In National Mut. Ins. Co. v. Curtis, 2007 WL 1599293 (Ind. App., 2007), the victim of a trampoline accident brought an action against the homeowner's insurer for a declaratory judgment that the insured's policy did not exclude liability coverage. The insurer filed a counterclaim and a cross-claim against the insured for declaratory judgment based on a trampoline exclusion. The Circuit Court entered summary judgment that the policy provided coverage.

 

The insurer appealed, disputing the trial court's denial of its motion for summary judgment. Specifically, the insurance company contended that as it was the insured's duty to examine the contents of their insurance policy, which included the exclusionary clause in clear, easily understandable and unambiguous language, and stating it should be enforced against the insured. On the other hand, the insured, focusing on the placement of the exclusionary clause, asserted that its inclusion in the Supplemental Extensions section amounted to an ambiguity, which should result in the insurer providing coverage for the victim's injuries.

The Court of Appeals agreed that the trampoline exclusion of liability coverage was inconspicuous at the end of the supplemental extensions to the homeowners policy and that it was unenforceable due to structural ambiguity in the policy.

 

According to the court, because the exclusion was buried in a completely unrelated section fourteen pages after the exclusions in the main policy, the two-page extensions form did not employ any significant bolding, capitalization, or interlineations to clarify and set apart the separate exclusions. Further, the structural complexity of the policy as a whole obscured the disputed clause, and a reasonable person would not realize its existence and application, regardless of a duty to read the policy.

The court explained that although insurers do have the right to limit their coverage of risks and, therefore, their liability by imposing exceptions, conditions, and exclusions, to be enforced these limitations must be clearly expressed and must be consistent with public policy.

 

Thus, the court held that the trial court properly found that the insured's homeowner's policy provided coverage for the victim's injuries under the personal injury provisions because the policy did not clearly express an exclusion of liability coverage for injuries arising out of the ownership or use of a trampoline.