Opinion ID: 2589988
Heading Depth: 1
Heading Rank: 5

Heading: Waiver of an otherwise applicable exclusion

Text: Appellants alternatively contend that Jefferson waived its right to deny coverage under the automobile exclusion provision because Jefferson did not designate the persons insured in its 1993 written denial of coverage. We conclude that Jefferson did not waive its right to assert this automobile exclusion by failing to define persons insured in its letter denying coverage. In Intel Corp. v. Hartford Accident & Indemnity Co., 952 F.2d 1551, 1561 (9th Cir. 1991), the Ninth Circuit Court of Appeals held that an insurer did not waive its right to rely on a different policy exclusion because the insurer informed its insured that the pollution exclusion, a standard and unambiguous exclusion, was applicable. In its reasoning, the Intel court clarified the decision in McLaughlin v. Connecticut General Life Insurance Co., 565 F.Supp. 434 (N.D.Cal. 1983), [2] in stating that waiver applies only in instances where the insurer engaged in misconduct, such as sandbagging or failing to investigate a claim, or where the insured relied on an insurer's misrepresentation to his detriment. 952 F.2d at 1559-60. We agree with the Intel court that an insurer does not waive its right to assert an exclusion where it has provided its insured with adequate notice of an unambiguous exclusion. In the present case, like the insurer in Intel, Jefferson promptly informed the Moors that it was denying coverage based on exclusion (b)a standard and unambiguous automobile exclusion provision common to general liability policies. Although Jefferson's 1993 letter denying coverage did not specifically identify the persons insured for purposes of exclusion (b), we cannot say that such failure misled appellants or was an attempt by Jefferson to mislead them. We conclude that the Moors were not prejudiced by Jefferson's failure to define the persons insured language in its 1993 letter because this definition could be readily ascertained from a layman's reading of section II(a) of the policy. Because the Moors were clearly on notice that Jefferson was relying on the automobile exclusion provision of the policy, we conclude that Jefferson did not waive its right to exclude coverage based upon exclusion (b) of the policy.