Tower Insurance Co. of New York v. Horn
2015 Ky. LEXIS 1933
| Ky. | 2015Background
- Sept. 26, 2011, B&B Contracting, LLC operated highway mowing/landscaping with a short-staffed crew; Brent Horn volunteered to drive a B&B truck and was not an employee or paid.
- Bradley Stafford, an employee of B&B, was fatally injured when he fell from Horn’s truck.
- Stafford’s administratrix sued for wrongful death; Horn sought coverage under Tower’s auto policy; Tower sought declaratory relief.
- Trial court granted Tower’s summary-judgment motion and denied coverage to Horn, finding Horn a permissive user but applying the employee exclusion to deny coverage.
- Court of Appeals reversed, agreeing Horn was an insured and the severability clause prevented the employee exclusion from applying to him; Tower sought discretionary review.
- We affirm the reversal and hold the employee exclusion does not apply to Horn due to the severability clause and Horn’s status as a permissive, non-employee user.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the employee exclusion bar coverage for a permissive user (Horn) | Tower: exclusion bars Horn because Stafford was an employee. | Horn: severability clause preserves Horn’s coverage. | Exclusion does not apply to Horn. |
| What is the effect of the severability clause on applying the employee exclusion | Policy treats insureds separately; severability supports exclusion to apply generally. | Severability requires assessing coverage per insured, so Horn isn’t excluded. | Severability requires analyzing Horn separately; exclusion not applicable to Horn. |
| Is Brown v. Indiana Ins. Co. controlling in this context | Brown bars coverage where a fellow employee was driving. | Brown is distinguishable; Horn isn’t a fellow employee, and severability wasn’t considered there. | Brown distinguished; not controlling. |
| Is Liberty Mut. Ins. Co. v. State Farm Mut. Auto. Ins. Co. controlling | Liberty Mutual would give less coverage to an unnamed permissive user. | Liberty Mutual focuses on household exclusions; different policy purpose here. | Not controlling; distinguishable. |
| Is National Ins. Underwriters v. Lexington Flying Club, Inc. applicable | Not controlling; Horn isn’t in a class exempted by the exclusion. |
Key Cases Cited
- Brown v. Indiana Ins. Co., 184 S.W.3d 528 (Ky.2005) (fellow-employee exclusion not controlling when permissive user is involved)
- Liberty Mut. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 522 S.W.2d 184 (Ky.1975) (severability clause not to negate policy exclusions; household/exclusion analysis distinct)
- National Ins. Underwriters v. Lexington Flying Club, Inc., 603 S.W.2d 490 (Ky.App.1979) (severability clause did not extend to exclusion for this context; differs from Horn)
- Northland Ins. Co. v. Zurich Am. Ins. Co., 743 N.W.2d 145 (S.D.2007) (minority view; omnibus insured not entitled to greater coverage than named insured)
- Centennial Ins. Co. v. Ryder Truck Rental, Inc., 149 F.3d 378 (5th Cir.1998) (majority view: exclusions apply to each insured; severability spreads but does not negate exclusions)
- St. Paul Fire & Marine Ins. Co. v. Schilling, 520 N.W.2d 884 (S.D.1994) (severability context in SD decisions referred to in related discussions)