American Bankers Insurance Co v. Robert Shockley, Jr., 3 F.4th 322

St. Charles Farms (SFC), a horse farm/equestrian business, sent an employee (Ratay) and an SFC golf cart to an off‑site riding event at Barrington Hills Riding Center (~15 miles from SFC).
Shockley was a passenger in the golf cart, was thrown and run over during an incident at the riding center, and sued Ratay and SFC for negligence (respondeat superior against SFC).
SFC’s insurer, American Bankers Insurance Co. of Florida, sued for a declaratory judgment in federal court that it had no duty to defend or indemnify SFC in the underlying suit; the district court granted summary judgment for American.
The insurance policy was labeled a farmowner policy but included a separate “Commercial Liability” section, listed business exposures (e.g., riding academies, instructors), and contained an additional‑insured endorsement for the Kane County Fairgrounds—creating ambiguity whether it functioned as a CGL policy or a premises‑linked farmowner policy.
The Seventh Circuit held the policy ambiguous, construed it as a commercial general liability policy in favor of the insured, found the underlying complaint invoked Coverage L (including supplemental motorized‑vehicle coverage), reversed the denial of a defense, and remanded; the court declined to decide indemnity as premature.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Nature of the policy (farmowner vs. CGL)	Policy is ambiguous and should be read as a CGL covering business operations	Policy is a premises‑linked farmowner policy limiting coverage to insured premises	Policy ambiguous; construed against insurer as CGL
Duty to defend under Coverage L	Underlying complaint alleges injury arising from SFC business operations and therefore falls within Coverage L	Injury occurred off‑premises; coverage limited to insured premises so no duty	Complaint potentially falls within Coverage L; duty to defend exists
Motorized‑vehicle exclusion (Exclusion Six)	Golf cart was used for business (not recreational) and supplemental motorized coverage applies	Golf cart is a motorized vehicle used off premises; exclusion bars coverage	Exclusion ambiguous; supplemental motorized‑vehicle coverage can apply; does not bar defense
Duty to indemnify now	Insurer should indemnify for covered liability	Indemnity not ripe until underlying facts/adjudication	Indemnity determination premature under Peppers; dismiss without prejudice

Sterling Nat'l Bank v. Block, 984 F.3d 1210 (7th Cir. 2021) (summary judgment standard; view facts in light most favorable to nonmoving party)
Federated Mut. Ins. Co. v. Coyle Mech. Supply Inc., 983 F.3d 307 (7th Cir. 2020) (duty to defend compares complaint allegations to policy language; doubts resolved for insured)
Selective Ins. Co. of S. Carolina v. Target Corp., 845 F.3d 263 (7th Cir. 2016) (contract interpreted by plain and ordinary meaning; read as whole)
Twenhafel v. State Auto Prop. & Cas. Ins. Co., 581 F.3d 625 (7th Cir. 2009) (insurance contract interpretation may be decided on summary judgment)
Dash Messenger Serv., Inc. v. Hartford Ins. Co. of Illinois, 221 Ill. App. 3d 1007 (Ill. App. 1991) ("arising out of" is broadly construed; liberal construction for insured)
Pekin Ins. Co. v. Wilson, 237 Ill. 2d 446 (Ill. 2010) (insurer bears burden to prove exclusions; ambiguities against insurer)
Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill. 2d 90 (Ill. 1992) (duty to indemnify is narrower than duty to defend)
Maryland Cas. Co. v. Peppers, 64 Ill. 2d 187 (Ill. 1976) (declaratory judgment court should not decide indemnity issues that require adjudication of underlying facts)