Digested from case reports published in the North Eastern Reporter 2d,
West Publishing Co., St. Paul, MN

HO policy covers damages caused by dog at another location owned by insured

Harley the dog was owned by Joan Cincotta and Michael Callahan and lived with them at 316 Spring Street in Marshfield, Massachusetts. It seemed that Harley did not care for visitors and had a history of at least four (and possibly seven) attacks.

Cincotta/Callahan asked Diane Moores to measure their tennis court for seal coating. When she entered the premises, she was mauled and seriously injured by Harley.

Callahan had a homeowners policy issued by Quincy Mutual Fire Insurance Company covering property owned by Callahan and his wife, Patricia, in Tuftonboro, New Hampshire. He and his wife also owned other real estate. Plymouth Rock Assurance Corp and London County Mutual had issued HO and personal liability policies on these properties, and each company had paid the limit of $500,000 on its policy to Moores. Neither company obtained a release for Callahan.

Quincy denied liability based on the following exclusion: "Personal Liability ... does not apply to bodily injury or property damage ... arising out of premises owned by an insured... that is not an insured location." The trial court found that the Quincy policy did not cover the injuries sustained by Diane Moores while she was lawfully on the premises owned by Cincotta and Callahan at 316 Spring Street, Marshfield. Callahan appealed.

(An action by Moores and her husband was still pending in a lower court at the time of this appeal.)

The court, on appeal, found that the question before it was the meaning of the phrase "arising out of premises ..." It concluded that the exclusion relied upon by Quincy did not apply to a dog bite that occurred on the premises owned by the insured but not covered by the Quincy policy. The court pointed out that the Quincy policy agreed to pay to the limits of its policy "for the damages for which the insured is legally liable" and to provide a defense. The court also found that Harley was frequently off the premises with his owners, and was "not a condition of the Marshfield premises, as a protective fence would be."

The court concluded that Quincy was obligated to defend Callahan in connection with the injuries sustained by a business invitee on premises owned by the dog's owner but not covered by the Quincy policy.

The judgment entered in the lower court in favor of the company was vacated and new judgment entered obligating Quincy Mutual to defend and, to its policy limits, indemnify Callahan in the pending action. The court also stated that Callahan could apply for reasonable attorney's fees and expenses in connection with the declaratory judgment action.

Michael F. Callahan v. Quincy Mutual Fire Insurance Co.-No. 98-P-2311-Appeals Court of Massachusetts, Norfolk-October 19, 2000-736 North Eastern Reporter 2d 857.

Does notice of loss to agent serve as notice to insurer?

Hardrives Paving and Construction Company owned an asphalt manufacturing plant in Trumbull County, Ohio. On June 14, 1995, lightning struck a transformer causing the loss of electrical power. After power was restored, a surge of electricity caused physical damage to the circuitry. In addition to the property damage, the plant had to stop operations while repairs were made. This occurred during its seasonal operation, causing loss of income from paving operations.

Hardrives had two insurance policies. One was issued by Monroe Guaranty covering loss due to physical damage to the property. Property was defined as buildings and personal property, including machinery and equipment located in those buildings. The other policy was issued by Hartford Steam Boiler Inspection and provided coverage of business interruption under an endorsement attached to the policy. Excluded was loss caused by "lightning, if coverage is provided by another policy of insurance or coverage you have."

Following the loss, Monroe Guaranty paid the insured $12,981 and reserved the right to seek indemnification from Hartford Steam Boiler. The insured also submitted a claim for business interruption losses to Hartford Steam, but the claim was denied. Monroe filed suit against Hartford Steam Boiler, as did the insured. The two actions were consolidated.

The trial court found that Hartford Steam Boiler was entitled to judgment against Monroe Guaranty since its policy provided primary coverage for lightning damage, and the policy issued by Hartford Steam Boiler expressly excluded lightning damage. The court further concluded that the insured was entitled to a judgment against Hartford Steam Boiler for its loss from business interruption and found that its lightning exclusion was not applicable in this instance.

Hartford Steam Boiler argued on appeal that its policy required that notice of any accident and "Commencement of Liability" be given "to any of our offices. You must confirm that notice in writing." It further stated that liability would start "at the time of the accident, or 24 hours before we receive notice of 'accident,' whichever is later." The insured had secured its insurance coverage through Jerry Kernan, an insurance agent. An affidavit submitted by the insured's vice president stated that Kernan "held himself out as an agent of Hartford Steam Boiler"; that he notified Kernan on the day of the accident; and therefore, Hartford Steam Boiler's liability for loss from business interruption commenced on June 14,1995, and continued until the repairs had been made. The insured maintained that notice was properly given to the company's representative in a timely manner. The trial court agreed.

Hartford Steam Boiler challenged that decision, and contended that while a principal may be bound by the acts of its agent if such agent is acting within his/her apparent authority, the Ohio statutes do not mandate that notice of loss given to an insurance agent is sufficient to constitute notice to the insurance company.

The higher court decided there were genuine factual issues that would not warrant the summary judgment entered in the trial court. The first was whether Kernan was an authorized insurance agent of Hartford Steam Boiler; second was whether he had the apparent authority to receive notice of the claim, and third, whether Kernan indicated to the insured, or its representative, that notice should be given to Hartford Steam Boiler regarding the loss. The record indicated that Kernan did not give prompt notice of the loss to the company but waited until August 10, 1995.

The judgment entered in the lower court in favor of the insured was affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion.

Hardrives Paving and Construction Company, Inc., v. Hartford Steam Boiler Inspection and Insurance Company, Appellant-No. 98-T-0134-Court of Appeals of Ohio, Eleventh District, Trumbull County-April 3, 2000-738 North Eastern Reporter 2d 463.

Garage liability policy is primary coverage for test driving accident

Mike Murphy Ford gave David Evans permission to "test drive" a vehicle owned by the Murphy dealership. The dealer had a garage liability policy issued by Universal with $100,000/$300,000 limits. Evans had a personal automobile policy issued by Country Mutual with limits of $20,000/$40,000 and $15,000 property damage. While Evans was driving the vehicle, he was involved in an accident. His company contended Universal was primarily liable, and Universal argued that Country Mutual was liable for a pro rata share.

The policy issued to David Evans provided "any insurance we provide with respect to a vehicle you do not own will be excess over any other collectible insurance." Universal's policy stated that the most Universal would pay on a claim arising from a customer's accident "is that portion of such limits needed to comply with the minimum limits provision law in the jurisdiction where the occurrence took place."

Evans tendered his defense to Universal but it refused to defend him. Country Mutual subsequently defended him under a reservation of rights against Universal, and settled all the claims against Evans for $49,808.13. It then filed this action against Universal for reimburse-ment. The lower court granted Country Mutual's motion for summary judgment, and Universal appealed.

The higher court pointed out that a garage liability insurance company had the responsibility for providing primary coverage to a customer "test driving" one of the dealer's vehicles. In this case, Universal must provide primary coverage to Evans as a customer "test driving" a vehicle owned by the dealer.

On the other hand, Country Mutual's policy clearly stated it would be excess insurance under the circumstances here.

Universal also argued that its policy provided only for the minimum statutory limits required by the Illinois statute, $20,000/$40,000 and $15,000 for property damage. However, another statute requires limits of $100,000/$300,000 and property damage limits of $50,000 for car dealerships.

The court, on appeal, ruled that the latter statute controlled and Universal was primarily responsible for the damages which resulted from the accident which occurred while Evans was "test driving" the dealer's vehicle.

The judgment entered in the lower court in favor of Country Mutual was affirmed.

Country Mutual Insurance Company, as Subrogee of David Evans, v. Universal Underwriters Insurance Company, Appellant-No. 3-99-0686-Appellate Court of Illinois, Third District-September 1, 2000-Rehearing denied September 25, 2000-735 North Eastern Reporter 2d 1032.

Insured bears burden of establishing that other driver has no insurance

Henry Michael was injured while driving his employer's van on December 9, 1996. He had stopped in his lane of traffic in order to make a left turn into his employer's place of business when the van was struck from behind by a vehicle operated by Jerry Wolfe. Michael filed suit for damages against Wolfe for his personal injuries, medical expenses and lost wages. His employer's insurance carrier, Hoosier Insurance Company, was added as a defendant and Michael alleged he was entitled to uninsured motorist coverage under that policy since Wolfe was not insured. Wolfe did not enter an appearance and did not appear at
the trial.

The trial court entered judgment in favor of Hoosier, concluding that Michael had failed to prove that Wolfe had no insurance.

The record indicated that Michael had submitted a form entitled "Request for Information for SR 21, but it was not signed, verified or in any way authenticated by any representative of the Bureau of Motor Vehicles. That form showed only that Wolfe's driver's license had been suspended because of his failure to provide that department with a Certificate of Compliance. The Request for Information provided no information as to the ownership of the vehicle Wolfe was driving or whether the owner had any liability insurance covering that car.

On appeal, the court pointed out that an insured must make reasonable efforts to determine whether an applicable insurance policy existed and must show that those efforts were unsuccessful. After the insured has met those requirements, the burden shifts to the insurance company to show there is an applicable policy.

In this case, the higher court concluded that Michael had not made an effort to find out if Wolfe owned the car or whether the car was insured.

The judgment entered in the lower court in favor of Hoosier was affirmed.

Henry W. Michael et ux, Appellants, v. Jerry L. Wolfe and Hoosier Insurance Company-No. 34A05-9912-CV-562-Court of Appeals of Indiana-October 24, 2000-737 North Eastern Reporter 2d 820.

HO policy doesn't cover builder's defective workmanship

Dennis M. Herrmann, d/b/a Ellas Homes, entered into a contract with C. Donald Heile and DeLora A. Heile for the construction of their home. The house was completed and delivered to the Heiles in 1995. In 1997, the Heiles filed suit against the builder and several suppliers and contractors. They alleged that many defects in the house developed within one year and that Herrmann had failed to remedy them despite a contractual obligation to do so. The home owners listed deterioration of the driveway, walkway, and front porch; leaking of roof and basement; and problems with one of the steps to the porch, a Jacuzzi tub, windows, hardwood flooring, drywall and bathroom tile.

State Automobile Mutual Insurance (State Auto), which had issued a commercial general liability policy to Herrmann, intervened in the action and then filed a complaint for declaratory judgment. It denied that its policy provided any coverage to the home owners because of exclusions in its policy. The trial court granted summary judgment to State Auto, and the home owners appealed.

The higher court ignored the exclusions, relying upon the policy statement that "... This insurance applies only ... to 'bodily injury' or 'property damage' ... that is caused by an occurrence." The policy defined "occurrence" as an "accident."

The court concluded that the home owners' claims arose from defective work by the builders and not from an "occurrence."

The judgment entered in the lower court in favor of State Auto was affirmed.

Heile et al., Appellants; State Automobile Mutual Insurance Company, v. Herrmann, a/k/a Ellas Homes, et al.-No. C-990076-Court of Appeals of Ohio, First District, Hamilton County-December 17, 1999-736 North Eastern Reporter 2d 566. *