Home owners in Grand Prairie, Arlington, Pantego, Fort Worth, Lake Worth, Dallas, Mansfield, De Soto, Duncanville, and other places in Texas would naturally wonder at times about exactly what types of coverages they have on their homeowners policies. Of course the answer is a lawerly “it depends.”
One case to look for in guidance for part of the answer is found in the case, Gomez v. Allstate Texas Lloyds Insurance Company. This is a 2007, Fort Worth Court of Appeals case. This is a liability insurance dispute concerning coverage under a homeowner’s policy for bodily injury arising out of a “four-wheeler” all terrain vehicle. One of the issues was the trial court’s interpretation of the scope of the policy’s recreational vehicle exception to the motor vehicle exclusion. Another issue was whether or not Allstate had a duty to defend the lawsuit that had been filed.
The Gomezes sued Jamy and Lara Johnson for injuries alleged to have occurred when Austin Gomez (6 years old) was a guest at the Johnson’s home, and Jamy placed Austin on a four-wheeler with no protective gear and allowed him to operate the vehicle. The lawsuit papers allege that Austin lost control and “went over an embankment.” The lawsuit alleges several things that the Johnson’s did wrong in contributing to the cause of this accident.
The Allstate policy, in the Exclusions section, does not apply to:
“f. bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of:
(1) motor or engine propelled vehicles or machines designed for movement on land, …
However this section does not apply to:
(1) motor vehicles which are not subject to motor vehicle registration and are:
…
(c) designed and used for recreational purposes; and are: …
(ii) owned by an insured while on the residence premises. …
(f) used exclusively on the residence premises.”
The court discussed insurance policy interpretation rules, which apply the rules of contract construction. In so doing the court stated, “In applying these rules, our primary concern is to ascertain the parties’ intent as expressed in the language of the policy. When determining the intent of the parties, we examine only the language of the insurance policy to see what is actually stated. We must consider all of the provisions with reference to the entire policy; no single provision will be controlling. If a policy is so worded that it can be given a definite or certain meaning, then it is unambiguous as a matter of law. A policy is not ambiguous merely because the parties advance conflicting contract interpretations.”
Their next statement is important to Insurance Law Attorneys. “Only after we determine that the policy’s provision is ambiguous will we construe it liberally in favor of coverage.” This means that when a policy can reasonably be read to mean more than one thing the courts will try to find it to read in favor of coverage on a claim.
The “eight corners rule” was also discussed by this court. Under the eight corners or complaint-allegation rule, an insurance company’s duty to defend a lawsuit is determined by the third party plaintiff’s pleadings, considered in light of the policy provisions, without regard to the truth or falsity of those allegations. The rule takes its name from the fact that only two documents are ordinarily relevant to the determination of the duty to defend: the policy and the pleadings of the third-party claimant.
There were arguements put forth by both parties to the lawsuit which the court looked at closely and discussed the separate sides. The opinion is about ten pages long and is good reading in getting an understanding of how the courts look at these types of cases.
One of the arguements in this case was over where it was that the four-wheeler was located when the alleged accident occurred. Applying the eight corners rule while looking at the pleading on file with the court, this court ruled that it was hard to tell exactly where the accident occurred and thus the insurance company had a duty to at least defend the lawsuit even though it may later be determined that they did not have a duty to pay any resulting judgment from the lawsuit.
At this point the court got into a discussion about the distinction between an insurance company’s duty to defend a lawsuit and its duty to indemnify. As the court stated, “The duty to defend and the duty to indemnify are not synonymous. Rather, these duties are separtate and distinct. Unlike the duty to defend, the duty to indemnify is not based on the eight corners of the policy and the underlying petition, but on the actual facts that form the underlying claim. While an insurer’s duty to indemnify can be negated for the same reasons an insurer’s duty to defend is negated, the duty to indemnify cannot be resolved before the duty to defend.”
Probably the bottom line here is that these insurance disputes can be very confusing and this case is an illustration of why an experienced Insurance Law Attorney should be consulted.
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