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OHIO SUPREME COURT VALIDATES HO POLICY EXCLUSION FOR CLAIMS "ARISING OUT OF" AN INSURED'S NON-INSURED PROPERTY
By Timothy P. Heather, Esq.
On April 20, 2011, the Ohio Supreme Court issued its decision in Westfield Ins. Co. v. Hunter. In that case, Mr. and Mrs. Hunter owned a home in Hamilton, Ohio, as well as a farm in Indiana. Their home was insured through a homeowner's policy issued by Westfield Insurance Company, which also provided personal liability coverage for damages which the Hunters may cause through negligent conduct in locations other than their Hamilton residence. The Indiana farm was not listed in the Westfield policy as a covered premise, and the Hunters had procured insurance for the farm through a separate policy issued by Grinnell Insurance Company.
In 2001, the Hunters allowed two of their grandchildren to operate all-terrain vehicles at their Indiana farm. The vehicles collided, and one of the grandchildren was injured. The injured grandchild and his parents filed suit against the other grandchild and his parents, as well as against the Hunters, seeking damages for the injured grandchild's injuries. Their Complaint alleged that the Hunters were negligent in allowing the two grandchildren to ride the all-terrain vehicles on their property without close adult supervision. The Hunters filed claims under both the Westfield and Grinnell policies, asking that both insurance companies defend and indemnify them for damages which may be awarded against them in a lawsuit.
Westfield filed a Complaint for Declaratory Judgment against the Hunters in the Butler County Court of Common Pleas seeking a determination that it owed no duty to defend or indemnify the Hunters for the grandchild's injuries under the Westfield homeowner's policy issued on their home in Hamilton based on the exclusion of coverage in that policy for claims "arising out of" other property owned by the Hunters but not listed in the Westfield policy as insured premises.
The trial court granted Westfield's Motion for Summary Judgment, finding that, since the injured grandchild's injuries were incurred on the Hunters' farm property, and the property was not identified as an insured premises in the Westfield policy, the claims of the injured grandchild were barred by the "Other Owned Property" exclusion in the Westfield policy. The injured grandchild and his parents, as well as Grinnell Insurance Company, who had opposed Westfield's declaratory judgment action, appealed the trial court's summary judgment order.
The Twelfth District Court of Appeals affirmed that the Hunters were not entitled to a defense or indemnification under the Westfield policy based upon its exclusion of damages "arising out of other owned property." The injured grandchild and his parents, as well as Grinnell, appealed the matter to the Ohio Supreme Court, which accepted review. The Ohio Supreme Court ruled that, when an exclusion in a homeowner's insurance policy bars coverage for claims "arising out of" premises which are owned by an insured but not identified in the policy as an insured location, the exclusion precludes coverage for premises-based liability claims, such as claims which arise from the quality or condition of a non-listed premises, and also bars coverage for claims predicated upon an insured's ownership of an unlisted premises on which the injury occurs.
The Court further held, however, that such an exclusion does not bar coverage from the insured's alleged negligence if that negligence is unrelated to the quality or condition of the "other owned property" on which an injury occurred. The Ohio Supreme Court found that the trial court's decision under appeal did not adequately determine whether the claims asserted by the Plaintiffs were related to the quality or condition of the premises where the injury occurred, or were based on some other theory of negligence. Thus, the Court remanded the case back to the trial court to apply its holding to the facts and legal arguments advanced by the parties.