The above question could be asked by someone in Grand Prairie, Hurst, Euless, Bedford, Grapevine, Colleyville, Keller, Dallas, Fort Worth, or anywhere in Texas. So what is the answer? The answer is what all lawyers say in response to all questions put to them: It depends!
It depends on whether or not the insurance policy is ambiguous. If it is ambiguous, then it is open to more than one interpretation. Or if it is doubtful or uncertain, the court must find in favor of coverage.
Experienced Insurance Law Attorneys look at and rely on what courts have done in the past with similar cases when advising a client what may be the outcome to any particular set of facts in a case.
A Texas Supreme Court case decided in 1993, is a good case to look at for guidance in answering the question. The style of the case is, State Farm Fire & Casualty Company v. Joseph C. Reed, et al.
In this case, Frances Reed operated a registered family home for day care services at her home and was registered at the Texas Department of Human Resources as such. In 1987, an eighteen month old child drowned in a puddle of water that settled on a tarp covering a swimming pool at the Reed house. The child had climbed through a hole in the fence that separated a play area from the swimming pole.
The parents of the child sued Reed. Reed notified State Farm Fire & Casualty Company and sought coverage under their policy. State Farm denied coverage concluding that coverage was excluded under the Reed’s policy because the death resulted from a business pursuit.
A declaratory judgment was filed against State Farm for coverage. The trial court, appeals court, and finally this court ruled that there was coverage inspite of State Farms’s contentions.
The policy excluded coverage for business pursuits except those pursuits that are “ordinarily incidental to nonbusiness pursuits.” In deciding this case the court found the phrase in the policy of insurance to be ambiguous because it could broadly exclude any loss associated with the activities of the for-profit day care, or it could be read narrowly to cover a loss that arose from an activity not ordinarily associated with the business.
Lets follows this again – In deciding the case the court found the phrase in the policy of insurance to be ambiguous because it could broadly exclude any loss associated with the activities of the for-profit day care, or it could be read narrowly to cover a loss that arose from an activity not ordinarily associated with the business.
Maintaining a fence, which had a hole in it, was not an activity normally incidental to the day care business. This court ruled there was an ambiguity, or uncertainty in the meaning of the insurance policy exclusion. Thus, the court ruled in favor of coverge.
There are cases after cases making it clear that ambiguities in insurance policies must be resolved by the courts in favor of finding coverage.
Updated: