Social Hosts Liability and Homeowners Motor Vehicle Exclusion
The insurer brought an action seeking a declaration regarding its obligations to indemnify the insureds under a homeowners policy for their liability to a third party for injuries arising out of a motor vehicle accident occasioned by the negligent operation of an underage minor under the influence of alcohol. The minor was served alcohol while a guest at the insureds' home. This case is Massachusetts Property Insurance Underwriting Association v. Berry, 954 N.E.2d 584 (2011).
Bernier and Caron own a home and are insureds under a homeowners policy issued by Massachusetts Property Insurance Underwriting Association. The two insureds negligently served, supplied, or permitted DiFrancesco, a nonresident minor, to consume alcohol and become intoxicated at the insured premises. While under the influence, DiFrancesco negligently operated a motor vehicle that struck another vehicle operated by Berry. Berry sustained serious personal injuries.
Berry sued Bernier and Caron. The insurer offered a defense under a reservation of rights. The insurer then instituted this action seeking a declaration that it had no duty to indemnify under the terms of the homeowners policy. The trial court ruled in favor of the insurer and this appeal followed.
The appeals court noted that liability on the part of the insureds was conceded. The question before the court was whether the homeowners policy requires the insurer to indemnify them from liability to Berry as social hosts. The issue of coverage centered around the motor vehicle exclusion in the policy. The insurer contended that Berry's injuries arose out of the use of a motor vehicle and the motor vehicle exclusion relieves it from its indemnity requirements. The insurer pointed out that the exclusion referred to “any person” who operates or uses a motor vehicle. And, if injury arises out of the use of a motor vehicle, the exclusion relieves the insurer of indemnity liability regardless of whether other covered causes may have contributed to the injury.
The appeals court agreed with the insurer. The court said that under the plain, broad, and unambiguous terms of the motor vehicle exclusion, there is no bodily injury coverage because Berry's injuries arose out of the use of a motor vehicle.
The court also addressed the chain of causation and whether the injuries were caused by the service of alcohol, by the negligent operation of the auto, or by a combination of both. The court said this was irrelevant. Under the terms of the exclusion, the operative question was whether Berry's injuries arose out of the use of a motor vehicle, and since the phrase “arising out of” must be read expansively, incorporating a greater range of causation that that encompassed by proximate cause under tort law, the court found that the exclusion eliminates the significance of other causal elements and renders irrelevant the chain of causation analysis.
The judgment of the trial court was affirmed.
Editor's Note: The appeals court in Massachusetts weighed the liability of a social host for serving alcohol to a minor against the motor vehicle exclusion in a homeowners policy, and decided that the exclusion prevailed. Even though the social hosts in this case were liable for serving alcohol to a minor, their liability was not covered by their homeowners policy because that minor injured someone through the use of an auto.
This case is also noted due to the discussion of the chain of causation by the court. The chain of causation analysis is usually confined to first-party insurance cases where causation is at issue. This was a third-party insurance dispute and the court noted that even though the insureds did serve alcohol to a minor, the motor vehicle exclusion with its “arising out of” language operated to eliminate coverage. The injured party could claim that the serving of alcohol to a minor caused his injuries, but the court ruled that, no, the injuries were actually caused by the negligent use of an auto and this was clearly excluded under the homeowners policy.