Writing insurance law textbooks (Casualty Insurance Claims,Excess Liability – Rights and Duties of Commercial Risk Insuredsand Insurers, and a new edition of Casualty Fire &Marine Investigation Checklists) it is occasionally possibleto predict what a court might rule, or what might change on appeal.In preparing for the new edition of Checklists, I includedan instruction regarding the definition of a “named insured” inpersonal liability (auto, homeowners) forms, when the definitionincludes a “spouse.” But with the states in turmoil over gaymarriage at the time, just who is a “spouse” if one was married ina state allowing gay marriage, but had a claim in a state that didnot recognize such marriages? It was one of those fickle pickles ofinsurance policylanguage.

No sooner had the text been submitted than the Roberts Courtruled in favor of gay marriage, now universal in all states. Hencemy explanatory paragraph was moot. I contacted my editor at ThomsonReuters West, and we elected to delete it. He then checked withJohn DiMugno (my co-editor on Catastrophe Claims: InsuranceCoverage for Natural and Man-made Disasters and the editor ofInsurance Litigation Reporter).

John replied, “As to cases addressing whether a same sex spousequalifies as an insured under the omnibus clause of an auto orhomeowners policy, I don't think there are any [court cases.] Idon't recall seeing one, and I at least look at every insurance lawdecision added to the Westlaw database on a daily basis. If I sawone, I would cover it in ILR. I'm sure the reason no caselaw exists (at least to my knowledge) is that insurers have notquestioned their obligation to cover same-sex spouses in statesthat recognize gay marriage. If insurers did contest coverage, theywould surely lose, given the universally recognized principle thatambiguities in an insurance policy must be construed in favor ofcoverage. With respect to other types of insurance, while theWestlaw database contains many decisions addressing the right ofsame sex couples to receive employment-related spousal benefits, noinsurer (to my knowledge) has contested coverage once the employerelects to provide such benefits.”

My editor forwarded this to me with the question, “Is polygamycoming?” Considering that so many of us in the 21^stcentury have multiple spice (one spouse, two or more spice, justnot all at once but one after the other), who knows what thebalance of our new century will bring?

(Photo: Shutterstock.com)

Politics, court decisions and theadjuster

Adjusters must remain constantly aware of political and legaldecisions that may affect coverage interpretation. Occasionally, acourt decision may even become language in a policy, such as theInchmaree Clause in an Ocean Marine Hull policy that includesbreakdown of machinery aboard the vessel, providing such loss didnot result from a lack of due diligence of the insured. Theclause's name comes from a maritime court decision involving avessel named Inchmaree. Given the number of recent cruiseship problems, policy interpretation must keep marine adjusters ontheir toes figuring out whether or not coverage applies to adisaster.

Who is insured is always an issue that must be verified in everyclaim. (For some claim reps that might come as a surprise.) Thereare many court cases involving “permissive use” in commercialpolicies – the vehicle custodian may be allowed some limitedpersonal use, but that may not extend beyond his or her “spouse,”and the custodian has no permission to allow others to use thevehicle.

Even the issue of “use” has drawn court attention. If a vehicleis used by the insured but the passenger decides to commit a“drive-by shooting” and injures a passer-by, is the injured victimentitled to sue the insured driver under the auto policy for “useof” the vehicle even if the insured did not anticipate that hispassenger was going to shoot someone? There have been a number ofcases fought on this issue and courts have gone both ways in theirdecisions.

We can't second-guess how a court might rule, but as the editorof the Insurance Litigation Reporter suggests, “aninsurance policy must be construed in favor of coverage” wheneverthe issues are not clear. The courts may not always do that, butthe insurer's adjuster should. It saves a lot of legal expense inthe long run.

Ken Brownlee, CPCU, is a former adjuster and risk managerbased in Atlanta, Ga. He now authors and edits claims-adjustingtextbooks.