Opinion ID: 2561909
Heading Depth: 3
Heading Rank: 2

Heading: The Progressive Policy Reasonably and Unambiguously Excludes Liability Coverage for Accidents Arising Out of the Operation of ATVs.

Text: The Nageaks argue that regardless of how we characterize it, the Progressive policy covers the operation of an ATV by an insured. They reason that the Progressive policy's coverage for non-owned vehicles extends to ATVs because the policy's liability coverage section defines non-owned vehicle as any vehicle ... that is not owned by you. They further contend that vehicle must include ATVs because AS 28.90.990(15) defines motor vehicle as a vehicle which is self-propelled except a vehicle moved by human or animal power, and AS 28.90.990(28) defines vehicle even more broadly as a device in, upon, or by which a person or property may be transported. For its part, Progressive maintains that the definition of vehicle at the outset of the Progressive policy, contained in the General Definitions section, excludes coverage for ATVs. The doctrine of reasonable expectations guides our review of the terms of an insurance policy. [14] In applying that doctrine, we held in Hillman v. Nationwide Mutual Fire Insurance Co. that an insurance policy's definitional section is distinct from the coverage provisions, and cannot logically be read as providing any substantive additions to the coverage section. [15] Progressive's definition of vehicle in its policy's General Definitions section effectively provides a substantive limitation to its policy's liability coverage section. The Nageaks therefore argue that just as the definitional section cannot add substantive protections, it cannot delete them. [16] The substantive provision for third-party liability coverage in the Progressive policy appears as follows: Part ILiability to Others Insuring AgreementBodily Injury Subject to the Limits of Liability, if you pay a premium for bodily injury liability coverage, we will pay damages, other than punitive or exemplary damages, for bodily injury for which an insured person becomes legally responsible because of an accident arising out of the ownership, maintenance, or use of a vehicle or a rental vehicle. The Additional Definitions subsection in Part I goes on to define insured person as, among other things, a relative with respect to an accident arising out of the maintenance or use of a non-owned vehicle with the express or implied permission of the owner of the non-owned vehicle. Also within the same Additional Definitions subsection, the policy clarifies that `non-owned vehicle' means any vehicle and any rental vehicle, that is not owned by you, a relative, or the named insured's non-resident spouse. Finally, the General Definitions section of the policy, number 12, explains: Vehicle means a land motor vehicle: a. of the private passenger, pickup body, or sedan delivery type; b. designed for operation principally upon public roads; c. with at least four (4) wheels; and d. with a gross vehicle weight of 10,000 pounds or less; which is not a rental vehicle. As Progressive explained in its initial correspondence with Skin, the ATV involved in Joseph's accident did not meet the first two criteria of the vehicle definition: it was neither a land motor vehicle ... of the private passenger, pickup body, or sedan delivery type, nor a land motor vehicle ... designed for operation principally upon public roads. Consequently, the ATV did not qualify as a non-owned vehicle, and Joseph did not qualify as an insured person because he was not operating a non-owned vehicle. Progressive therefore denied coverage. The Nageaks argue that Progressive cannot rely on its policy's distinct and separate General Definitions section to limit the scope of coverage. They argue that the statutory definition of vehicle should apply within the Progressive policy's liability coverage section. According to the Nageaks, Hillman relieves the insured of any obligation to cross-reference the General Definitions section when reading the non-owned vehicle definition. In Hillman, however, we rejected an appeal for coverage based on a definition that we determined could not logically be read as providing any substantive additions to the coverage section of the policy. [17] Here, Progressive relies on the general definition of vehicle set out at the beginning of its policy. That section explains that [e]xcept as otherwise defined in this policy, terms appearing in boldface will have the following meaning. And the term vehicle appears in boldface within the liability coverage section's non-owned vehicle definition. That boldfaced vehicle definition unambiguously excludes ATVs. The Nageaks do not argue that ATVs are of the private passenger, pickup body, or sedan delivery type. Nor do they claim that the ATV was designed for operation principally upon public roads. [18] The superior court took judicial notice that lay persons in Barrow regularly see snowmobiles and ATVs driven upon the public roads. And the Nageaks defend the trial court's reasoning by pointing to Alaska Administrative Code provisions and Barrow Municipal Ordinances that apparently permit non-licensed drivers to operate ATVs in the streets of Barrow. [19] But an insurance coverage rule that turns so readily on the conditions and ordinances particular to the insured's place of residence would inject uncertainty into a policy's scope of coverage. Progressive's definition of vehicle meets the objectively reasonable expectations of consumers across Alaska. The local ordinances and regulations cited by the Nageaks do not entitle consumers in some parts of Alaska to more insurance coverage. The Nageaks further argue that the Progressive policy is confusing and ambiguous because a definition of vehicle cannot be found in the policy's liability coverage section. Therefore, they maintain, an insured has a reasonable expectation of coverage for all non-owned vehicles that meet the statutory definition of motor vehicle. But adopting this argument would lead us to recognize a Progressive insured's reasonable expectation of coverage for liability incurred while driving non-owned scooters, golf carts, fork-lifts, tugs, and any other vehicle which is self-propelled except a vehicle moved by human or animal power. [20] The Progressive policy does not support such an expectation of coverage. At its outset, the policy defines the term vehicle, and an insured may fairly apply that definition throughout the policy, including the liability coverage section. We therefore conclude that because the Nageaks' ATV fails to qualify as a covered vehicle, third-party liability coverage was not available to Skin. [21] In light of this holding, we need not determine whether Joseph was legally excluded as a covered driver under the policy.