If the insured has a dune buggy, motorbike or an all-terrain vehicle, he should know that the standard personal auto policy has an exclusion pertaining to any vehicle that has fewer than four wheels or is designed mainly for use off public roads. So, the questions arise: how can the insured get coverage for such vehicles? Can the coverage be insured under the personal auto policy? What type of miscellaneous vehicle can be insured? What coverages are available for the insured? What limits of liability are available? How is the coverage rated?
Special types of vehicles can be insured under the standard personal auto policy through the use of an endorsement, PP 03 23, the miscellaneous type vehicle endorsement.
Dual residency allows coverage under auto policy
This is a case from the Superior Court of New Jersey, Appellate Division. The opinion is an unpublished opinion at this writing, so court rules should be checked before citing. The case is Rosner v. Liberty Mutual Insurance Company, 2009 WL 816396 (N.J.Super.A.D.).
Rosner was involved in a motor vehicle accident in New Jersey and he died from the injuries sustained in the accident. A third-party complaint was filed against the driver of the other car (Lubeck), and a first-party claim was filed for underinsured motorist (UIM) benefits against Rosner's insurance carrier, Liberty Mutual Insurance Company.
Liberty Mutual filed a complaint against Geico, which insured Mrs. Rosner at the time of the accident. Liberty Mutual claimed that her UIM coverage with Geico was primary to that of Mr. Rosner's policy with Liberty Mutual. Geico said that Mr. Rosner was not a resident relative under the wife's policy and so was not entitled to coverage. The trial court ruled that Geico had to provide UIM coverage to the Rosners. Geico appealed.
Geico argued that the court incorrectly applied New Jersey law and that Mr. Rosner was not a resident spouse under the Geico policy and that Pennsylvania law precludes payment of UIM benefits to a resident family member operating a vehicle not covered by the insurance policy. The appeals court disagreed and discussed the following information.
Rosner married his wife in 1998. She resided in a home that she owned in Pennsylvania and he lived in an apartment he owned in New York City. During the first several years of the marriage, the couple lived in their respective homes during the week and stayed together at either the Pennsylvania residence or the NYC apartment from Thursday to Monday. He paid all the bills associated with his New York apartment and she paid all the bills associated with the Pennsylvania house. Mrs. Rosner testified that Rosner began to spend more time in the Pennsylvania home and eventually lived full-time there. Moreover, at the time of the accident, Rosner, who had a New York driver's license, was driving a vehicle that he owned and had registered in New York. His insurance policy with Liberty Mutual was issued in New York and listed his residence as New York. Mrs. Rosner's policy with Geico listed the Pennsylvania address as her residence and did not list Rosner as a resident relative. Geico interpreted this as meaning Rosner had no coverage under the wife's policy.
The appeals court found that the Geico policy did define an insured to include the named insured's spouse, if the spouse is a resident of the same household. However, the court continued, the laws of both Pennsylvania and New Jersey recognized that an individual may have dual residences for purposes of insurance coverage. Although it was arguable that Rosner was a resident of New York at the time of the accident, the record also supports the conclusion that Rosner was a resident of Pennsylvania, that is, he was a resident of both states. As such, Rosner qualified as a resident spouse of Mrs. Rosner and was entitled to coverage under the Geico policy. The opinion of the trial court was affirmed.
Blast fax case from Massachusetts
This case involved a dispute over whether a general liability insurance policy issued by St. Paul Fire and Marine Insurance Company provided coverage for claims brought against Cynosure that its blast faxes violated the Telephone Consumer Protection Act (TCPA). The case is Cynosure, Inc. v. St. Paul Fire and Marine Insurance Company, 2009 WL 949077 (D.Mass.).
The general liability policy issued by St. Paul to Cynosure insured Cynosure against claims accusing the insured of making known to any person or organization covered material that violates a person's right of privacy. Covered material was defined as any material in any form of expression, including material made known in or with any electronic means of communication, such as the Internet.
Weitzner, a doctor in New York City, filed a class action against Cynosure in Massachusetts state court, alleging that Cynosure violated the TCPA by transmitting unsolicited facsimile advertisements (otherwise known as blast faxes) on numerous occasions. The insured tendered the claim to St. Paul which denied coverage. St. Paul stated that the policy provided coverage only where an insured makes known to others covered material that violates some other person's right of privacy, whereas the claim against Cynosure alleged that Weitzner, the recipient of the fax, was also the party whose privacy rights had been violated.
Cynosure wanted St. Paul to reconsider its denial in view of the ruling in Terra Nova Insurance Company v. Fray-Witzer, 869 N.E.2d 565 (Mass. 2007) wherein the Massachusetts court required liability coverage for unsolicited blast faxes. St. Paul again denied coverage.
The district court found that the starting point for interpreting the policy language was, indeed, the Terra Nova case in which the Supreme Judicial Court held that the phrase "oral or written publication of material that violates a person's right of privacy" was ambiguous. The phrase was held by that court to be ambiguous because it found that the body of national case law addressing the same or similar policy language fell on both sides of the interpretive ledger. The court said the conflicting court rulings would confuse even the most sophisticated and informed insurance consumer.
The district court decided that the policy language in St. Paul's policy was similar to, and so ambiguous, like that found in the Terra Nova case. Under Massachusetts law, the policy must then be interpreted in favor of the insured as covering blast fax claims.
Damage caused by contractor's work, that particular part, and CGL exclusions
The insurer, in Amerisure Mutual Insurance Company v. American Cutting & Drilling Company, 2009 WL 700246 (S.D.Fla.), filed a declaratory judgment seeking a declaration that it had no duty to indemnify or defend any insured because of exclusions j(5) and j(6) in the CGL policy.
Coscan was either the general contractor or construction manager on a construction project of multi-height and story condominiums on property owned by Veranda. During the construction, American Cutting was hired to cut/chip plumbing access holes in the post tension concrete floors. In 2007, the city required construction of the condos to stop as a result of cut and nicked post tension cables; at the time the construction project was flagged, the project was not completed.
Coscan notified American Cutting that a number of post tension cables throughout the condos were broken as a result of core drilling, hammer drilling, and chipping at slabs by multiple contractors, including American Cutting. American Cutting was sued based on the charge that it caused steel cables to be severed or damaged by its work. American Cutting tendered the lawsuit to its insurer, Amerisure Mutual, which then filed this declaratory judgment action.
The sole issue before the court was whether the policy exclusions cited by the insurer applied. Exclusion j(5) applied to property damage to that particular part of real property on which the named insured is performing operations if the damage arises out of those operations. Exclusion j(6) applied to property damage to that particular part of any property that must be restored, repaired, or replaced because the work of the named insured was incorrectly performed on it.
The insured argued that the phrase "that particular part" is ambiguous, contending that the phrase could mean the particular area where work was contracted to be performed (the concrete), or it could encompass the broader area of the project (the entire flooring system and all component parts). This court noted that Florida courts have consistently held that the exclusionary language at issue is unambiguous. Nevertheless, the court discussed the application of each exclusion to this claim.
The court said that the insured was on the property for the sole purpose of cutting through concrete, and was not supposed to cut any steel or other cables. "That particular part of real property" in this case should be taken and understood in the ordinary sense as the part of the project where American Cutting was cutting through concrete, that is, the areas of the floor where it was enlarging the holes; this particular part was the concrete floor, including the embedded cable where American Cutting was chipping concrete. Therefore, exclusion j(5) applies because the insured was chipping concrete (performing operations) on areas of the concrete floor that included embedded cable (that particular part of real property) and damage to the cable (property damage) resulted from the operations. As a result, there is no coverage and no duty for Amerisure to defend American Cutting.
As for exclusion j(6), the court noted that it applies to damage caused by incorrect performance and the insured argued that there was no proof that it incorrectly performed its work. However, the court said that American Cutting knew the cables were embedded in the concrete slab and that the cables were an integral part of the flooring. The insured's job was to chip only concrete and not cut any cables and the insured breached this duty. The court found that the work of the insured was incorrectly performed and so, exclusion j(6) also applied to the claim for property damage. The motion of the insurer was granted.
Loss of use meaning
The insured brought an action against insurers seeking insurance coverage under primary and excess insurance policies for settlement payments the insured made to resolve damage claims brought by a customer. After a jury verdict in the insured's favor, the insurers moved for judgment as a matter of law, or alternatively, a new trial. The case is Vicor Corporation v. Vigilant Insurance Company, 2009 WL 511988 (D.Mass.).
Vicor sold power converters to Ericsson and Ericsson incorporated the converters into electronic equipment used in wireless communications systems. Ericsson then sold its products to wireless providers on a worldwide basis. In 2003, a number of Ericsson's customers suffered large scale service interruptions when some of the radio base stations suddenly failed to operate. Ericsson attributed the failures to multiple failures of the Vicor power converters. Ericsson sued Vicor which settled the litigation of $50,000,000. Vicor sought recovery from its insurers and claimed its payments were for covered loss of use damages. The insurers disputed coverage.
The district court saw the principal issue as whether the amount paid by Vicor to settle the litigation was for loss of use damages that were covered by the insurance policies. These policies applied to the loss of use of tangible property that is not physically injured.
The court noted that the phrase "loss of use" standing alone is not particularly instructive although some courts have helped, albeit in a somewhat negative manner. Courts have said that loss of use damages can be akin to lost rental value or its equivalent, but courts have also listed which items are not covered as loss of use damages: increased operating and maintenance costs; betterment expenses; fraud; money for repairs other than emergency response costs; retrofit; loss of goodwill; loss of business opportunity; lost profits; investigation costs; and costs of product replacement.
In this case, Vicor contended that its payments were legitimate loss of use damages, but the court said that the facts showed Vicor paid for increased maintenance and operating costs; such costs and expenses do not fit the applicable and generally acceptable meaning of "loss of use". The court granted the motion for judgment as a matter of law with respect to the amount paid by Vicor for the increased maintenance and operating costs.
Care, custody, or control exclusion versus possible cause of loss
This appeal arose out of an insurance coverage dispute between Narragansett Jewelry Company and its general liability insurer, St. Paul Fire & Marine Company. The insured sought defense and indemnity from St. Paul in connection with a civil action filed against the insured by Slane & Slane Designs. St. Paul denied coverage and Narragansett filed a lawsuit in federal court alleging breach of contract and sought a declaratory judgment against St. Paul. The trial court granted summary judgment to St. Paul and this appeal followed. The case is Narragansett Jewelry Company v. St. Paul Fire & Marine Insurance Company, 555 F.3d 38 (1st Cir. 2009).
Slane is a jewelry design company that contracted with Narragansett to develop jewelry models and molds based on Slane designs, and to produce jewelry ordered by Slane. The gist of the initial complaint was that Narragansett failed and refused to develop models of consistent and usable quality free of defects, and that Narragansett damage and lost numerous models belonging to Slane.
In this case, St. Paul argued that the exclusion is clear in its wording. Narragansett argued that the damage claimed by Slane could have occurred during the shipment process when placed in the hands of a third-party carrier and so, the care, custody, or control exclusion in the liability policy did not apply. The court said that, regardless of what might be possible, there are no allegations in the Slane lawsuit that supported Naragansett's position. Speculation about a third party causing damage was not applicable to this dispute between the insured and insurer. What mattered was the wording of the complaint against Narragansett and when that was compared with the wording of the care, custody, or control exclusion, it was clear that there was no coverage for the insured.
The decision of the district court was affirmed.
Each occurrence limit applied to damage claims
The insurer filed an interpleader action pertaining to a claim against its insured over negligence in constructing a deck for a residence. The deck collapsed during a social event and many people were injured. The insurer contended that its liability limit under the general liability policy for all claims in this incident is $500,000; the defendants claim the limit is $1,000,000. This case is Continental Western Insurance Company v. Ard, 2009 WL 440520 (D.Kan.).
The only issue before the court here was whether, based on the facts of the case, the insurance policy limits payment to the each occurrence limit of $500,000 or the products-completed operations aggregate limit of $1,000,000. All parties to this case agree that the claims stem from one incident that occurred in May of 2007, but the dispute focuses on which limit is implicated by the term "a person" as used in the definition of bodily injury.
The defendants position rest on the argument that the phrase "a person" as used in the definition of bodily injury links the described injury to a single person rather than simply describing what must sustain the injury. The defendants conclude that by inserting the definition of bodily injury into the limits of insurance clauses, it becomes apparent that the coverage available as a result of injury to any one person is $500,000 for any one occurrence, but when there are multiple claimants of that same occurrence, the aggregate limit of $1,000,000 would then apply.
The court, however, said that a plain reading of the provisions simply cannot support the defendants' position. The policy declares that the "each occurrence limit is the most the insurer will pay for all bodily injury from one occurrence". The court said that it could not construe "all bodily injury" to mean bodily injury occurring only to one person for each occurrence. Instead, the only reasonable interpretation is that the policy is limited to paying the each occurrence limit for all injuries sustained by all individuals resulting from one occurrence. The court ordered that the policy's liability limit for the May occurrence is $500,000 and the motion of the insurer was granted.
*For further information, or to contact this author, please leave a comment and your e-mail address in the forum below.