January 1, 2019

Phrase Has Same Meaning Wherever It Is Found In Insurance Policy; Erie Indemnity Company v. Estate of Harris

Category: Indiana Law Review | Author: | Share:

Questions over insurance coverage is at the heart of lots of litigation, so the manner in which the Indiana Supreme Court deals with coverage issues is notable. In this case, the Court was asked to determine whether an employer’s commercial auto policy covered an injury caused by an uninsured driver while the employee was at home.

Erie issued a commercial auto policy to Formco in 1993, which was renewed every year through 2010. The declarations page for that policy identified Formco as the only insured. However, the “Autos Covered” section identified a 2004 Toyota pickup truck as a scheduled vehicle. Formco allowed Harris to drive this truck as his primary vehicle for personal and business use.

The policy contained an UM endorsement which promised:

We will pay damages for bodily injury and property damage that the law entitles you or your legal representative to recover from the owner or operator of an uninsured motor vehicle . . . . Damages must result from a motor vehicle accident arising out of the ownership or use of the uninsured motor vehicle . . . as a motor vehicle and involve . . . bodily injury to you or others we protect.

Underneath this promise followed the section entitled OTHERS WE PROTECT, which listed 4 categories of potential claimants for uninsured motorist benefits.

On August 6, 2010, Harris was struck and killed by an uninsured motorist while operating his personal riding lawnmower at his private residence. His estate submitted a claim for uninsured motorist benefits under the Erie policy. Erie denied that claim, and a lawsuit ensued. Erie moved for summary judgment, claiming that Harris’s claim was not covered by the policy. The trial court granted Erie’s motion, the Court of Appeals affirmed, and the Court granted transfer.

The issue on appeal was whether Harris was an “others we protect” in the UM endorsement. Erie argued that this phrase had the meaning described in the OTHERS WE PROTECT section. The Estate argued that it protected Harris, as he was “specifically listed in the Erie Policy for purposes of protection and coverage.” The Court recognized that Harris’s construction made “others we protect” and OTHERS WE PROTECT have different meanings, and it did not like this result.

Rather than finding the phrase “others we protect” to be ambiguous, the Court found it “eminently reasonable for two phrases consisting of identical words and located near one another to share the same meaning.”

While it is not a “definition” per se, the proximity and similarity between the phrases make it is reasonable to understand that the OTHERS WE PROTECT section serves as an explanatory list outlining who can be included in “others we protect.” In other words, the section gives meaning to the corresponding phrase. Erie could have (and probably should have) removed any doubt as to the phrase’s meaning by making “others we protect” a defined term rather than a standalone section. But for whatever reason, it did not and invited this litigation. Erie’s drafting miscues notwithstanding, we still think it obvious that OTHERS WE PROTECT gives meaning to “others we protect.” And more importantly, we believe ordinary policyholders, looking at the four corners of the Policy, would agree that “others we protect” means OTHERS WE PROTECT. We therefore find Erie’s proffered interpretation a reasonable one.

The Estate’s interpretation, in contrast, was unreasonable. First, the Court noted that Harris was not named as an insured in the policy or identified as a protected or covered driver. The Estate argued that Harris was a scheduled driver on Formco’ application and Erie’s underwriting documents. But the Court found that it was unreasonable to rely on these documents when interpreting the policy.

To arrive at the Estate’s strained interpretation, a policyholder must read additional outside information into the Policy and UM Endorsement and then draw conclusions based on that very information. That strikes us as unreasonable. We do not believe an ordinary policyholder would take that approach.

Second, the Estate’s interpretation meant that there would be three categories of insureds: “you,” “others we protect,” and “OTHERS WE PROTECT.”

We see immediately that this view produces two categories that have the same name but different meanings. For example, the phrase “others we protect” would seemingly include any person identified in an application or underwriting documents while OTHERS WE PROTECT would include even more remote, additional people who could be covered depending on the situation or their relationship to “you.” We do not believe an ordinary policyholder would understand the same phrase to have these different meanings, especially when there exists a self-contained explanation on the same page of the endorsement.

Thus, Harris was not covered by the policy, and the trial court properly granted summary judgment to Erie.

Lessons:

  1. The phrase “others we protect” has the same meaning wherever it is found in an insurance policy.
  2. Other documents (like an insurance application) should not be used to interpret an insurance policy if the policy is unambiguous.