Home-Owners Insurance Company wins dispute over insurance coverage
Virgie Downs, the mother of an injured child, was sued by Home-Owners, a subsidiary of Auto-Owners, to eliminate liability coverage for the child's recreational vehicle injuries. The 14-year old was riding on a 1986 Honda with the homeowner's daughter, when they struck a fence adjacent to the roadway. Downs had alleged that the RV owners were negligent in maintaining the RV's brakes, in allowing children to operate it, and in failing to provide her daughter with a helmet.
Home-Owners filed a declaratory judgment action denying any duty to defend the home owners or to pay any damages assessed against them. It pointed to the fine print in its policy which covered RV liability only if the RV was operated on the insured land. The fence was in the road right-of-way and not on the insured premises.The trial judge believed that the policy language was unclear and therefore must be interpreted to provide coverage. The Court of Appeals reversed, holding that the trial court's interepretation of the policy language was "absurd" and that the insurer would only be required to indemnify risks that it had agreed to insure.