If an apartment building sign states “No dogs allowed on the premises,” is it unclear because it does not specify whose dogs (the resident, visitor, or contractor) cannot enter the premises? Or, is it ambiguous because it might mean only large or dangerous dogs?

This hypothetical may sound irrelevant to insurers, but it illustrates the type of argument often made in coverage litigation. And, according to courts in two recent opinions, the policy language was clear and the exclusions were enforceable, without additional details or qualifiers. In other words, “no dogs” meant “no dogs.”

Firearms Exclusion

Let's start with a coverage dispute involving a Georgia bar’s GL policy containing a firearms endorsement.¹ The form excluded bodily injury “arising out of the manufacture, importation, sales, distribution, gunsmithing, ownership, maintenance, or use of firearms or weapons.” The shooter was a third-party on the premises. The bar sought coverage for the wrongful death action, contending that the exclusion was ambiguous because it failed to say who had to use the firearm. The argument made was that the shooter could be an employee, a customer, or someone walking in off the street, and the failure to specify to whose use the firearm exclusion applied rendered it ambiguous.

The federal court initially agreed, but later reversed its own decision and held that the lack of limiting language on use “means it applies to anyone’s use” of a firearm. In succinct language, the court stated:

“The absence of limiting language as to whose use is excluded does not render the exclusion ambiguous because breadth does not equate to ambiguity.”

Of course, breadth can be important if exclusions are so broad as to swallow all or almost all coverage, rendering the protection illusory. But that was not the case here.

Occupational Disease Exclusion

In the second case, the Connecticut Supreme Court had an opportunity to interpret an Occupational Disease (OD) exclusion.² The coverage litigation involved asbestos exposure and complex issues such as trigger, allocation, and qualified pollution exclusions. The claims involved on-the-job exposures to an insured’s products at other workplaces.

The OD exclusions were short and simple. The umbrella policy barred coverage of “personal injury (fatal or nonfatal) by Occupational Disease,” and the excess policy simply excluded “liability arising out of Occupational Disease.” Did these exclusions apply to only injured employees of the insured, or also to workers exposed to the insured’s products while employed by other companies?

The insured argued that OD belonged in the realm of Workers’ Compensation, and the exclusion should apply only to its own workers and workplace. The Connecticut high court disagreed, observing that OD is not limited to Workers’ Comp scenarios and that the insurer could have added limiting language if it wanted to and did, in fact, do in other exclusions. The court concluded:

“To read the exclusion as urged by [Insured] would require us to add otherwise non-existent language specifically limiting its application.…”

Reading What’s There

It is refreshing when judges interpret policy language as it is written, without creating ambiguity where none exists. Hopefully, their reasoning will resonate with other courts when policy language is challenged and dissected in the future. A New Year reminder - policy wording matters!

Endnotes

1. Hudson Specialty Ins. Co. v. Snappy Slappy, LLC, 2019 U.S. Dist. LEXIS 73706.
2. R.T. Vanderbilt v. Hartford Accident and Indemnity Co., 2019 Conn. LEXIS 266.