Fire Insurance Exchange v. Oltmanns
2012 UT App 230
Utah Ct. App.2012Background
- Oltmanns and Blackner operated a Honda F-12 AquaTrax personal watercraft on a southern Utah lake.
- Injury occurred during use of the AquaTrax, leading to a liability claim against Oltmanns under his homeowners policy with Fire Insurance Exchange.
- Fire Insurance Exchange sought a declaratory judgment that it had no duty to defend or indemnify under the policy’s liability coverage.
- The policy contains an exclusion stating liabilities do not cover bodily injury arising from ownership, maintenance, use, loading or unloading of jet skis and watercraft meeting certain power thresholds.
- The exclusion’s terms also include an exception for storage situations, and the insurer argued the term “jet ski” encompasses all personal watercraft.
- The trial court granted summary judgment for the insurer, and Oltmanns and Blackner appealed seeking reversal on the ambiguity of “jet ski.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the term 'jet ski' ambiguous in the policy exclusion? | Oltmanns argues ambiguity because 'jet ski' is a trademark for a Kawasaki model not involved. | Fire argues 'jet ski' is unambiguous and broad enough to exclude all PWCs. | Ambiguous; term construed against insurer. |
| Does the exclusion clearly and unmistakably communicate the coverage limitation? | Ambiguity requires extrinsic evidence or construction against the drafter. | Exclusion clearly excludes jet ski-type watercraft. | Not clear and unmistakable; requires contra drafter construction. |
| What governs the interpretation standard for insurance contract exclusions? | Ambiguities should be resolved in insured’s favor; extrinsic evidence permissible. | Interpretation should follow contract-interpretation rules and pro-insurer strictness for exclusions. | Insurance contracts are interpreted with preference to coverage when ambiguous; strict construal of exclusions against insurer. |
Key Cases Cited
- Utah Farm Bureau Ins. Co. v. Crook, 980 P.2d 685 (Utah 1999) (ambiguous exclusion language construed in favor of coverage; strict against insurer)
- United States Fidelity & Guar. Co. v. Sandt, 854 P.2d 519 (Utah 1993) (adhesion contract interpreted liberally in favor of insured; exclusions strictly construed against insurer)
- Wilburn v. Interstate Electric, 748 P.2d 582 (Utah Ct. App. 1988) (extrinsic evidence used to resolve contract ambiguity (general principle))
- Massey v. Griffiths, 152 P.3d 312 (Utah 2007) (summary judgment standard and contract interpretation framework)
- Bear River Mut. Ins. Co. v. Williams, 153 P.3d 798 (Utah App. 2006) (insurance contract interpretation; deference to trial court’s contract conclusions)