The Supreme Court was asked to decide whether an off-road vehicle (“ATV”) is covered by a homeowner’s insurance as a “farm-type” vehicle. The district court found that the language of the insurance contract was ambiguous and ruled in favor of coverage. IN Erie Insurance Exchange v. Diamond Danelle Jones, An Infant, By Her Mother And Next Friend, Tracy Hardison, No. 210443, Supreme Court of Virginia (April 14, 2022) interpreted the policy as written.
Diamond Jones rode as a passenger in the back of an ATV. The daughter of Jennifer and Richard Rekowski (“Rekowskis”) drove the vehicle. While Jones was riding, a tree branch struck and injured her. The accident did not occur on Rekowski’s property.
Rekowskis was insured by a homeowner’s insurance policy issued by the Erie Insurance Exchange (“Erie”). The section on exemptions in the insurance provided that the insurance does not cover “[b]accidental damage, property damage or personal injury resulting from ownership, maintenance or use of. . . any motor vehicle on land. ” However, vehicles are not exempt if “they are a recreational motor vehicle which is not designed for use on public roads when they are in an insured place; or they are a lawn or yard type vehicles or snow thrower, wherever it is used or present, if it is not subject to motor vehicle registration … “
The policy does not define “lawn or yard type vehicles.” If the vehicle in question is a “recreational motor vehicle”, the insurance would not cover the accident as it did not occur “in an insured place”. If the vehicle is a “lawn or yard” vehicle, the insurance would cover the accident.
Jones sued for his injuries to the Rekowskis family and their daughter. In her reply, Erie claimed that the insurance did not cover the accident. Jones then brought this action for declaratory exemption against Erie, the Rekowskis family and their daughter, jointly and severally, and sought a judgment that Erie is liable to pay the insurance claim. Rekowskis never submitted a response. The trustee for Rekowski’s daughter submitted a response and approved the final order.
Testimonies in the deposits submitted in support of the claims for summary judgment showed that the ATV in question was a 2016 Honda TRX250TE. It has an engine of 250 cubic centimeters. Bill Uhl, an expert on the plaintiff “in the field of off-road vehicle use”, explained that the vehicle in question is a “utility model designed for any type of use that the owner has in mind.” He said that it is possible to buy a towbar for the vehicle and that the user can attach various implements such as sliders, rototillers or seed drills. He also testified about other uses for such a vehicle on a farm.
Rekowskis has never used this vehicle as a lawn or agricultural vehicle or owned any accessories for it. Jennifer Rekowski described it as a “bitty little quad bike. It’s the smallest quad bike they make.” She said the machine “barely pulls my daughter.” She did not know of a place to attach implements. Richard Rekowski also did not believe that any agricultural equipment could be attached to the ATV due to its limited power.
The district court concluded that the insurance covered the accident and reasoned that “vehicle of the lawn or yard type” was an ambiguous language, and therefore it should be interpreted against the person who established it.
Courts interpret insurance, just like other agreements, by determining the intentions of the parties based on the words they have used in the document. When a disputed insurance term is unambiguous, we apply its simple meaning as it is written. On the other hand, “disputed insurance language is ambiguous and can of course have more than one meaning, we interpret the language in favor of coverage and against the insurer. An agreement is not ambiguous just because the parties disagree on the meaning of the terms used.
Policies generally exclude motor vehicles from coverage, but an exemption from the broad exemption provides coverage for “a lawn or farm type vehicles or snow thrower. “The evidence presented, including by the plaintiff’s expert, shows that this ATV could potentially be used for either recreation or for use on a farm. It is a versatile vehicle. A multi-purpose vehicle with the potential to be used on a farm is not a vehicle of “farm type” if not used for agricultural activities. No evidence shows that this ATV is designed for primary use as an agricultural vehicle such as a combine harvester or tractor. To read “farm type vehicle” as covering all vehicles that could potentially be used on a farm would create an exemption so wide that it would render the coverage limits meaningless because any vehicle such as an SUV or even a motorcycle could be used for farm operations.
Therefore, the Supreme Court concluded that the language “lawn or yard type vehicle or snow thrower” by law does not cover a multi-purpose vehicle such as an ATV.
In summary, the exemption for a farm-type vehicle does not apply, and the exemption from coverage in the homeowner’s policy for “land motor vehicles[s]”Applies because the event did not take place in an insured place. Therefore, the Supreme Court concluded that the district court erred in rejecting Erie’s claim for summary judgment and changing its decision and finding for the insurer.
Many litigants and judges bravely try to find an ambiguity in the language of the insurance police to get a defense for an insured or compensation for an injured party. But simply because parties differ on the meaning of language in a policy that does not make the terms ambiguous. The ATV in this case was a motor vehicle on land, it was driven outside the insured’s premises and it was never used for any yard, lawn or snow thrower. According to a homeowner, the clear and unambiguous language of the insurance deprived the owner of the liability insurance cover.
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Barry Zalma, Esq., CFE, now limits his internship to the position of insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry. He is available at http://www.zalma.com and firstname.lastname@example.org.
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