Opinion ID: 2623504
Heading Depth: 4
Heading Rank: 2

Heading: Operator's Coverage

Text: ¶ 25 The Calhouns argue that even if the Progressive policy does not cover John's use of his father's Jeep as an owner's policy, the Progressive policy provides, or should be construed to provide, coverage for John's accident as an operator's policy. The Calhouns assert that this result is warranted because either the policy is an operator's policy according to its plain language, or alternatively, the policy language is ambiguous, and should be construed against Progressive and in favor of coverage. We address each argument in turn.
¶ 26 In support of their assertion that Progressive is required to insure John's accident, the Calhouns argue that, by its own terms, the Progressive policy is an operator's policy. The language in the policy to which the Calhouns refer stems from Progressive's promise to pay damages for bodily injury and property damage for which an insured person becomes legally responsible because of an accident arising out of the ownership, maintenance, or use of a vehicle. (Emphasis omitted.) The policy defines insured person to include, in relevant part, you [the named insured] or a relative with respect to an accident arising out of the ownership, maintenance, or use of any vehicle with the express or implied permission of the owner of the vehicle. (Original emphasis omitted and emphasis added.) The Calhouns argue that because this language tracks the language of the ... `operator's policy' portion of [section 31A-22-303(1)(a)(ii)(B)], the Progressive policy is an operator's policy that must cover John's use of his father's Jeep. ¶ 27 We agree with the Calhouns that this initial provision appears to provide the type of operator's insurance coverage contemplated by an operator's policy in subsection (B). However, this statement of coverage must be read in light of the policy's explicit limitations of coverage, which include, in pertinent part, the following: EXCLUSIONS READ THE FOLLOWING EXCLUSIONS CAREFULLY. IF AN EXCLUSION APPLIES, COVERAGE WILL NOT BE AFFORDED UNDER THIS PART I. Coverage under this Part I, including our duty to defend, does not apply to: ... 12. bodily injury or property damage resulting from the operation or use of a vehicle owned by you [the named insured] or a relative, other than a covered vehicle. When the Progressive policy is read in conjunction with this unequivocal exclusion, it is clear that although the policy may provide additional operator's coverage, it is not an operator's policy within the meaning of section 31A-22-303(1)(a)(ii)(B). ¶ 28 Moreover, contrary to the Calhouns' assertions, exclusionary endorsements such as the owned vehicle exception at issue are not necessarily invalid. Rather, contracting parties are free to limit coverage in excess of the minimum required limits, and [an] exclusion found in [a] contract [is] valid in relation to any coverage exceeding minimum amounts. Allstate Ins. Co. v. United States Fid. & Guar. Co., 619 P.2d 329, 333 (Utah 1980) (footnote omitted); see also Utah Code Ann. § 31A-1-103(2) (1994) (This title [31A] restricts otherwise legitimate business activity. What this title does not prohibit is permitted unless contrary to other provisions of Utah law.). As long as any exclusions are phrased in language which clearly and unmistakably communicates to the insured the specific circumstances under which the expected coverage will not be provided, exclusions in insurance policies beyond the minimum coverage limits are allowed. Alf v. State Farm Fire & Cas. Co., 850 P.2d 1272, 1275 (Utah 1993) (quotations omitted). ¶ 29 The court of appeals correctly recognized that such exceptions are permissible when it upheld a similar owned vehicle exclusion in Hill v. Farmers Insurance Exchange, 888 P.2d 138 (Utah Ct.App.1994). In that case, the defendants had insured three vehicles under separate automobile insurance policies. Id. at 139. Each policy excluded coverage for bodily injury or property damage arising out of the ownership, maintenance or use of any vehicle other than [the] insured car [named in the policy], which [was] owned by or furnished or available for regular use by [the named insured] or a family member. Id. (emphasis and footnote omitted). Following an automobile accident in which the defendants' sixteen-year-old daughter injured the plaintiffs, the plaintiffs sought to recover under each of the three separate insurance policies. Id. at 139-40. The court of appeals rejected the plaintiffs' attempts to obtain multiple recoveries. Id. at 140-41. Because the policies unambiguously excluded coverage for the use of other household vehicles not named under each policy, the court held that the plaintiffs were not entitled to recover under the defendants' remaining two insurance policies. Id. at 141. ¶ 30 A similar result is warranted in this case. First, the Progressive policy provides the minimum owner's policy insurance coverage required by law. See supra Part I.A.1. Therefore, any additional coverage provided may be limited as long as the language is clear and unmistakablewhich is the case here. The Progressive policy's statement that it will not afford coverage for bodily injury or property damage resulting from the operation or use of a vehicle owned by you [the named insured] or a relative, other than the covered vehicle clearly and unmistakably communicates to the insured that, notwithstanding the policy's general grant of operator's coverage, the policy will not extend coverage to the insured's use of any household relative's vehicle not named in the Progressive policy. Given this unequivocal limitation, the policy's owned vehicle exclusion permissibly limits the additional operator coverage it provides in its policy to exclude liability for John's use of his father's Jeep.
¶ 31 The Calhouns argue that even if the Progressive policy does not explicitly provide operator coverage in this case, the policy is ambiguous, and should therefore be construed to provide the type of operator's liability insurance that would cover John's accident. They reason that because the Progressive policy only states that it is a Utah Motor Vehicle Policy, and fails to specify whether it is an owner's or operator's policy, [t]he insured, upon reading the policy, would have no way of knowing that Progressive intended to only provide the statutorily required coverage of [section] 31A-22-303(1)(a)(ii)(A) but not the statutory coverage in [section] 31A-22-303(1)(a)(ii)(B). Because Progressive created the alleged ambiguity, the Calhouns contend that we should resolve the issue in favor of coverage and construe the Progressive policy to extend insurance coverage to John's use of his father's Jeep. ¶ 32 Although the Calhouns correctly note that we resolve ambiguities in insurance policies in favor of coverage, Nielsen v. O'Reilly, 848 P.2d 664, 665-66 (Utah 1992); see also Pollard v. Truck Ins. Exch., 2001 UT App 120, ¶ 7, 26 P.3d 868; Hill, 888 P.2d at 138, policy language is ambiguous only when it is not plain to a person of ordinary intelligence and understanding, viewing the matter fairly and reasonably, in accordance with the usual and natural meaning of words, and in the light of existing circumstances, including the purpose of the policy. Nielsen, 848 P.2d at 666 (quotations omitted). As indicated above, the owned vehicle exclusion language in this case is not ambiguous. The exclusion clearly states that Progressive will not defend John for bodily injury or property damage resulting from the operation or use of a vehicle owned by ... a [household] relative, other than the covered vehicle. (Emphasis omitted.) Although John may have believed he was obtaining full coverage for his vehicle, the policy makes clear that coverage will not extend to John's use of his father's Jeep. Accordingly, we decline to construe the Progressive policy to extend coverage to John in this case.