney Smith, who was 15 years old and had a beginner's permit. Deem had driven her car with Smith as a passenger to a friend's home on December 22, 1997. Deem became "extremely intoxicated" and vomited and then passed out. A short time later, she said she wanted to go home but didn't want to leave her car. Smith believed she had Deem's permission to drive Deem's car but Deem didn't recall giving permission. The roads were snow-covered and icy in spots. Smith lost control, and the car went off the road. Both girls sustained injuries.

Cincinnati denied liability on the ground that Smith was not covered under its policy and filed this action for declaratory judgment. The lower court entered judgment in favor of Cincinnati, and Smith appealed.

The policy excluded coverage for any person "using a vehicle without a reasonable belief that that person is entitled to do so." Courtney Smith contended she had a "reasonable belief" that she was entitled to drive the car because she had Deem's permission. However, Smith had only a learner's permit and was legally allowed to drive only when accompanied by a parent, guardian or relative.

The higher court decided that the policy term was not ambiguous; Courtney Smith was legally permitted to drive only when she was accompanied by a parent, guardian or relative. Cincinnati was not liable for the accident that occurred while she was driving.

The judgment entered in the lower court in favor of Cincinnati was affirmed.

Courtney Smith, Appellant, v. Cincinnati Insurance Company-No. 41A01-0109-CV-353-Court of Appeals of Indiana-May 31, 2002-769 North Eastern Reporter 2d 599.