Today, in Argonaut Ins. Co. v. Jones, ___ N.E.2d ___ (Ind. Ct. App. 2011), Cause No. 53A01-1012-PL-669, the Indiana Court of Appeals clarified when it would place a thumb on the scale when construing an ambiguous term in the insurance policy. It held that the issue did not depend on whether the claimant was a third-party to the agreement; rather, it depends on whether the claimant is a stranger to the policyholders entirely.
This case arose out of a traffic accident in which a man hit and killed a police officer who was directing traffic. The officer was not in her car at the time of the accident. Instead, she had parked the car using appropriate police procedures in order to block one lane of a highway. The officer’a estate sued the man. It also sought a recovery from the county’s insurance carrier based on a UIM endorsement. Argonaut (the UIM carrier) sought summary judgment, but that motion was denied. After a bench trial, Argonaut appealed.
On appeal, the Court noted that ambiguities in insurance contracts are generally construed in favor of the insured. However, Argonaut claimed that the officer was not a named insured and, therefore, that this presumption did not apply. The Court disagreed.
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Here, however, Deputy Jones was not a stranger to either party, but was instead an employee of the policyholder. Argonaut does not claim that Deputy Jones in her role as a Deputy Sheriff would not have been an insured under the policy generally—just that she is not covered for the claim at issue here. That is to say, Deputy Jones, though an unnamed insured, is squarely within the class of individuals whom the Argonaut policy was intended to benefit by providing liability and UIM insurance coverage. We therefore decline to apply the neutral construction principle argued for by Argonaut, though we note that our decision today would be the same in either case.
The Court then found that the officer was an insured, since she was using the patrol car when she was hit, and that her injuries and death were within the reasonable expectations of the parties.
While sometimes, as in this case, it does not matter whether an insurance policy should be construed in favor of the insured, this is of vital importance in other cases. Therefore, the Court’s clarification of when that presumption applies is a helpful clarification of that issue for the future. It helps that the Court’s clarification makes good common sense.
Lesson:
- Ambiguities in an insurance policy should be construed neutrally only when the claimint is a stranger to the policyholders.
