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Hoppe v. Safeco Ins. Co. of Indiana, 2021 WL 3137195 (Ind. Ct. App. 2021)

In Hoppe, a minor was injured after falling off of a golf cart being driven by her friend, the minor daughter of the insureds, in the parking lot of an outdoor music venue across the street from the insureds’ home in Noblesville, Indiana. Through her father, the injured minor sued the insureds and sought damages for their alleged negligence, negligent supervision, negligent entrustment, and failure to obtain timely medical care for the minor.

The insureds sought a defense and indemnification under their homeowner’s policy, which generally excluded liability coverage for bodily injury arising out of the use of a “motorized land vehicle” owned or operated by any insured. Based on the exclusion, the insurer filed a declaratory judgment action against the insureds and the minor claimant, seeking a declaration it had no duty to defend the insureds or to indemnify them for any judgment they must pay to the minor claimant. In response, the insureds (and the minor claimant) argued that the exclusion did not apply because it made an exception for certain kinds of motorized land vehicles, including golf carts, while on an “insured location.”

The policy defines “insured location” to include “any premises not owned by you which you have the right or privilege to use arising out of [your residence].” According to the insureds, they had the privilege to use the parking lot of the music venue, which, at the time of the accident, was named Klipsch Music Center. (The venue is now on its fifth name, Ruoff Music Center.) The insureds argued that their privilege to use the parking lot arose out of its close proximity to their residence, the frequency at which they drove the golf cart to the parking lot, and the fact that they were never told they could not use their golf cart in the parking lot. The trial court rejected the insureds’ argument and entered summary judgment for the insurer, holding the policy excluded liability coverage, and thus, the insurer had no duty to defend or indemnify the insureds against the minor claimant’s lawsuit.

The Court of Appeals affirmed the trial court’s decision and found that the insureds’ interpretation of the term “privilege” was unreasonable. The policy did not define the term “privilege,” so the Court of Appeals turned to Merriam-Webster’s dictionary to give “privilege” its plain and ordinary meaning: “a right or immunity granted as a peculiar benefit, advantage, or favor.” The Court of Appeals noted that the definition of privilege “implies [that the right] is granted by the property owner with knowledge and acceptance of the use of the property by the person to whom the privilege is bestowed.” With this understanding, the Court of Appeals rejected the insureds’ argument that the Klipsch parking lot was an insured location. Because the insureds had not been granted the right to use the Klipsch parking lot, they did not have the “privilege” to do so.  The Court of Appeals stated, “[i]t is not a reasonable interpretation that just because the [insureds] were never told that they could not use their golf cart in the Klipsch Parking Lot, that they had been granted a privilege to use the Klipsch Parking Lot.” As the Court of Appeals put it, the insureds’ presence on and use of the Klipsch parking lot “was, at best, unacknowledged, and, at worst, unauthorized by the property owner.”

Had the insureds’ been granted the “privilege” to use the parking lot, the Court of Appeals explained, the parking lot would still not meet the definition of an “insured location” because the “privilege” to use the parking lot did not arise from the insured premises. “Using the parking lot of a business for one’s own pleasure simply because it is located near one’s home does not prove that any alleged privilege to use the area arises from one’s residence.” To hold otherwise, the Court of Appeals explained, would mean that “any frequent use of a nearby parking lot could be shown to be a privilege arising from one’s residence premises.”

Finally, the Court of Appeals rejected two additional arguments made by the insureds—that the phrase “while on an insured location” was ambiguous as to whether what had to occur “on an insured location,” and that the minor’s claim for failure to obtain timely medical treatment involved injuries separate from those caused by the use of the golf cart. Because the policy covered injuries caused by an “occurrence” or accident, the Court of Appeals held that “it is the golf cart’s location at the time of such an accident that determines whether coverage applies.” And because there could be no claim for failure to obtain timely medical care but for the injuries stemming from the use of the golf cart, that claim was also subject to the exclusion.

The decision in Hoppe exemplifies the legal tenet that the failure to define a term in an insurance policy does not make the term ambiguous. Although the Court of Appeals addressed a specific and less common “insured location” provision, its general analysis may still provide insurance practitioners with helpful insight when evaluating more common “insured location” provisions.