Court Opinion

ID: 9554089
Source: CourtListenerOpinion
Date Created: 2023-08-07 19:41:17.750055+00
Date Added: 2024-06-11T15:32:58.347318
License: Public Domain

MATTHEWS, Chief Justice,
joined by BURKE, Justice, concurring.
I disagree with part IV.A. of the opinion, which holds that the phrase “aircraft of the insured” means “aircraft of either the named insured or the additional insured who is seeking coverage” rather than “the aircraft of the insured who is seeking coverage.” It is my view that the phrase refers exclusively to the insured who is seeking coverage. My reasons for this conclusion follow.
First, in the absence of a severability of interests clause1, an insurance policy is ambiguous as to whether or not the use of the term “the insured” in an exclusion refers merely to the insured seeking coverage or to the insured seeking coverage and to the named insured. Ordinarily, ambiguities in insurance contracts are to be resolved in favor of that interpretation which results in coverage. Starry v. Horace Mann Ins. Co., 649 P.2d 937, 939 (Alaska 1981) (“Ambiguities must be resolved against the insurer.”); Puritan Life Ins. Co. v. Guess, 598 P.2d 900 (Alaska 1979). On this basis, ¿ number of courts in other jurisdictions have concluded that, in the absence of a severability of interests clause, the term “the insured” as used in an exclusion refers only to the particular insured who is seeking coverage. E.g., Pleasant Valley Lima Bean Growers and Warehouse Association v. Col-Farm Insco., 142 Cal.App.2d 126, 298 P.2d 109 (1956); Industrial Indemnity Co. v. Continental Casualty Co., 375 F.2d 183 (10th Cir.1967); Cimarron Insurance Co. v. Travelers Insurance Co., 224 Or. 57, 355 P.2d 742 (1960); 48 ALR 3d 13, 88 § 28; 50 ALR 2d 78, 97 § 6. I agree with this rationale.
Second, insurance companies intend that the term “the insured” as used in an exclusion apply only to the insured who is seeking coverage. That is the conclusion reached in N. Risjord & J. Austin, “Who is ‘The Insured’ "Revisited, 28 Ins. Couns. J. 100.2 The article states:
The punchline is this: the term “the insured” means, and means only, the person claiming coverage, or (to put it another way) only the person coverage for whom is the issue.
Id., (emphasis in original). The article goes on to explain that the severability of interests clause became current in 1955 and was intended to clarify what insurance companies had intended all along, namely that the term “the insured" in an exclusion refers merely to the insured claiming coverage:
From a date at least no later than 1940, it was clearly understood by the insurance companies participating in the standard provisions program that, as stated above, “the insured” meant only the person claiming coverage, and that *1206the employee exclusion denied coverage to any insured only with respect to injury to his employee. By 1954, a majority of the reported decisions was to the contrary. Ironically, this is the only known situation where many of the courts persist in erring in favor of the insurance companies!
As a result, in 1954, the present writers, in “Who is ‘The Insured’ ” asserted that “the insured” was only the person claiming coverage. The 1955 revisions of the standard provisions promulgated by the National Bureau of Casualty Underwriters and the Mutual Insurance Rating Bureau carried a new condition labeled “Severability of Interests”, intended to express the purpose formerly implied and to avoid further erroneous decisions on this subject.
Id. at 101 (emphasis in original, footnotes omitted).
Third, the construction of the clause employed by the majority opinion would serve to defeat the reasonable expectations of the state. The lease agreements between Ryan and the state required Ryan to obtain “insurance to protect both the [state] and [Ryan] against comprehensive public liability, products liability ... and property damage.” Certainly the core purpose of this provision was to provide coverage to the state for claims related to Ryan’s use of the leased premises. This purpose could readily be frustrated under today’s opinion. For example, the insurance agreement here has an employee exclusion, as well as an aircraft exclusion. The former states that the policy does not apply “to bodily injury to ... any employee of the insured_” Thus, if a Ryan employee working on the leased premises were injured on or adjacent to the leased premises by reason of the negligence of the state, the state would not be protected.3 Since the majority’s reading of the term insured would plainly run counter to the central expectation of the contracting parties and deny coverage in this situation, it seems demonstrably wrong.4
Nonetheless, I concur in the result. In my view the policy should not be construed to apply to airports at which Ryan has no lease agreement with the state. Ryan had entered lease agreements with the state at Nome, Unalakleet, Kotzebue and McGrath. As Ryan had no lease at the Koyuk airport where the accident took place, the state is not afforded coverage in this case.5

. Such a clause states typically that "the term 'the insured’ is used severally and not collectively.” State v. Underwriters at Lloyds, London, 755 P.2d 396, 399 (Alaska 1988); Marwell Const. Inc. v. Underwriters at Lloyds, London, 465 P.2d 298, 305 (Alaska 1970).

. Each of the authors were officers of liability insurance companies when this article was published.

. This is hardly an unlikely hypothetical. In Duty Free Shoppers Group Ltd. v. State, 777 P.2d 649 (Alaska 1989), an employee of an airport premises lessee prosecuted such a claim against the state and obtained a substantial settlement.

. Insurance contracts are to be construed so that they give effect to the reasonable expectations of the contracting parties. Potter v. Ranger Ins. Co., 732 F.2d 742 (9th Cir.1984) (applying Alaska law); Hahn v. Alaska Title Guarantee Co., 557 P.2d 143 (Alaska 1976). Here, even the appellee acknowledges that the state expected coverage “against liability arising out of Ryan’s lease of clearly defined premises....”

.My interpretation is not without its own analytical difficulty because the policy language contains no geographical limitation. The policy provides the state with premises coverage for liability arising “(a) in or about any premises owned or controlled by the [state] and (b) elsewhere in the course of any work or the performance of any duties carried out by the [state]." Such language could be interpreted to cover the state for claims arising anywhere, but that interpretation is unreasonably broad.