Monday, January 11, 2010

Household Exclusion In Insurance Policy Determined Ambiguous

In State Farm Mutual Automobile Insurance Company v. Menendez (3D08-2969), the Third District affirmed the trial court's decision "that the household exclusion in the automobile insurance policy....was ambiguous."  The court stated:
The named insured permitted her granddaughter, Fabiola G. Llanes (“the named insured’s granddaughter”), to use her vehicle. While operating the vehicle, the named insured’s granddaughter negligently collided with another vehicle, resulting in injuries to herself, her parents, and the named insured. When the accident occurred, the named insured’s granddaughter was living with her parents, and the named insured was living at a separate address.
Following the accident, the parents filed suit against the named insured seeking to recover damages for their bodily injuries, and the named insured sought coverage from State Farm. State Farm denied coverage for the parents’ injuries based on the policy’s household exclusion.
The household exclusion referred to earlier provides, in pertinent part, that there is no liability coverage for any bodily injury to “[a]ny insured or any member of an insured’s family residing in the insured’s household.”...The definitional section of the policy provides that “insured” means “the person, persons or organization defined as insureds in the specific coverage. . . .” “You or your” is defined as “the named insured or named insureds shown on the declaration page.”
It is undisputed that Menendez is the “named insured” shown on the declaration page. It is also undisputed that she permitted her granddaughter to use the insured vehicle. Based on the above definitions, it is clear that both Menendez and her granddaughter are insureds and the household exclusion bars any bodily injury claims asserted by them. However, as to the bodily injury claims of the parents, the household exclusion is susceptible to more than one reasonable interpretation.
The parents however suggest that the use of the word “the” before “insured” refers to the insured named in the declaration, Gilda Menendez. Thus, for the exclusion to apply, the family member of “an insured” would have to reside in the same household as the named insured. Because the named insured’s granddaughter’s parents do not reside in the same household as the name insured, the parents argue that the household exclusion cannot be applied to bar their bodily injury claims.
As the language of the household exclusion is ambiguous and because it is susceptible to different, but reasonable, interpretations, we must construe the language in favor of the insured and against the insurer. We therefore conclude that the trial court correctly entered final summary judgment in favor of the appellees and against State Farm.1 Accordingly, we affirm the order below.
UPDATE: The Florida Supreme Court accepted jurisdiction to review this decision. The docket can be viewed HERE, Court's order accepting jurisdiction can be viewed HERE and you can view the briefs at the links below: 


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