Court Opinion

ID: 9709590
Source: CourtListenerOpinion
Date Created: 2023-08-26 03:51:54.699685+00
Date Added: 2024-06-11T18:22:50.396130
License: Public Domain

NIX, Justice,
dissenting.
I dissent. The issue in this appeal is whether an exclusion in a liability insurance policy is enforceable. The majority, relying upon standard principles of contract law, focuses upon the question of ambiguity in the policy’s language. Mr. Justice Hutchinson in his concurrence suggests the use of a “reasonable expectation” test. In my view both tests are equally nebulous and neither is appropriate in the area of insurance contract interpretation.
An insurance contract is essentially a contract of adhesion. Its terms are not bargained for but rather dictated by the insurer. Thus the insured’s awareness and understanding of exclusions set forth in an insurance policy should not be presumed from the mere presence of such exclusions among the policy’s terms. The very fact that the insurer prescribes particular exclusions indicates an assumption that the purchaser could otherwise reasonably expect to be covered against the risk so excluded.
It is therefore crucial that the insurer explain and the insured understand the precise nature of the policy’s limitations. For this reason I would apply the test adopted by the Superior Court in Hionis v. Northern Mutual Insurance Co., 230 Pa.Super. 511, 327 A.2d 363 (1974), employed by both that court and the trial court in this matter, and hold the insured to a standard of proving the insured was aware of and fully appreciated the effect of exclusions in the insurance policy before permitting the insurer to escape its duty to defend the insured. Because the insurer in the instant case failed to sustain that burden, I would affirm the order of the Superior Court.