Clear and Unambiguous Policy Enforced as Written

Insurance is Always Limited to the Agreement Between the Insured and the Insurer

Insurance policies, to the surprise of many, are nothing more than a written contract. No one has a right to be insured. Insurers have the unquestioned right to choose he who would be insured and to limit the insurance coverages promised. The contract must be interpreted as written to fulfill the agreement made.

In Benjy D. Smith v. The Burlington Insurance Company, No. 18-5040, D.C. No. 4:17-CV-00058-JHP-FHM, United States Court of Appeals for the Tenth Circuit (June 27, 2019) Benjy Smith appealed the grant of summary judgment to the Burlington Insurance Company in an insurance-coverage dispute finding the policy provided no coverage to Smith for liability incurred outside the conditions of the policy.


Smith owns and operates a courier service and a security service. In 2015 one of his armed security guards allegedly shot Monroe Bird III while on duty at a Tulsa, Oklahoma, apartment complex. Bird later died from his injuries. Bird’s mother, Zondra Magness, brought a wrongful-death action against Smith d/b/a Smith and Son Security for negligent hiring, retention, and supervision of the security guard (the Magness Action).

At the time of the shooting, Smith had a commercial general-liability policy with Burlington (the Policy) that provided, in relevant part: “[Burlington] will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” Insured was defined in Section II of the Policy by reference to the policy Declarations: “[Y]ou and your spouse are insureds, but only with respect to the conduct of a business of which you are the sole owner.” In the Declarations, “Benjy D. Smith” was listed as the “Named Insured,” his “Form of Business” was designated as “Individual,” and his business was described as “Courier Service.”

After Burlington denied coverage for the Magness Action, Smith filed suit seeking a declaration that Burlington had a duty under the Policy to defend and indemnify him and reimburse his defense costs in the Magness Action. The parties filed cross-motions for summary judgment. Burlington argued, in part, that the parties intended the Policy to cover Smith with regard to only his courier-service business, the only business described in the policy Declarations. The district court agreed with Burlington. It concluded that the plain language of the Policy unambiguously covered only Smith’s courier business.


Parties to a contract of insurance are at liberty to contract for insurance to cover such risks as they see fit and they are bound by terms of the contract. The cardinal rule in contract interpretation is to determine and give effect to the intent of the parties. When policy provisions are clear, consistent, and unambiguous, courts look to the plain and ordinary meaning of the policy language to determine and give effect to the parties’ intent.’

Reading the Declarations together with the body of the policy to give effect to each, the Tenth Circuit agreed with the district court that the Policy is unambiguous: Smith was the insured, but only with respect to the conduct of a business (not his personal conduct), and that business was his courier service.


Mr. Smith owned two businesses. One, the courier business represented minor risks of loss. The other business, providing armed security services provided serious risks of loss. Smith decided to insure only the risks he faced from the courier business and not the Security business. Burlington agreed to insure the courier business. It was not asked to, nor did it insure the security business. Smith, tried to get coverage when one of his security guards killed a person who was not part of the courier business. The effort failed. By avoiding the extra cost of insuring a security service Smith found himself uninsured for the killing.

© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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The Excellence In Claims Handling program provides everything a person or entity presenting a claim needs to effectively present the claim and provides the insurance claims person with everything he or she needs to properly represent the insurer.

The insured, risk manager, or corporate counsel will be able to present a first party property claim – whether a fire, theft, or windstorm or some other insured against cause – with little difficulty and professionalism and present a sworn proof of loss acceptable to an insurer.

The insurance claims person completing the course will be able conduct a thorough investigation of the policy and claim. The insurance claims person will also be able to assist an insured to fulfill all of the promises made by the insured to the insurer and the insurer to provide the indemnity promised by the insurance policy.

The series of courses was designed so that the student can obtain the needed information easily while he or she sits down in the morning for a first cup of coffee or any other time in the day in short, easy to consume lessons. For instance “Insurance and Claims” is made up of three modules and 27 lectures while “Investigating the Property Claim” is made up of four modules and 65 lectures. You can review each course, each module and each lecture at the links below.

Each person completing the course will be able to claim that he or she is a professional first party property claims person ready to provide excellence in claims handling and be ready to resolve any claims problem that arises for the benefit of the insurer and the policy holder.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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