delivered the Opinion of the Court.
I. Introduction
In this insurance coverage dispute, we review the court of appeals' decision in Lincoln General Insurance Co. v. Bailey,
The insured, driving a rental car under the influence of methamphetamines, led police on a high-speed car chase that ended when, speeding on the wrong side of the road, he struck a vehicle containing Julie Bailey and her son, Brandon Magnusson. Ms. Bailey was critically injured and her son was killed; Ms. Bailey and her son's estate are the plaintiffs in this case. The insured pled guilty to five felonies, including second degree murder.
The insured assigned his rights to the plaintiffs to collect on a $1 million excess-insurance policy issued by Lincoln General when he rented his car. Lincoln General denied coverage for damages caused by the insured, relying on, in part, an exclusion in the rental agreement that voided coverage if the car was used to commit a crime that could be charged as a felony. The trial court, and the court of appeals, held that this criminal-acts exclusion was enforceable.
We consider two issues regarding this criminal-acts exelusion.
The second issue is whether insertion of the eriminal-acts exclusion into the rental agreement violated the reasonable expectations of the insured. In Colorado, there are two general cireumstances where the doe-trine of reasonable expectations renders exclusionary language unenforceable: (1) where an ordinary, objectively reasonable person would, based on the language of the policy, fail to understand that he or she is not entitled to the coverage at issue; and (2) where, because of cireumstances attributable to an insurer, an ordinary, objectively reasonable insured would be deceived into believing that he or she is entitled to coverage, while the insurer would maintain he or she is not. We conclude that the facts of this case implicate neither cireumstance and hold that the criminal-acts exelusion does not violate the reasonable expectations of the insured.
II. Background
On one afternoon in December 2008, the insured, under the influence of methamphet-amines, led police on a high-speed car chase while driving a rental car. At times, police in six different cars attempted to end the chase, which lasted approximately twelve minutes and covered a distance of twenty miles. During this chase, the driver: (1) drove at speeds two to three times greater than posted speed limits, accelerating to speeds over 100 miles per hour; (2) repeatedly veered onto the wrong side of the road; (8) ran multiple stop signs; (4) forced cars, busses, trucks, and police cars to take evasive action to avoid collisions; and (5) avoided police-placed stop sticks by speeding through a hotel parking lot.
The chase ended when the driver, speeding on the wrong side of the road, crashed head-on into an automobile with two individuals inside: the driver, Ms. Bailey, and her passenger and fourteen-year-old son, Brandon Magnusson. Both sustained serious injuries. At one point, Ms. Bailey was in critical condition, but survived. Her son, however, died shortly after the collision.
The insured pled guilty to five felonies related to his use of the car, including second degree murder, first degree assault, vehicular homicide, vehicular assault, and unlawful possession with intent to distribute a controlled substance. He was sentenced to forty-three years in the Colorado Department of Corrections.
Approximately two weeks before the high-speed car chase, the insured obtained the rental car from a Dollar Rent-A-Car ("Dollar") counter at Denver International Airport. As part of a rental car transaction that lasted no more than five to six minutes, the driver purchased a $1 million supplemental liability insurance ("SLI") policy from Lincoln General. This SLI protection covered bodily injury and property damage in accidents involving the rental car, but only as excess insurance; the SLI coverage was only effective after "the limit of liability or limit of insurance of all underlying insurance' available to the insured" was exhausted. The "underlying insurance" in this case was provided by Dollar to the driver as part of his rental agreement, and constituted primary insurance that provided coverage up to the statutorily mandated minimum - coverage amounts: $25,000 for bodily injury to any one person, and $50,000 to all persons in any one accident, including property damage. § 10-4-620, C.R.S. (2010).
The insured purchased the SLI coverage from a Dollar rental clerk, who had not received any formal training to sell insurance products. The clerk told the insured that the SLI protection "covered the car bumper to bumper; if he was to get into a wreck, the car was covered." But the clerk never reviewed the terms of insurance with him and did not tell him about any coverage exclusions or prohibitions.
THE VEHICLE MAY NOT BE USED ... (8) IN A RACE OR SIMILAR CONTEST ...; (4) FOR ANY ILLEGAL PURPOSE, OR IN THE COMMISSION OF A CRIME THAT COULD BE CHARGED AS A FELONY; (5) WHILE THE DRIVER IS UNDER THE INFLUENCE OF ALCOHOL OR DRUGS; ... (7) TO INTENTIONALLY CAUSE DAMAGE, OR DAMAGE THE VEHICLE BY WILLFUL, RECKLESS OR WANTON MISCONDUCT ...
ANY PROHIBITED USE OF THE VEHICLE VIOLATES THE AGREEMENT AND VOIDS OR DEPRIVES YOU OF BENEFITS, PROTECTION AND OPTIONAL COVERAGES, IF ANY, TO WHICH YOU WOULD HAVE OTHERWISE BEEN ENTITLED UNDER THIS AGREEMENT.
(emphasis in original). After this section, near the end of the rental agreement, another section appears, describing the insured's third-party liability responsibility as follows:
.... Where available, and for an additional daily charge, if You initialed that You accept the optional SLI at the beginning of rental, SLI provides You with protection against third-party auto liability claims as outlined below:
A. Dollar will protect You against third party liability claims arising out of the use or operation of the Vehicle for: () Bodily injury or death of another ... and (@) Property damage other than to the Vehicle. This protection is limited to an amount equal to the minimum limits specified by the compulsory insurance or financial responsibility laws relating to automobile liability insurance in the state in which the Vehicle is rented and shall be referred to as Primary Protection; and B. SLI provides You with a separate policy providing excess coverage against such claims for the difference between the Primary Protection and a maximum combined single limit of $1,000,000.00 (U.S.) per occurrence for bodily injury, including death and property damage, for other than the Vehicle while the Vehicle is on rent to you
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3. You understand that SLI is void if You violate the terms of the Agreement. You understand SLI is subject to other specific exclusions, which are summarized on the separate SLI brochure which is available at the rental counter.
When the insured received the rental agreement, he did not read it. And although the rental agreement provided that a brochure describing the SLI coverage was available at the rental counter, the insured neither asked for nor received this brochure. He also never received the policy describing the SLI coverage.
Before going to prison, the insured assigned to the plaintiffs his rights to collect on the SLI coverage. After the collision, Lin-coin General initiated a declaratory judgment action, claiming that, because of exclusionary policy language, it owed no duty to defend or to indemnify the insured, and was not liable to the plaintiffs for any losses arising from the collision. Ms. Bailey, on behalf of herself and her son's estate, filed two complaints: one against Lincoln General, alleging breach of contract, bad faith and violation of the Colorado Consumer Protection Act (the "CCPA"); and the other against the insured and Dollar for personal injury and wrongful death. The trial court held an uncontested hearing to determine damages, entering judgment against the driver for over $2 million. Dollar then settled with Ms. Bailey, for $25,000, on the primary policy it had issued to the insured.
Lincoln General moved for summary judgment, claiming it had not violated the CCPA, and arguing that the prohibitions in the rental agreement and policy absolved it of any liability to the plaintiffs. Specifically, Lincoln General claimed that the driver had
On a cross-claim for summary judgment, Ms. Bailey moved for partial summary judgment on the claim for breach of contract, claiming that the exelusions were ambiguous, unconscionable, violated public policy, and defeated the reasonable expectations of the insured.
The trial court granted Lincoln General's motion for summary judgment, declaring that Lincoln General could not be held Hable for the insured's actions. Relying on just the language in the rental agreement and not the SLI policy, the trial court focused solely on the prohibition against using the vehicle in the commission of a crime that could be charged as a felony, and concluded that: the exelusion was clear and unambiguous, the prohibition did not violate public policy, and the driver had violated this prohibition. The trial court denied the plaintiffs' motion for partial summary judgment, finding no bad faith, breach of contract, or a violation of the CCPA.
The court of appeals affirmed, for substantially the same reasons the trial court articulated. The court of appeals concluded that the SLI coverage's criminal-acts exclusion was not ambiguous, did not violate public policy, and was not unconscionable. Lincoln Gen., 224 P.B3d at 339-42. The court also determined that the criminal-acts exclusion was not unenforceable under the doctrine of reasonable expectations, which did not apply because that doctrine, according to the court, is only "an interpretive tool used to resolve ambiguity." Id. at 339.
III - Public Policy
The plaintiffs contend that the court of appeals erred in concluding that the criminal-acts exclusion in an excess-insurance policy is not void for violating public policy. We conclude that although Colorado's public policy is concerned with protecting innocent tort victims, it is also concerned with insurers' freedom to contract, allowing insurers to limit their liability to calculable risks, excluding liability for the intentional misconduct of insureds that significantly increases insurers' risk of liability. Accordingly, the criminal-acts exclusion in this case does not violate public policy.
Insurance provisions that violate public policy may be declared void and unenforceable. Peterman v. State Farm Mut. Auto. Ins. Co.,
In determining whether insurance provisions are void as against public policy, our primary focus has been whether they attempt to "dilute, condition, or limit statutorily mandated coverage." - Terranova v. State Farm Mut. Auto. Ins. Co.,
The ceriminal-acts in the insurance policy here is framed in terms of a prohibition, the violation of which deprives the insured of coverage benefits: "THE VEHICLE MAY NOT BE USED ... IN THE COMMISSION OF A CRIME THAT COULD BE CHARGED AS A FELONY. ..."
There are no Colorado statutes establishing the public-policy desirability of criminal-acts exclusions in excess-insurance policies. Nevertheless, the plaintiffs point us to three
Our court of appeals correctly noted that the SLI coverage here, as excess insurance, is not subject to the requirements of these statutes, which only apply to statutorily mandated coverage. Nevertheless, as partly shown by these three statutes, "[in Colorado, there is a strong public policy in favor of protecting tort victims; this is a fundamental purpose of insurance coverage, whether or not the state makes the particular coverage mandatory to obtain." Friedland v. Travelers Indem. Co.,
Given Colorado's strong public policy of protecting tort victims, we first consider whether the criminal-acts exclusion in this case is so broadly worded as to deprive the insured of fundamental coverage afforded by his excess-insurance policy, rendering coverage illusory.
At least one court has, based on the public-policy principle of protecting innocent tort victims, limited a criminal-acts exclusion that encompassed not just intentional eriminal misconduct, but also criminally negligent misconduct characterized by gross "thoughtlessness, inattention, or - inadvertence." Young v. Brown,
Because the exclusion in this case implicates all felonious conduct, it may be so broad as to reach circumstances that raise the issue addressed by the Young court and render the insurer's risk a nullity. See Am. Family Mut. Ins. Co. v. White,
But these circumstances are not before us today. Here, the insured's felonious criminal misconduct rose far above the mere criminal negligence that concerned the Young court; the insured here was "aware that his conduct" was "practically certain to cause" "the death of a person." § 18-1-501(6), CRS. (2010); § 18-8-103(1), C.R.S. (2010). Thus, we need not address whether Lincoln General's use of the eriminal-acts exclusion renders coverage illusory.
We turn now to the more general question of whether Colorado's insurance laws give insurers of excess-insurance poli-cles license to include eriminal-acts exclusions, and conclude that they do. There are multiple, competing public-policy principles animating Colorado's insurance laws: not only is it the public policy of this state to protect tort victims, but it is also the public policy of this state to provide insurers and insureds the freedom to contract, allowing insurers to shift risk based on their insureds'
Colorado has a strong commitment to the freedom of contract. Shelter Mut. Ins. Co. v. Mid-Century Ins. Co.,
This freedom to contract encompasses excess-insurance policies: "In the absence of statutory inhibition, an insurer may impose any terms and conditions consistent with public policy which it may see fit." Chacon v. Am. Family Mut. Ins. Co.,
The freedom to contract is especially important in the insurance industry, as insurance policy terms are the primary means by which parties distribute and shift risk. See 7 Couch on Insurance § 101-6 (2006); see also Chacon,
Insurers' freedom to contract generally allows them to provide coverage for losses caused by "fortuitous" events, and not for events "planned, intended, or anticipated." Aluminum Co. of Am. v. Aetna Cas. & Sur. Co.,
Most felonious criminal misconduct, like intentional misconduct, significantly alters the calculus of risk between the insurer and insured, subjecting the insurer to increased and significantly greater risk of liability. Just as intentional misconduct resulting in loss is not a "fortuitous" event properly subject to coverage, neither is most felonious criminal misconduct that "includes a voluntary act or the omission to perform an act which he is physically capable of doing." See § 18-1-502, CRS. (2010). Further, most insureds can keep themselves from engaging in felonious erimi-nal conduct in the same way that "[mJost individuals can protect themselves from causing intentional harm." See Am. Family Mut. Ins. Co. v. Johnson,
Finally, public policy is also concerned with insurers giving insureds license to engage in intentional misconduct, which may be "more likely if ... insured[s] believe [they] will not
Indeed, this public-policy principle is so compelling that, in many jurisdictions, insurers may actually violate public policy if they fail to include eriminal-acts or intentional-acts exclusions in their policies. Seq, eg., Freightquote.com, Inc. v. Hartford Cas. Ins. Co.,
In light of the competing public-policy principle of giving insurers the freedom to limit through contract their liability for their insureds' intentional misconduct, and in the absence of any statutory mandate suggesting otherwise, the criminal-acts exclusion here does not violate public policy as applied in this case. Lineoin General exercised its freedom to contract and limited its risk by excluding criminal acts that, if covered, would significantly increase its scope of lability.
IV. The Doctrine of Reasonable Expectations
The plaintiffs contend that they are entitled to the SLI coverage because of the doctrine of reasonable expectations. Their reasonable-expectations argument is twofold. First, they contend that, considered from the perspective of the insured, the rental agreement is ambiguous, entitling them to coverage. And second, they argue that under the circumstances of this case, the insertion of the eriminal-acts exelusion was unconscionable, violating the insured's reasonable expectations.
Before addressing the plaintiffs argument, we must first clarify Colorado's formulation of the doctrine of reasonable expectations. - Given insurance policies unique nature, which includes significant potential for insurers to take advantage of or mislead insureds, such policies are subject to heightened scrutiny, including the doctrine of reasonable expectations, which obligates insurers to clearly and adequately convey coverage-limiting provisions to insureds. In Colorado, the reasonable expectations of insureds have succeeded over exclusionary policy language in two main situations: (1) where an ordinary, objectively reasonable person would, based on the language of the policy, fail to understand that he or she is not entitled to the
A. Insurance Policies as Standardized Agreements
We have long viewed insurance poli-cles with a critical eye, as such policies, although they may not technically qualify as contracts of adhesion, see Schmidt v. Midwest Family Mutual Insurance Co.,
In Davis v. M.L.G. Corp.,
Because of the nature of insurance policies, courts have a duty to serutinize them closely for "provisions that unduly compromise the insured's interests." - Hwizar,
In Colorado, the doctrine of reasonable expectations is one of the principles of fairness to which insurance policies are subject, as it is designed to protect insureds from the dangers inherent in standardized insurance policies. We have earlier noted that public policy itself "favors protecting consumers by requiring those who sell insurance to disclose fully and fairly to the purchasing public what insurance protection is actually being provided for the premium charged." Davis,
B. Manifestations of the Doctrine
Some confusion exists over the seope of the doctrine of reasonable expectations in Colorado. Courts do not disagree that it is implicated where there is a dispute about the existence of insurance coverage. See Struble v. Am. Family Ins. Co.,
There are two main ways in which the doctrine of reasonable expectations has manifested itself in Colorado, ensuring that insurers have "fully and fairly" conveyed coverage limitations to insureds. The first is where an ordinary, objectively reasonable person would, based on the language of the policy, fail to understand that he or she is not entitled to the coverage at issue. Applying this source of reasonable expectations to the facts of this case, we conclude that the language of the rental agreement would not lead an ordinary, objective insured to expect coverage for his criminal acts.
The second manifestation of the doctrine is where, because of cireumstances attributable to an insurer, an ordinary, objectively reasonable person would be deceived into believing that he or she is entitled to coverage, while the insurer would maintain otherwise. Applying this principle here, we conclude that the plaintiff cannot point to any cireum-stances attributable to the insurer that would lead him to expect coverage for his criminal acts, especially in light of the fact that an objectively reasonable insured would not expect to be able to insure such behavior.
1. Language of Policy
a. Legal Principles
Colorado courts have honored the reasonable expectations of an insured where an ordinary, objectively reasonable person would, based on the language of the policy, fail to understand that he or she is not entitled to the coverage at issue. This manifestation of the doctrine of reasonable expectations applies when policy coverage-provisions may not be ambiguous in a technical sense, and hence subject to the rule that ambiguities must be construed against the drafter, but are ambiguous from the perspective of an ordinary reader. In such cases, exclusionary language may be held unenforceable.
Insurance policies are subject to contract interpretation, Radil v. National Union Fire Insurance Co. of Pittsburg, PA,
As we observed in Carroll v. CUNA Mut. Ins. Soc.,
And under the doctrine of reasonable expectations, the whole policy is construed as it would be understood by an ordinary insured. See Cyprus,
If, based on how an ordinary, objectively reasonable insured would read the whole policy, the question of whether certain coverage exists is "susceptible to more than one reasonable interpretation," Cary v. United of Omaha Life Ins. Co.,
When honoring the insured's expectations through this manifestation of the doctrine of reasonable expectations, insureds do not actually have to have read their poli-cles; the test to be applied is "what the ordinary reader and purchaser would have understood" insurance provisions to mean had they been read. Davis,
b. Application
Turning to explore whether the rental agreement in this case violated this manifestation of the doctrine of reasonable expectations, we review de novo the trial court's grant of summary judgment, "ever mindful that summary judgment is appropriate only when the pleadings and supporting documents show there to be no genuine is
Reading the rental agreement, an ordinary reader would first learn, from a section de-seribing the prohibited uses of the vehicle, that using the car in a prohibited manner may void benefits and protections. After proscribing nine different uses, including the use of the car in felonious criminal acts, this prohibited-uses section states the following in bold type:
ANY PROHIBITED USE OF THE VEHICLE VIOLATES THE AGREEMENT AND VOIDS OR DEPRIVES YOU OF BENEFITS, PROTECTION AND OPTIONAL COVERAGES, IF ANY, TO WHICH YOU WOULD HAVE OTHERWISE BEEN ENTITLED UNDER THIS AGREEMENT.
Hence, at this point, an ordinary reader could reasonably conclude that any and all protections conferred by the rental agreement may be rendered unavailable by engaging in a prohibited use of the vehicle.
Then, when reading the section describing third-party liability, which appears after the prohibited-uses section and near the end of rental agreement, the insured would receive confirmation that using the automobile in a prohibited manner would void SLI coverage, as one paragraph clearly states that SLI coverage will be unavailable to the insured based on a violation of the rental agreement: "You understand that SLI is void if You violate the terms of the Agreement."
Hence, because the insured would have always clearly understood that SLI coverage could be voided upon a violation of the rental agreement, the language of the rental agreement would not lead an ordinary, objective insured to expect SLI coverage where the insured uses the car to commit a felonious criminal act.
The plaintiffs argue, nevertheless, that because there is an ambiguity in the rental agreement
The plaintiffs' argument continues that, because of this ambiguity that may lead an ordinary insured into believing that primary coverage could be voided-which, according to the plaintiffs, would restrict statutorily required coverage in a manner that violates
The plaintiffs' argument is not persuasive. Although ambiguous policy language shrouds the insured's ability to recover benefits under his primary insurance policy issued by Dollar, no such ambiguous policy language applies to his excess-insurance policy, the benefits of which are sought by the plaintiffs but denied by Lincoln General. The only relevant ambiguities under the doctrine of reasonable expectations are those that relate to the coverage the insured claims and reasonably expects, and which the insurer later denies. See Reg'l Bank of Colo.,
2. Deception
Colorado courts have honored the reasonable expectations of an insured where cireumstances attributable to an insurer have deceived ordinary, objectively reasonable insureds into believing that they are entitled to coverage, while the insurer would maintain they do not enjoy such coverage.
Hence, we disagree with the court of appeals' assessment that the doctrine of reasonable expectations only applies as an interpretive tool to resolve ambiguities. Indeed, as seen above, the doctrine of reasonable expectations assists in establishing whether ambiguities exist at all. But more deeply, the court of appeals' view conflicts with the underlying rationale in our Davis decision.
In Davis, we addressed the validity of an exclusion in a physical damage waiver that was part of a car rental agreement between a lessor and lessee.
Although the prohibition was not ambiguous, and although we never declared that the prohibition itself was unconscionable, we nevertheless held the exclusion unenforceable. Id. at 992. We concluded that the prohibition excluded coverage in an "unconscionable manner," and we did so not only in reference to traditional factors of unconscionability, but also in light of the reasonable expectations of the lessee. Id. at 986, 989, 991-92.
We embraced the broader concept of reasonable expectations because we wished to adopt a principled approach that could be used by courts where "a lease agreement is not ambiguous in the sense that the instrument is subject to two possible interpretations," but nevertheless where "the deceptive character of language ... leads an average renter to believe that he or she has paid for broad protections against collision liability," when in fact the lessor would argue that he or she does not possess such protections. Id. at 989. Hence, we envisioned courts making use of the doctrine precisely where no ambiguity existed, so that courts would not strain to find an ambiguity that could be construed against the drafter; instead, courts would have the authority to avoid a manifestly unfair result not by reference to any purported ambiguity, but by reference to reasonable expectations. See id. at 988-90.
This said, the doctrine of reasonable expectations "does not contemplate the expansion of coverage on a general equitable basis." Johnson v. Farm Bureau Mut. Ins. Co.,
In order for reasonable expectations to prevail over exclusionary policy language, an "insured must demonstrate through extrinsic evidence that its expectation[s] of coverage [are] based on specific facts which make - these - expectations - reasonable." O'Neill,
Davis is a unique case because both procedural and substantive deceptiveness combined to give rise to the lessee's coverage expectations. Substantively, the lessee's reasonable expectation of coverage partly came from how a "normal" person would understand the nature of a physical damage waiver, which, at the time, was framed by the public policy behind no-fault insurance. Davis, T12 P.2d at 992. We observed that "[eljollision insurance is generally understood to cover whatever accidents occur, regardless of the fault of the operator." Id. at 990 (quoting Elliott Leases Cars, Inc. v. Quigley,
Procedural deceptiveness could also be attributed to the lessor in Davis, as the lessor failed to adequately communicate the coverage exclusion to the lessee. On the front side of the rental agreement, three different options were listed for reducing the lessee's responsibility for physical damage occurring
Because Davis involved both procedural and substantive deception, the traditional factors of unconscionability were uniquely suited to help determine the reasonable expectations of the lessee, as "[a] party asserting that a contract is unconscionable must prove both procedural and substantive unconsciona-bility." - Tillman v. Commercial Credit Loans, Inc.,
But since Davis Colorado courts, ourselves included, have upheld reasonable coverage-expectations on facts grounded only in procedural deceptiveness.
For example, in Shelter, we precluded an insurer from relying on a coverage-reduction limitation that was included in a renewal policy, but which was not "clearly and unequivocally" conveyed to the insured at the time of renewal.
In a similar vein, in Leland v. Travelers Indemmity Co. of Illinois, the insured purchased an insurance policy but failed to timely pay the premium.
b. Application
Applying the same summary judgment standards discussed above to this manifestation of the doctrine of reasonable expectations, neither substantive nor procedural deception exist sufficient to establish an insured's objectively reasonable expectations of coverage for felonious criminal acts.
Here, unlike Davis, there was no substantive deception that misled the insured into believing that the SLI coverage would extend to felonious criminal acts. The lessee in Davis could successfully claim that an objective person would expect a physical damage waiver to cover vehicle damage regardless of fault, as the No-Fault Act in place at the time established the public-policy principles leading to that expectation of coverage. But the insured cannot claim the same here because, as discussed above, the criminal-acts exclusion does not violate public policy, nor, based on the number of states holding that indemnification for criminal or intentional acts is contrary to public policy, is it commercially unreasonable.
In fact, going further, no objectively reasonable person purchasing liability coverage would presume coverage for his or her intentional, felonious, criminal acts. "Homicide, assault, kidnapping, sexual assault, arson, burglary, and robbery are all Malum per se, and protestations by the accused that such conduct is blameless is irrational." People v. Washburn,
But no such procedural deception exists here. In line with Tynan's, and in contrast to Shelter and Tepe, the insured in this case received a copy of a rental agreement that "clearly and unequivocally" contained the coverage exclusion. Although the plaintiffs argue that the rental agreement was in fine print, it was not so fine that it was "impossible to read," like the print in Davis Further, it cannot be said that there was a "concerted effort" to hide the exelusion. In Davis, the exclusion was obscured by its placement on the reverse of the agreement.
Granted, the rental clerk told the insured that the SLI protection "covered the car bumper to bumper; if he was to get into a wreck, the car was covered." This would likely have fostered coverage expectations in regards to the vehicle. And, because of the high policy limit-$1 million-it could have fostered general, third-party liability coverage expectations. But considering that no objectively reasonable person would expect coverage for his or her own criminal acts, the clerk's statement simply does not go far enough to engender criminal-acts coverage expectations.
There are other aspects of the transaction of which the plaintiffs complain, including the short duration of the transaction, the rental agreement's status as a standardized agreement, and the fact that the rental agent never told the insured about the erimi-nal-acts exclusion. But these facts, on their own, do not engender expectations of criminal-acts coverage in this case. Therefore, we conclude that Lincoln General and its agents did not, from the perspective of an objective, ly reasonable insured, deceive its insured into believing that he enjoyed coverage for his own felonious criminal acts.
V. Conclusion
For the foregoing reasons, we affirm the court of appeals. The eriminal-acts exclusion, as applied in this case, does not violate public policy, and neither are the plaintiffs entitled to relief under the doctrine of reasonable expectations.
Notes
. We granted certiorari on the following issues:
1. Whether the court of appeals was correct in concluding that the crime exclusion to supplemental liability insurance in the rental car agreement was not unconscionable and did not violate the doctrine of reasonable expectations.
2. Whether the lower courts erred in finding that the SLI exclusions are not contrary to public policy because the policy of faircompensation for innocent victims should override the crime exclusion under the circumstances of this case.
. Of course, many jurisdictions, although not recognizing a public-policy requirement for insurers to include intentional or criminal-act exclusions, hold that public policy is not violated where insurers include in liability or excess-insurance policies criminal-acts or other similar exclusions directed towards intentional conduct. See, e.g., Philadelphia Indem. Ins. Co. v. Carco Rentals, Inc.,
. Although Davis dealt with a rental agreement and not an insurance policy, we concluded that the rental agreement was akin to an insurance policy in that it was a form contract prepared by the entity claiming the exclusion and offered on a take-it-or-leave-it basis. Davis,
. We are not alone in recognizing the risks for abuse in standardized insurance policies. See, e.g., Stordahl v. Gov't Emp. Ins. Co.,
. In line with the obligation for insurers to fully and fairly disclose coverage obligations, the trial court and court of appeals properly limited their discussion to the language in the rental agreement and not to the SLI policy the insured never received.
. Although Lincoln General argues that plaintiffs did not preserve this issue for appeal, we conclude that they have sufficiently preserved this issue because they: (1) argued to the trial court and court of appeals the doctrine of reasonable expectations, which involves questions of ambiguity; (2) contended that, "from the perspective" of the insured, the rental agreement violated the insured's reasonable expectations; and (3) cited relevant portions of the rental agreement, see American Family Mutual Insurance Co. v. Allen,
. We do not address whether, in light of the sunset of the No-Fault Act, see Shelter,
. But we also noted that an approach honoring reasonable expectations was in harmony with several other interpretive rules applied to contracts, including "the central policy underlying contract law, that of construing contracts so as to effectuate the parties' intentions." Davis,
. Looking at the unconscionability factors used in Davis, it is apparent that two of the factors deal primarily with substantive deceptiveness, including "absence of evidence that the provision was commercially reasonable or should reasonably have been anticipated ... [and] the terms of the contract, including substantive unfairness." Davis,
. One likely explanation for this is that the doctrine of reasonable expectations is not necessary where policy provisions conflict with public policy; such provisions are simply void. See Peterman,
. It is for this reason that we need not directly assess whether the criminal-acts exclusion is unconscionable. As discussed above, a contractual provision may only be held unconscionable so long as the provision is in some way substantively unconscionable. See supra, 1055-56; Tillman,