An insurer’s denial of UIM coverage under a commercial auto policy was upheld, confirming that employees must occupy a covered vehicle to qualify for benefits.
In a July 11, 2025 decision, the US Court of Appeals for the Seventh Circuit sided with ACE American Insurance Company in a dispute over underinsured motorist (UIM) coverage. The case involved Jason Rahimzadeh, a Medtronic PLC employee who was struck by a car while riding his bicycle - an injury he believed should be covered under his employer’s commercial auto insurance policy.
It wasn’t. And the court agreed with the insurer.
Rahimzadeh’s injury occurred on September 11, 2020, while he was participating in Medtronic’s “Healthier Together” initiative, which encouraged employees to complete a 5K during work hours. Since the driver who hit him was underinsured, he turned to insurance. He filed a claim under his personal policy and also submitted a UIM claim through Medtronic’s commercial policy, issued by ACE.
That policy, however, only provided UIM coverage to people defined as “insureds”. In this case, since the named insured was a corporation, the policy specified that only individuals “occupying” a covered vehicle at the time of the incident qualified. The contract defined “occupying” as being “in, upon, getting in, on, out or off” a covered vehicle. ACE denied the claim on the basis that Rahimzadeh, on a bicycle, did not meet the definition.
Rahimzadeh sued for breach of contract in Illinois state court, arguing that the occupancy requirement violated public policy. He pointed to Galarza v. Direct Auto Insurance Co., a 2023 Illinois Supreme Court decision that invalidated a similar restriction in a personal auto policy. ACE removed the case to federal court, and the district judge dismissed it. That court distinguished Galarza from Rahimzadeh’s situation, emphasizing that the former applied to personal insurance policies - not commercial ones issued to corporations.
The court relied instead on Stark v. Illinois Emcasco Insurance Co., a 2007 Illinois appellate case where the court rejected UIM coverage for a corporate officer who was hit while walking in a parking lot. The logic: commercial policies are written to protect the company’s interest in the vehicle, not to follow individuals around.
On appeal, Rahimzadeh asked the Seventh Circuit to reconsider or at least send the policy question to the Illinois Supreme Court. But the panel declined, saying the law was already settled. They affirmed the lower court’s dismissal.
For insurers, brokers, and risk managers, the case highlights the importance of clearly defined coverage boundaries in commercial auto policies. While personal policies may face broader public policy scrutiny, courts continue to give commercial policies more room to draw sharp lines - especially when it comes to who qualifies as an insured and under what conditions. The ruling confirms that if an employee isn’t in or on a company vehicle at the time of an accident, UIM benefits likely won’t apply.
