Opinion ID: 2510374
Heading Depth: 2
Heading Rank: 3

Heading: Ambiguity Within the Policy as a Whole

Text: {15} Battishill argues that the policy read in its entirety is ambiguous, requiring an interpretation in his favor. Although the Court of Appeals recognized that [t]he all-risk and named-perils personal property coverages are clearly separate coverages with likely different underwriting analysis based on different risks, Battishill, 2004-NMCA-109, ¶ 23, 136 N.M. 288, 97 P.3d 620, it ultimately agreed with Battishill's contentions. The Court of Appeals identified structural similarities that supported construing the policy in his favor. {16} We agree with the Court of Appeals that the two coverages are separate and distinct; however, we disagree with the Court's analysis of the structural similarities. It is not necessary to read the coverages together to construe the all-risk dwelling exclusion at issue, because the exclusion read alone is clear and unambiguous. See Costabile, 193 F.Supp.2d at 476-78 (holding the language providing all-risk coverage was unambiguous, while the language providing coverage against named perils was ambiguous). But see United Capital Corp., 237 F.Supp.2d at 274-76 (recognizing that the ordinary use of the word vandalism would include an arson, the Court nevertheless concluded that the policy as a whole was ambiguous because fire and vandalism were listed separately in another section of the policy). Unless it is necessary to read the coverages together, we believe there is a risk of creating, rather than identifying, ambiguity. {17} We recognize that it is the law in New Mexico that an insurance policy which may reasonably be construed in more than one way should be construed liberally in favor of the insured. Erwin v. United Benefit Life Ins. Co., 70 N.M. 138, 144, 371 P.2d 791, 794-95 (1962). However, that rule applies only where the language in the policy is ambiguous. Safeco Ins. Co. of Am. v. McKenna, 90 N.M. 516, 520, 565 P.2d 1033, 1037 (1977). Resort will not be made to a strained construction for the purpose of creating an ambiguity when no ambiguity in fact exists. Id. In this case, the language in the exclusion is clear and unambiguous. We only look to other sections in a policy for clarification, not in an attempt to create an ambiguity where none exists. See, e.g., Rummel, 1997-NMSC-041, ¶ 20, 123 N.M. 752, 945 P.2d 970 (If any provisions appear questionable or ambiguous, we will first look to whether their meaning and intent is explained by other parts of the policy.). An ambiguity does not exist simply because a controversy exists between the parties, each favoring an interpretation contrary to the other. 2 LEE R. RUSS & THOMAS F. SEGALLA, COUCH ON INSURANCE § 21:11 (3d ed.2005). {18} Our cases provide some guidance in determining whether an ambiguity exists, but they do not support a conclusion of ambiguity in this case. Ambiguities arise when separate sections of a policy appear to conflict with one another, when the language of a provision is susceptible to more than one meaning, when the structure of the contract is illogical, or when a particular matter of coverage is not explicitly addressed by the policy. Rummel, 1997-NMSC-041, ¶ 19, 123 N.M. 752, 945 P.2d 970. In this case, separate sections of the policy do not conflict with one another because the all-risk dwelling coverage and the named-perils coverage are separate and distinct coverages, each providing separate coverage for different risks to different property under different terms. Vandalism and malicious mischief have a common and ordinary meaning in contemporary usage. Both terms, by their definitions, include arson. The structure of the contract appears logical; the two sections can be read independently and provide a sensible result. Finally, although arson is not explicitly addressed by the policy, arson is included within various terms used in the policy. For example, arson is included within the terms fire, vandalism, and malicious mischief. {19} For purposes of the all-risk coverage, fire, vandalism, and malicious mischief are included, unless an exclusion applies. We recognize that arson can be viewed as a type of fire, and arson can be viewed as a form of vandalism and malicious mischief. However, the fact that there is an overlap within the named perils section does not create an ambiguity within the all-risk section. See Costabile, 193 F.Supp.2d at 476; cf. United Capital Corp., 237 F.Supp.2d at 277 (distinguishing Costabile on the basis that the structure of the policy ... provides no basis for limiting the ambiguity to only one type of coverage). Fire, vandalism, and malicious mischief are not covered by the all-risk dwelling coverage as enumerated risks. Rather, it can be inferred that fire, vandalism, and malicious mischief are covered, unless they fit within an explicit exception. Therefore, even though arson is a form of fire, to which no exception applies, it is encompassed within the definitions of vandalism and malicious mischief, to which an exception does apply. {20} The exclusion within the all-risks section is clear and unambiguous, and it should be applied as written. See Costabile, 193 F.Supp.2d at 478 (The language of the policy in Coverages A and B is not ambiguous: the willful destruction of property is not covered if the building has been vacant or unoccupied for thirty consecutive days.); see also COUCH 3d § 21:11 ([I]t is a well settled rule that the question of construction can only arise where the language of a policy is susceptible to more than one meaning, and that clear and unambiguous clauses must be accepted as the expression of the intent of the parties, and enforced by the courts as written.). We conclude that the policy read as a whole provides no basis for interpreting the exclusion in favor of Battishill.