Insurance policies

When insurance policies are not concerted: the sad song of exceptions of instrumentality

March 4, 2022 – Joe had a little too much to drink at a very fun party. He loses his glasses but decides to drive home anyway. The road is blurry – is it the booze or his missing glasses?

Suddenly there is a loud crash and the airbag knocks Joe out. The driver of the other vehicle is in poor condition. Joe’s smartwatch and smart car both call 911.

A week later, the other driver is released from the hospital and Joe is out on bail. It’s time to pay for the accident. Joe calls… his home insurance company?

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It may surprise you that some lawyers actually expect a bad driver’s insurer to cover this type of accident. But why?

Sometimes homeowners or business liability insurance policies have higher policy limits than bad driver car insurance. For example, many states have relatively low minimum auto liability limits – often as low as $15,000 per person or $30,000 per accident. A seriously injured plaintiff looking for more money might be tempted to apply for coverage under a home insurance policy with a liability limit of $500,000 – even if the alleged liability is caused by a car on highway away from home assured.

While auto insurance policies generally limit coverage to automobile-related liabilities, most home insurance policies do not limit coverage to accidents that occur at home. Similarly, general liability insurance policies insure businesses against a relatively wide range of liabilities.

Virtually all liability insurance policies have exclusions that narrow the scope of coverage, such as those that apply to the conduct of the insured (for example, intentional acts) or to certain types of losses (for example, damage to the property of the insured). An “instrumentality” exclusion is a type of exclusion that prohibits coverage for certain liabilities arising from a device, which may be (or, in some cases, should be) covered by another type of policy.

The “instrumentality” exclusions generally apply not only to the “use” of the instrument, but also to ownership, maintenance, possession, etc. These exclusions generally apply generally to liabilities that “arrange” from the instrument.

The “motor vehicle” exclusion illustrates an “instrumentality” exclusion. Applying the “motor vehicle” exclusion in a home insurance policy to an ordinary motor vehicle collision can be simple. But in unusual circumstances and with creative attorneys, courts are sometimes asked to rule that an instrumentality exclusion does not preclude insurance coverage for injuries resulting from instrumentality.

Many courts have taken the approach that, in the absence of an additional cause to which the damage could be uniquely attributed (i.e., a second dangerous instrument), damage caused by the excluded instrument is not covered. In the leading California Supreme Court case, State Farm Mutual Auto Ins. Co. c. Partridge, 10 Cal.3d 94 (1973), the insured had a firearm with a modified rapid-fire trigger in the car. The gun fired when the car hit a bump, injuring one of the passengers. Because the modified weapon was independently dangerous and could have caused injury whether or not it was paired with a car, and because the injury was caused by a bullet that was fired from the weapon, the court ruled that the exclusion of motor vehicles from the owners policy does not cover bar.

Under the Partridge approach, an instrumentality exclusion applies even if other acts of negligence contribute to the injury, unless the other acts of negligence cause injury through the insured’s use of an instrument not excluded.

The motor vehicle exclusion is probably the most common instrumentality exclusion. Most liability policies that are not designed to cover motor vehicle liabilities exclude liability arising from the use of a motor vehicle, as drivers and businesses should have (or at least should have) separate car insurance. But home and general liability insurance policies often exclude liabilities arising from the use of other “instruments” such as: (1) personal watercraft, (2) aircraft, and (3) equipment exclusions. mobiles.

For example, parents reportedly allowed their adult son to drive a boat after drinking at home. The son drives the boat with his friend pulled on an inner tube behind the boat. The inner tube hits an object in the water and the friend is seriously injured.

In Farmers Ins. Group v. Johnson, 43 Wn.App.39 (1986), a Washington Court of Appeals considered this drinking water pipe scenario and found that the watercraft exclusion in the parent homeowners policy applied at the cover of the bar. The Johnson court held that “the obvious purpose of excluding watercraft was to limit the extent of liability for boating injuries”.

Exclusions for various vehicles and mobile equipment sometimes overlap. But the “instrumentality” exclusions are not limited to vehicles and equipment. Homeowners or general liability insurance policies could potentially include firearms and controlled substance exclusions.

Many “instrumentality” exclusions prohibit coverage of something that should have been insured separately. At the most basic level, for example, home owners and business owners who use vehicles must also purchase personal or commercial auto insurance. Similarly, a homeowner or business owner who owns a boat must purchase a separate watercraft insurance policy.

On the other hand, certain types of risks are unlikely to be covered by a more specialized policy, but they may nevertheless be subject to an instrumentality exclusion. Consider this example: an owner leaves his prescription medication in a place accessible to his guest. The guest, who is in a vulnerable mental state, takes too many pills and sadly dies.

A Massachusetts court in Mass. Prop. Ins. Subscription Ass’n c. Gallagher, 75 Mass.App.Ct. 58 (2009), addressed this issue and found that the homeowners policy does not cover the use of controlled substances, even if the insured carelessly left the pills unattended. The Gallagher court upheld a judgment in favor of the insurer, finding that the exclusion of controlled substances excluded cover.

While the insured’s alleged negligence in leaving the pills within easy reach was grounds for liability, the fact “”[t]That other causes of injury may also exist does not preclude determining that the injury arises from activities excluded from coverage by the policy. (quote omitted).

Unlike motor vehicle or watercraft exclusions, there is no widely available personal insurance policy specifically intended to cover the risk of injury from illicit or controlled substances. As the Gallagher case points out, not all dangerous instruments can be easily insured simply by purchasing the “right kind” of insurance. Nevertheless, instrumentality exclusions in home and general liability insurance policies are likely to be applied to globally remove coverage for virtually all injuries or damages associated with the excluded instrumentality.

One way to minimize the impact of general instrumentality exclusions that can eliminate coverage from home or general liability insurance policies is for policyholders to purchase personal or commercial umbrella policies. An umbrella policy may offer higher limits and cover a wider range of potential liabilities, including liabilities arising from the ownership, maintenance or use of instruments that might be excluded under one policy. ownership or general liability.

On the other hand, some umbrella policies may also exclude certain instruments or limit coverage of liabilities arising from certain instruments to the extent that the underlying insurance policy covers the instrument. Therefore, purchasing an umbrella policy can help, but it is not a substitute for adequate insurance for potentially dangerous instruments such as cars and boats.

Erin Mindoro Ezra is a regular insurance coverage columnist for Reuters Legal News and Westlaw Today.

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The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and non-partisanship by principles of trust. Westlaw Today is owned by Thomson Reuters and operates independently of Reuters News.