A Bounce in Their Step


National Mutual Insurance v. Curtis (Indiana)
(Trampoline Accident Victim Sued Homeowners’ Insurer for Declaratory Relief; Insurer Cited Trampoline Exclusion, But court Found Exclusion to Be Ambiguous; Insurer Owed Duty)

The plaintiff was seriously injured while attending a graduation party at the home of the Curtises. During the party, he was injured while using a trampoline. The plaintiff filed a lawsuit against the Curtises for his injuries, and he later amended the complaint to add National Mutual Insurance Company as a defendant, seeking a declaration that the Curtises’ policy provided liability coverage for his injuries. National Mutual declined coverage, citing a trampoline exclusion found in a supplement attached to the main policy. The lower court granted the plaintiff’s summary judgment, determining that the policy provided coverage, and National Mutual appealed.

National Mutual issued a policy to the Curtises which included fourteen pages of supplemental information in addition to the eighteen pages that comprised the main policy. The additional materials included “Supplemental Extensions,” with numerous additional exclusions in fine print. One of those exclusions found in the “Supplemental Extensions” was for liability “[a]rising out of the ownership, maintenance or use of a trampoline.”

The court was essentially asked to “reconcile the seemingly contradictory duty of an insurance company to provide an unambiguous and clear policy with the duty of an insured to read his insurance policy.” National Mutual contended that the Curtises’ homeowner’s policy consisted of a basic policy form with modifying endorsements, all written in clear and unambiguous language. According to National Mutual, the Curtises had duty to acquaint themselves with his policy, but failed to do so. As such, National Mutual argued that the Curtises could not be heard to complain. The Curtises asserted that the exclusion provision was inconspicuous, and that structure and presentation of the homeowner’s policy created ambiguity.

The court recognized that insurers clearly have the right to limit their coverage of risks and, therefore, their liability by imposing exceptions, conditions, and exclusions. However, in order for such limitations to be enforced, they must be clearly expressed and they must be consistent with public policy. Although the insured is always supposed to read the policy, the court explained that “only a very hardy soul would have plowed through all of the fine print and separate sections in an effort to understand the many terms and conditions listed in the main policy and the convoluted additions thereto.” According to the court, “[n]owhere was there any straightforward and unconditional statement that the policy was not intended to protect the homeowners in this situation.”

Another factor that influenced the court’s decision was the seemingly misleading title of the section where the exclusion was found (i.e., “Supplemental Extensions”). Moreover, the “Supplemental Extensions” form did not employ any significant bolding, capitalization, or interlineations to clarify or set apart the separate exclusions. The court finally noted that National Mutual had updated its main policy over many years, but had elected to keep the trampoline exclusion in the attached supplements rather than incorporate it into the main policy language. In light of all those factors, the court found the trampoline exclusion to be ambiguous. The lower court ruling in favor of the insureds was affirmed.

NOTE: It is no secret that the court’s interpret policies in favor of coverage. In light of the significant case law detailing the obligations and burdens of an insurer, there would appear to be no excuse for this insurer to not have updated and clear policy forms. From the perspective of an insured, the lesson is that one should always closely review and analyze all policy documents, including the main policy form, certificates, endorsements, and amendments. An insured cannot always rely on a court refusing to enforce the express language of a policy in these types of circumstances.

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