American Policyholders' Ins. Co. v. Smith
| Decision Date | 13 March 1980 |
| Docket Number | No. 79-262,79-262 |
| Parties | AMERICAN POLICYHOLDERS' INSURANCE COMPANY v. Edward F. SMITH. |
| Court | New Hampshire Supreme Court |
Wiggin & Nourie, Manchester (Kenneth G. Bouchard, Manchester, orally), for plaintiff.
Alexander M. Lachiatto, Franklin, by brief and orally for defendant.
This is a petition for declaratory judgment under RSA 491:22 to determine coverage under a manufacturers' and contractors' liability insurance policy issued by the plaintiff to the defendant, Edward F. Smith. The principal issue is whether an exclusion that purports to modify the property damage coverage extended by the policy is sufficiently clear and adequately positioned so that an ordinary person in the position of the insured would understand that the policy coverage was modified by the exclusion. We find no modification of coverage.
In 1975, Mr. Smith, a self-employed general contractor, was hired to install a drainage pipe at a private residence owned by Jeanne Schoolcraft. As Smith excavated the drainage trench, the bucket of his backhoe struck an underground gas main that serviced the house. The resulting explosion damaged the house and various items of personal property. Schoolcraft then brought suit against both Smith and Gas Service, Inc., the gas supplier. Gas Service, Inc. brought a third party action against Smith seeking indemnity in the event it was held liable to Schoolcraft.
Mr. Smith made a demand upon his liability insurer, American Policyholders' Insurance Company, to provide him with insurance coverage and a legal defense. Contending that the policy extended no coverage for this type of occurrence, the plaintiff filed a petition for declaratory judgment and later amended it to assert that the company also had no obligation to defend Smith in the suit brought by Gas Service, Inc.
Following a hearing, the trial court ruled that the defendant was entitled to coverage under the policy. The plaintiff excepted and Contas, J., reserved and transferred all questions of law to this court.
The first issue before us is no stranger to this court. It is whether an ordinary person in the insured's position would understand that a certain exclusion limited the general policy coverage. See Commercial Union Assurance Co. v. Gilford Marina, Inc., 119 N.H. ---, 408 A.2d 405 (1979); Commercial Union Assurance Co. v. Gollan, 118 N.H. 744, 394 A.2d 839 (1978).
The relevant policy provision takes the form of an additional "declarations" page attached to the defendant's multi-page general liability automobile policy. The "declarations" page contains a section entitled "General Liability Hazards," which not only specifies the advance premiums required for the defendant's bodily injury and property damage coverage, but also includes a subsection entitled "Description of Hazards." Located directly beneath that subsection title is the classification code number, 62-1511xcu, which is immediately followed by the word "Excavation."
On the reverse side, under the "liability" section, the insurer agrees to
pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of A. bodily injury or B. property damage to which this insurance applies, caused by an occurrence, and . . . to defend any suit against the insured seeking damages on account of such bodily injury or property damage . . . . (Emphasis in original.)
Following this language is a list of seventeen exclusions from coverage including exclusion (q)(3), which provides that the coverage does not extend "to property damage included within . . . the underground property damage hazard in connection with operations identified in this policy by a classification code number which includes the symbol 'u'." (Emphasis in original.) The "underground property damage hazard" as defined in the "definitions" section of the automobile policy It is the plaintiff's contention that an ordinary person in the insured's position would understand that the grant of coverage extended for losses arising from excavation work is modified by exclusion (q)(3) to exclude from coverage any damage to underground property or any other property that resulted from the defendant's backhoe striking the gas main.
As we have noted before, "(i)nsurance policies have long been under attack in this jurisdiction for their confusing language" and misleading forms. Commercial Union Assurance Co. v. Gollan, 118 N.H. 744, 745, 394 A.2d 839, 841 (1978...
To continue reading
Request your trial
-
Trombly v. Blue Cross/Blue Shield of New Hampshire-Vermont
...company, it is not consistent with the consumer's interest in understanding a particular policy. See American Policyholders' Ins. Co. v. Smith, 120 N.H. ---, ---, 412 A.2d 749, 751 (1980). The parties agree that prior to 1976 the contract was interpreted to provide full coverage to those in......
-
Schaefer/Karpf Productions v. CNA Ins. Co.
...production and tape manufacturing, as opposed to scuba diving instruction or transmission repairing. (American Policyholders' Ins. Co. v. Smith (1980) 120 N.H. 202, 412 A.2d 749, 750-751; Robinson, Insurance Coverage Of Intellectual Property Lawsuits, (1989) 17 AIPLA Q.J. 122, 125.) The dec......
-
Curtis v. Guaranty Trust Life Ins. Co.
...cases we recognized "the right of an insurer to contractually limit the extent of its liability," American Policyholders' Ins. Co. v. Smith, 120 N.H. 202, 205, 412 A.2d 749, 751 (1980), holding that it must do so "through 'clear and unambiguous policy language.' " State Farm Mut. Auto. Ins.......