Household Exclusion Applicable in Wrongful Death Claim

 

June 17, 2013

 

Homeowner insured's former live-in girlfriend brought a wrongful death suit against the insured. The insurer brought an action seeking a declaratory judgment that it was not obligated to defend or indemnify the insured. This case is Hanson Farm Mutual Insurance Company of South Dakota v. Degen, 829 N.W.2d 474 (2013).

 

Marcus Degen and Tina Sellers lived together in a home purchased by Marcus. The two daughters of Tina Sellers also lived in the home. The house was insured through a homeowners policy issued by Hanson Farm Mutual. The policy contained a household exclusion stating that the personal liability coverage did not apply to bodily injury to the named insured and residents of the household and persons under the age of 21 in the care of the named insured.

Degen treated Sellers' daughters as his own, sharing the household chores with Sellers, getting the girls ready for school, discussing and participating in various facets of the girls' lives. In 2007, Marcus was leveling dirt on the property with a skid loader and accidentally hit one of the daughters, Adrianna. The girl died. Marcus and Sellers continued to live together for more than one year after the accident, but the difficulty in dealing with the death caused them to separate. Sellers then pursued a wrongful death lawsuit against Degen.

 

The insurer declined coverage based on the household exclusion and filed an action for declaratory judgment. The trial court ruled in favor of the insurer and this appeal followed.

 

The Supreme Court of South Dakota noted that the issues on appeal are: whether the phrase “in your care” is ambiguous as it relates to coverage under a homeowner's policy; and whether the trial court erred in concluding that the girl was in Marcus's care and therefore excluded from coverage under the household exclusion.

 

The insured contended that the phrase “in your care” is ambiguous because “care” has several different dictionary definitions. The court said that it would construe the language in the policy according to its plain and ordinary meaning, with a focus on the word “care”. The court found that the plain and ordinary meaning of “care” is akin to the charge or supervision of another. The court discussed other court rulings on the word and Couch on Insurance 3d, concluding that the phrase “in the care of” connotes a level of support, guidance, and responsibility that is most often present in situations where an insured cares for a minor child, an elderly person, or an incapacitated individual. The court decided that the phrase was not ambiguous and most appropriately interpreted in the context of the policy as “under the insured's charge or supervision.”

 

The court then addressed the question of whether Adrianna was in the care of Degen and therefore excluded under the household exclusion. The insured argued that Adrianna was not in his care at the time of the accident. However, applying an eight-factor test utilized in a New Hampshire case, the court said that the undisputed facts demonstrated that, while Degen had no legal responsibility for the girls, both daughters depended on Degen for various facets of their well-being. The insured provided them with a home and food, provided for their emotional needs, supervised and disciplined them, and had, in fact, listed the two girls as beneficiaries of his retirement policy. Based on these facts and applying the facts to the eight-factor test, the court ruled that Adrianna was in Degen's care at the time of the accident.

 

The ruling of the trial court was affirmed and the insurer had no obligation to defend or indemnify the insured.

 

Editor's Note: In its decision, the Supreme Court of South Dakota made use of an eight-factor test that was utilized in Oliva v. Vermont Mutual Insurance Company, 842 A.2d 92 (2004). This test considers the following in determining whether an individual is in another's care for insurance purposes: is there a legal responsibility to care for the person; is there some form of dependency; is there a supervisory responsibility; is the person providing the care providing substantial essential financial support; what is the age of the dependent; is the living arrangement temporary or permanent; what is the physical or mental health status of the dependent; is the person in the care of another gainfully employed.

 

The facts in this situation mostly matched these factors, meaning that the girl was in the insured's care, and so, the household exclusion applied.