Opinion ID: 2126473
Heading Depth: 1
Heading Rank: 6

Heading: coverage under earp's policy

Text: Having determined that § 44-2403(4)(b) is applicable in the present case, we now apply its provisions. Section 44-2403(4)(b) bars Alsobrook's claim except to the extent the claim is outside the scope of Earp's insurance policy. [4-6] The meaning of an insurance policy is a question of law, in connection with which an appellate court has an obligation to reach its own conclusions independently of the determination made by the lower court. [15] In construing insurance policy provisions, a court must determine from the clear language of the policy whether the insurer in fact insured against the risk involved. [16] In appellate review of an insurance policy, the court construes the policy as any other contract to give effect to the parties' intentions at the time the writing was made. Where the terms of a contract are clear, they are to be accorded their plain and ordinary meaning. [17] Generally, the purpose of a garage policy is to protect automobile dealers, garage keepers, and owners of automobile service stations against loss by reason of injury to other property or persons by the use of their automobiles. Such policies are designed to care for the specialized needs of the particular operation. [18] As relevant here, the liability section of Earp's garage liability policy provides: SECTION II  LIABILITY COVERAGE A. COVERAGE . . . . We will pay all sums an insured legally must pay as damages because of . . . property damage to which this insurance applies, caused by an accident and resulting from garage operations involving the ownership, maintenance or use of covered autos. .... B. EXCLUSIONS This insurance does not apply to any of the following: .... 13. WORK YOU PERFORMED Property damage to work you performed if the property damage results from any part of the work itself or from the parts, materials or equipment used in connection with the work. Earp's garage liability policy also included a section dealing specifically with garagekeepers coverage. This section states in relevant part: SECTION III  GARAGEKEEPERS COVERAGE A. COVERAGE 1. We will pay all sums the insured legally must pay as damages for loss to a covered auto or auto equipment left in the insured's care while the insured is attending, servicing, repairing, parking or storing it in your garage operations . . . . .... B. EXCLUSIONS 1. This insurance does not apply to any of the following: .... d. Faulty Work. Faulty work you performed. Given this policy language, Alsobrook argues that his claim against Earp does not fall within the policy's coverage. Alsobrook contends that because his claim is based on Earp's alleged negligent repair of Alsobrook's car, his claim is excluded under the work you performed and faulty work exclusions of the insurance policy, and can be brought directly against Earp. Earp, however, argues that its insurance policy with Reliance provided coverage for Alsobrook's claim and that because Reliance is now insolvent, Alsobrook's claim is barred by application of the Act. As an initial matter, we conclude that the faulty work exclusion in section III of the policy is irrelevant. For section III to apply, the damages to the vehicle must have occurred while [Earp was] attending, servicing, repairing, parking or storing [the car]. However, Alsobrook alleged in his complaint that the damages to his car occurred approximately 2 or 3 months after Earp negligently performed the repair work. Because the damages did not occur while Earp was performing work on Alsobrook's car, section III of the policy does not cover those damages. In other words, Alsobrook need not concern himself with the faulty work exclusion, because section III is entirely inapplicable. But Alsobrook's claim may be covered under section II of the policy, the liability coverage, unless it is excluded by the work you performed exclusion. We recently considered a similar provision in Auto-Owners Ins. Co. v. Home Pride Cos. [19] In Auto-Owners Ins. Co., an apartment complex, Appletree Apartments, Inc. (Appletree), entered into a contract with Home Pride Companies, Inc. (Home Pride), to install new shingles on a number of apartment buildings. Following completion of the project, Appletree began to notice problems with the roof. Appletree eventually filed suit against Home Pride alleging that Home Pride failed to install the shingles in a workmanlike manner and that such faulty workmanship caused substantial and material damage to the roof structures and buildings. After the suit was filed, Home Pride made a claim to its insurer, Auto-Owners Insurance Company (Auto-Owners), for coverage under its commercial general liability policy. Auto-Owners brought a declaratory judgment action against Home Pride claiming that the insurance policy did not provide coverage because the faulty workmanship was not an occurrence under the policy. We explained that although faulty workmanship, standing alone, is not an occurrence under a [commercial general liability] policy, an accident caused by faulty workmanship is a covered occurrence. [20] We further explained that if faulty workmanship causes bodily injury or property damage to something other than the insured's work product, an unintended and unexpected event has occurred, and coverage exists. [21] We noted that Appletree had alleged that Home Pride negligently installed shingles on the apartment buildings, which caused the shingles to fall off. Additionally, Appletree alleged that as a consequence of the faulty work, the roof structures and buildings experienced substantial damage. We concluded that the latter allegation represent[ed] an unintended and unexpected consequence of the contractors' faulty workmanship and goes beyond damages to the contractors' own work product. [22] Therefore, Appletree had properly alleged an occurrence within the meaning of the insurance policy. Auto-Owners further argued that coverage was excluded under the your work exclusion in the policy. The your work exclusion provided that [t]his insurance does not apply to:. . . . Damages claimed for any loss, cost or expense incurred by you . . . for the loss of use, withdrawal, recall, inspection, repair, replacement, adjustment, removal or disposal of. Your work. . .' [23] We explained that Iglenerally speaking, the `your work' exclusions . . . operate to prevent liability policies from insuring against an insured's own faulty workmanship, which is a normal risk associated with operating a business. [24] We noted that the rationale behind the `your work' exclusions is that they discourage careless work by making contractors pay for losses caused by their own defective work, while preventing liability insurance from becoming a performance bond. [25] In rejecting Auto-Owner's argument, we concluded that the your work exclusion did not exclude Appletree's damage claim because [its] claim extends beyond the cost to simply repair and replace the contractors' work, i.e., to reshingle the roofs. [26] The claimed damages to the roof structure and buildings fell outside of the exclusion, and to the extent that Home Pride may be found liable for the resulting damage to the roof structures and the buildings, Auto-Owners is obligated to provide coverage. [27] Courts in other jurisdictions that have addressed this issue have similarly concluded that damages to property outside of the cost of repairing or replacing the insured's own work is not excluded under a your work exclusion and is therefore covered under the policy. [28] In the present case, the work you performed exclusion in section II of Earp's policy excludes only those damages that represent the cost to either repair or replace the work that Earp was contracted to perform. But this exclusion does not act to exclude damages to property other than the work that Earp was contracted to perform, i.e., the damages to Alsobrook's vehicle that go beyond the cost to repair or replace Earp's allegedly negligent work. Here, the only indication in the record with respect to the actual repairs performed on Alsobrook's vehicle is found in Alsobrook's petition. The petition does not state with any clarity what exact repairs were requested. Nor is it evident from the petition what portion of the alleged damages represents the cost to repair or replace the work Earp was contracted to perform, versus damages to property beyond the scope of Earp's repair work. The petition simply provides a dollar amount representing the total damage to the car. On this record, there is a genuine issue of material fact as to how much of Alsobrook's damages are covered under section HA of the policy and how much is excluded by the work you performed exclusion. Therefore, the district court erred in concluding that Alsobrook's entire claim against Earp, besides the deductible, was barred as a matter of law. With respect to Alsobrook's remaining assignment of error relating to the admission of Kovar's affidavit, we note that the record does not establish to what extent, if any, the court relied on that evidence in reaching its conclusion. Nonetheless, as Alsobrook argues, the scope of an insurance policy is a question of law, with respect to which we have made an independent determination, without reference to the Kovar affidavit. Because our independent analysis cures any error in receiving the affidavit, we need not consider this assignment of error.