In Sauer v. Crews, Slip Opinion No. 2014-Ohio-3655, the Ohio Supreme Court held that “in determining whether an insurance policy provision is ambiguous, a court must consider the context in which the provision is used.”
Sauer involved an automobile accident with the insured’s flatbed trailer. The trial court found that the insured was solely negligent in causing the accident. However, the insurer, Century Surety Company, denied coverage under the automobile exclusion of its commercial general liability insurance policy. The trial and appellate court disagreed.
Because there are automobile insurance policies, commercial general liability policies, including Century’s policy, have an automobile exclusion that excludes from coverage claims for bodily injury and property damage arising from use of an “auto”. Century’s policy specifically defines “auto”, and that definition expressly excludes “mobile equipment”. The policy then specifically defines “mobile equipment”, which includes vehicles maintained primarily for the purposes other than for transportation of person or cargo.
Based on this policy language, both the trial and appellate court concluded that the term “cargo” was ambiguous, and that because of this ambiguity, it is unclear whether the insured’s trailer falls under the definition of “mobile equipment” and therefore covered under the policy. The ambiguity required that Century provide coverage. The Ohio Supreme Court rejected this analysis and conclusion.
Rather, the Court concluded that the policy explicitly excluded from coverage bodily injury or property damage arising from the use of an “auto” and that the policy specifically states that a “trailer” designed for travel on public roads is an “auto” under the policy. Therefore, in reading the definitions of “auto” and “mobile equipment” together and in the entire context of the automobile exclusion, the term “cargo” is not ambiguous. Without any ambiguity, the policy clearly and explicitly excludes from coverage claims for bodily injury or property damage arising from the use of the insured’s trailer in this case.
A full text of the Slip Opinion can be found here.