Is Coverage for a Permissive User Lost if the User Exceeds the Permission?
Most liability insurance policies allow an insured to give permission to another to use a vehicle or boat and be insured as a permissive user. That coverage does not exist if the vehicle or boat is used for conduct not within the permission. If, for example, permission is given to allow a person to cross a lake but, instead, carries explosives to a dam that created the lake to destroy it would be outside the permission given. Most cases, of course, are not that obvious.
In Alex Deen v. Donald Ansted, et al., Court of Appeals No. L-18-1071, 2019 Ohio 3125, Court of Appeals of Ohio Sixth Appellate District Lucas County (August 2, 2019) the Ohio Court of Appeal was faced with a situation that the trial court found to be sufficient and the plaintiff, Alex Deen, Administrator of the Estate of Mustafa Nasirdeen, appealed the summary judgment rendered in favor of intervening Home-Owners Insurance Company (“Home-Owners”).
On August 10, 2014, Mustafa Nasirdeen drowned in a private lake at the Hidden Harbour subdivision in Holland, Lucas County, Ohio, after falling/being pushed from a pontoon boat operated by Ryan Benham, grandson of boat-owners and residents Donald and Kathy Ansted.
On the date of the accident, the Ansteds were covered by a homeowner’s insurance policy issued by Home-Owners which defined persons who would be considered insureds under the policy as follows: “5. Insured means: * * * (e) any person or organization legally responsible for animals or watercraft covered by this policy and owned by a person included in a., b. or c. above. However, we will cover that person or organization only with respect to those animals or watercraft. We will not cover any person nor organization using or having custody of animals or watercraft in the course of any business nor without permission of the owner.:
The Ansteds were also covered under an umbrella or excess personal liability coverage policy for individuals named or qualifying as insureds.
The trial court granted summary judgment in favor of Home-Owners. The court concluded that the fact that Ryan allowed alcohol on the pontoon boat was a gross deviation from the scope of the permission given by his grandparents and, thus, coverage under their insurance policies was not available.
At issue is whether the Ansteds’ insurance policies provided coverage at the time of the incident. In Ohio, insurance contracts are construed as any other written contract. If the language of the policy is clear and unambiguous, there are no issues of fact and interpretation is a matter of law. Conversely, policies that are reasonably susceptible of more than one interpretation will be construed strictly against the insurer and liberally in favor of the insured.
The Ansteds’ admitted that at the relevant time, Ryan was using the boat with their permission. Although the admission was against their interests in the original action commenced by appellant, it is not binding in Home-Owners’ declaratory judgment action.
Appellant’s key argument on appeal is that the trial court erred in finding that Ryan’s actual use of the boat was a gross deviation from the scope of his permission given by the Ansteds. Generally, permission to use a vehicle may be express or implied. Analyzing the phrase “scope of permission,” Ohio courts have adopted the slight or minor deviation rule which provides that where the use of the property deviates only slightly from the purpose for which permission was initially granted, the standard omnibus clause in a liability insurance policy will be interpreted to extend coverage. However, if the use represents a complete departure or gross deviation from the scope of permission, no coverage will be afforded.
It is undisputed that the Ansteds did not restrict the time, place, or purpose of Ryan’s use of the boat. He was not limited to a certain part of the lake, number of persons on the boat, or as to the date or duration of an excursion. The deposition testimony clearly indicates Ryan had the Ansteds’ express permission to use the boat and had done so on several prior occasions. Further, Mrs. Ansted was aware and had personally observed that Ryan and his friends were going to use the boat on the date of the accident.
Construing, as it must, the evidence in a light most favorable to the non-moving party material fact questions remain regarding whether Ryan had permission to use the boat in light of the alcohol brought on board. Specifically, the trier of fact should have determined if this was a minor deviation from the scope of permission or a gross deviation which negated Ryan’s general permission to use the boat the day of the accident. Therefore, the Court of Appeal reversed the trial court and remanded the case to determine whether the use of the boat was within the course of the permission granted or not.
It is not unusual for a summary judgment order to be reversed on appeal. That is why many trial judges are loath to grant motions for summary judgment. In this case the court of appeal did justice, found there was insufficient evidence to prove that Ryan grossly breached his grandparents permission to use the boat, and allowed the case to go to trial to determine coverage. The grandparents obviously didn’t give him permission to cause the death of Mustafa Nasirdeen. Whether the existence of alcohol on board added to the potential for the death or exceeded the permission is the issue to be resolved by the trial court.
© 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 http://www.zalma.com and firstname.lastname@example.org.
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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