Insurance Law

Court Looks For Fair Way To Interpret Golf Cart Coverage: Insurer Gets It Rough And Insured Gets The Green

Lots of courts have addressed whether golf carts are “autos” for purposes of liability and automobile policies. I’ve confronted the issue a couple of times and it’s an interesting one. The Court of Appeals of Georgia just had a golf cart coverage case before it. But the issue in American Strategic Ins. Corp. v. Helm, No. A14A0466 (Ga. Ct. App. June 9, 2014), [enhanced version available to subscribers], is not your typical one.

In 2012, William Helm struck and injured Tracy Self while Helm was driving his four-seat motorized golf cart around a master-planned community. Self filed suit against Helm for negligence in the operation of the golf cart. Helm was insured under a homeowner’s policy issued by American Strategic Insurance Corp. ASI filed a declaratory judgment action seeking a determination whether Helm’s policy provided coverage for the accident.

The ASI policy provided liability coverage but also contained specific exclusions pertaining to ‘Motor Vehicle Liability,’ in particular, “no coverage for ‘motor vehicle liability’ unless the ‘motor vehicle’ is: A motorized golf cart that is owned by an ‘insured,’ designed to carry up to 4 persons.” However, Helm’s policy also included a Georgia Special Provision Endorsement, which superseded and replaced the policy language involving golf cart coverage. The Special Endorsement modified coverage to read, “A motorized golf cart: (1) Owned by the ‘insured’; (2) Designed to carry up to 2 persons.”

So to be clear – the ASI policy excluded coverage for motor vehicle liability -- but provided coverage for a motorized golf cart “designed to carry up to 2 persons.” The golf cart at issue was a four-seater.

Self argued that coverage was owed because the phrase “designed to carry up to 2 persons” set a minimum requirement, such that a one-person golf cart would not be covered under the policy, but any golf cart with two seats or more would be covered. ASI in turn claimed the phrase set a maximum and acted as an exclusion for golf carts with any more than two seats.

The Georgia appeals court was confronted with a classic case of competing interpretations of a policy provision. The court held that the policy was susceptible to two reasonable interpretations, and, therefore, ambiguous. Because of this conclusion, the court construed the ambiguity against the insurer and found that the exclusion did not apply.

While the court did not say exactly what drove its decision, it appears to have been influenced by a couple of things. The deposition testimony of ASI’s director of underwriting supported the conclusion that the policy could reasonably be interpreted two different ways. Second, the court noted that Self pointed out “other instances in which the phrase ‘up to’ can be used to set a minimum, noting for example that if a job posting stated that applicants must be capable of lifting up to 40 pounds or typing up to 90 words per minutes, those applicants who are capable of lifting more or typing faster would not be excluded.”

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The views expressed herein are solely those of the author and not necessarily those of his firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. Coverage Opinions is gluten free but may contain peanut products.

    Randy Maniloff is Counsel at White and Williams, LLP in Philadelphia. He previously served as a firm Partner for seven years and transitioned to a Counsel position to pursue certain writing projects including Coverage Opinions . Nonetheless he still maintains a full-time practice at the firm. Randy concentrates his practice in the representation of insurers in coverage disputes over primary and excess obligations under a host of policies, including commercial general liability and various professional liability policies, such as public official’s, law enforcement, educator’s, media, computer technology, architects and engineers, lawyers, real estate agents, community associations, environmental contractors, Indian tribes and several others. Randy has significant experience in coverage for environmental damage and toxic torts, liquor liability and construction defect, including additional insured and contractual indemnity issues. Randy is co-author of “General Liability Insurance Coverage - Key Issues In Every State” (Oxford University Press, 2nd Edition, 2012). For the past twelve years Randy has published a year-end article that addresses the ten most significant insurance coverage decisions of the year completed.

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