Opinion ID: 2586252
Heading Depth: 3
Heading Rank: 3

Heading: Nelson's Interpretation of the Policy Is Unreasonable.

Text: Nelson argues that the named driver exclusion is ambiguous and that the Uliseses did not understand it. Nelson further asserts that the last clause of the final sentence excludes only vicarious liability, not negligent entrustment claims, and limits the scope of the exclusion. We consider these arguments in turn.
Nelson's first argument is that the term arising from in the policy is ambiguous. Progressive Form 9330, the named driver exclusion election, states: No coverage is provided for any claim arising from an accident or loss that occurs while a covered vehicle . . . is operated by the excluded driver(s). THIS INCLUDES ANY CLAIM FOR DAMAGES MADE AGAINST YOU, A RELATIVE, OR ANY OTHER PERSON OR ORGANIZATION THAT IS VICARIOUSLY LIABLE FOR AN ACCIDENT ARISING OUT OF THE OPERATION OF A . . . VEHICLE BY THE EXCLUDED DRIVER. (Emphasis added, capitalization in the original.) Ambiguity will be found where the contract as a whole and all extrinsic evidence support two different interpretations, both of which are reasonable. [35] A contract provision is considered ambiguous if it is reasonably susceptible to more than one interpretation. [36] We emphasize that only where inconsistent, but reasonable, interpretations of the contract are possible will ambiguity be found: The mere fact that the parties disagree about the proper interpretation of the contract does not mean that the contract is ambiguous. [37] We have already determined that an entrustee's negligent act is a necessary element of any negligent entrustment claim against the entrustor. Nelson's claim for recovery against Progressive therefore necessarily arises from Siuleo's act of driving the automobile. [38] Moreover, the policy's exclusion plainly indicates that any claim arising from Siuleo's operation of the automobile is not covered. Applying a reasonable interpretation of the phrase to the facts presented here, we are unable to find any ambiguity. [39]
Nelson might still prevail despite our conclusion that this policy is not ambiguous, for we need not find that an ambiguity exists to construe the policy under the reasonable expectations doctrine. [40] This implicates her second argument: that the last clause of the final sentence of the exclusion excludes only vicarious liability, not negligent entrustment claims, and limits the scope of the exclusion. And because an insurance policy is a contract of adhesion, we construe it to give effect to the insured's reasonable expectations. [41] Thus the objectively reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts will be honored even though painstaking study of the policy provisions would have negated those expectations. [42] We discern reasonable expectations from the language of the disputed provisions, other provisions, and relevant extrinsic evidence. . . .  [43] But Nelson's claim is supported by none of these sources. As to the language of the disputed provision, Nelson argues that vicariously liable modifies youand thus that an insured is able to take advantage of the exclusion only if his or her liability is vicarious, a grammatically tortured reading of the provision. Both the placement and language choice indicate that the provision is broad in excluding coverage: excluded under this provision are the insured, relatives of the insured, and persons or organizations vicariously liable for the accident. Any other interpretation of the exclusion would strain credulity and defy reasonable expectations. [44] As to other provisions, there are no other provisions in the contract that support this interpretation. Finally, as to extrinsic evidence, Nelson provides no evidence supporting the Uliseses' belief that they would be covered, other than her own assertion. On the contrary, the record reflects that the Uliseses elected to remove Siuleo from the policy at two different times. In 2000 the Uliseses listed three members of their household as excluded drivers. The auto policy premium was $1,427. In February 2001 Lilii added Siuleo to the policy, and the premium increased to $3,859. In March 2001 Siuleo was again removed from the policy, and the policy premiums returned to $1,427. Given the repeated fluctuations in policy premiums and corresponding financial savings in exchange for the exclusions, [45] Nelson has failed to show that the Uliseses maintained a reasonable expectation of coverage for injuries resulting from Siuleo's operation of the vehicle.