Failure to be an “Insured” Defeats Coverage

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While driving her Honda CRV in Clark County, Nevada, Brittney Gardineer was involved in an accident with a Ford Explorer driven by Lynette Hill, who is now known as Landon Hill (“Hill”). The Ford Explorer was owned by Hill’s father-in-law, Dennis Hill (“Dennis”), and Hill was driving it with his permission. In American National Property and Casualty Company v. Brittney L. Gardineer, No. 20-15826, United States Court of Appeals, Ninth Circuit (February 11, 2022) the Ninth Circuit was asked to determine if an exception to an exclusion created coverage for a permissive driver of an insured’s car.

Under Nevada law, the threshold question in construing an insurance policy is whether the relevant language of the policy is ambiguous or unambiguous. As with all questions of insurance-policy construction, the court must consider the relevant language in the context of the “policy as a whole” and should avoid any interpretation that would “lead to an absurd or unreasonable result.”

Exclusion 29 states that certain losses are not covered by the umbrella policy, even if they would otherwise fall within the terms of that policy’s coverage clause. However, Exclusion 29 then states that the “exclusion” it sets forth “does not apply” if relevant “coverage” is provided by “primary insurance described in the Declarations.”

However, because Hill’s liability is not covered by the language of the umbrella policy’s coverage section, she is not an insured, the removal of the particular exclusion set forth in Exclusion 29 makes no difference vis-à-vis her liability.

Dennis’s umbrella policy does not require ANPAC to indemnify Hill for her liability from the accident with Gardineer since she was not an “insured” and not covered by the basic insuring agreement of the umbrella policy.

ZALMA OPINION

The Ninth Circuit read the entire policy and reached the only proper and reasonable decision: a person needs to fit within the definition of “insured” to be able to obtain defense or indemnity from an insurance policy. Since Hill was not an insured of the umbrella policy she had no right to indemnity from that policy. Hill did not. The Ninth Circuit’s opinion could have stopped at the point it determined Hill was not an insured.

© 2022 – Barry Zalma

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