The Supreme Court of Nevada held that even if an insured's noncompliance with an exclusion is not causally related to a loss, the exclusion may apply if it is unambiguous, narrowly tailored, and essential to the risk undertaken. The case is Griffin v. Old Republic Ins. Co., No. 44902, 2006 WL 1278704 (Nev. May 11, 2006).

 

A plane owned and operated by Kevin Jensen crashed in Robert Griffin's backyard, causing severe personal injuries to Griffin . Jensen was insured under an aviation policy issued by Old Republic . Old Republic claimed it had no obligation to pay for Griffin 's damages because Jensen did not possess an in-force airworthiness certificate at the time of the crash.

 

Griffin argued that “the modern trend is to require a causal connection between an insured's noncompliance and the loss for the insurer to avoid liability.” Old Republic countered that a causal connection is not required by Nevada law or by the majority of jurisdictions that have considered the issue.

 

The court said, ” Old Republic 's insurance policy unambiguously states that an airworthiness certificate must be in full force and effect and that the aircraft must be subjected to appropriate airworthiness inspections in order for coverage to apply.” The court, therefore, refused to imply a causality requirement where no causal connection language exists.

 

The court found the exclusion to be unambiguous and listed two other criteria for determining if an exclusion is not required to be causally connected to the loss: if it is narrowly tailored and if it is essential to the risk undertaken by the insurer.

 

The court said, “An exclusion is narrowly tailored if it 'clearly and distinctly communicates to the insured the nature of the limitation.'” The exclusion in this case clearly states that coverage does not apply if the insured does not have an in-force airworthiness certificate.

 

The court also said, “An exclusion is essential to the risk undertaken by the insurer if the clause excludes activities that are material to the acceptance of the risk, or are material to the hazard assumed by the insured.” The court found that an airworthiness certificate is essential because it ensures regular maintenance and annual inspections of the aircraft.

 

Because the exclusion met the criteria, the court ruled that the exclusion applied.