A Louisiana court of appeals ruled that an automobile policy did not provide coverage for a boat being transported by the insured in Allstate Ins. Co. v. Reid, No. 2004 CA 1620, 2005 WL 3194297 (La. App. Nov. 30, 2005).
Robert Reid was driving his truck and pulling a boat and trailer owned by his friend, Kenneth May, when he veered off the road and struck a bridge rail with the boat and trailer. Both the trailer and the boat were damaged.
May's insurer, Allstate, paid for the damage and then filed a subrogation claim against Reid. Reid filed a third party demand against his insurer, State Farm, which provided liability insurance on his truck. State Farm denied coverage and refused to tender a defense.
The trial court found that Reid and May were each 50 percent at fault in causing the boat damage and ruled that State Farm owed for one-half of the damage. State Farm appealed.
The appeals court looked to two separate sections of the policy that addressed trailer coverage. The liability portion of the policy provided that “trailers designed to be pulled by private passenger car or utility vehicle, with some exceptions as to the type of trailer, are covered 'while owned or used by an insured.'” The liability portion of the policy excluded coverage “for any damages to property owned by, rented to, in the charge of or transported by an insured.”
The second provision, in the comprehensive/collision coverage section, provided $500 for physical damage to nonowned trailers, which State Farm paid to Allstate.
State Farm argued that the exclusion under the liability section clearly excluded coverage for the damage to May's boat. Allstate and Reid, though, countered that the exclusionary language was ambiguous. Allstate said that “the policy specifically provides coverage for a non-owned trailer pulled by the State Farm insured, and under that coverage, there is no specific exclusion of the contents within the trailer from coverage.” Allstate reasoned that, even if the boat was not covered under the general liability section, if the trailer was covered, then the boat belonging on the trailer should be covered.
The court, however, said, “The policy plainly excludes damage to the boat, which was being transported by Reid, and denies coverage for any damage to the non-owned trailer beyond the $500.00 limit.” Thus, there was no coverage under the policy for May's boat.
Reid and Allstate also asserted that the exclusion in State Farm's policy violated the Louisiana Motor Vehicle Safety Responsibility Law. But, the court said that the intent of the legislature was obvious and that the law provided that “liability for property transported by the insured may be excluded from coverage under a liability insurance policy.” Thus, the court found State Farm's limitation to be valid and reversed the trial court's judgment.