(Article from Insurance Law Alert, October 2024)
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Holding
The North Dakota Supreme Court ruled that a policy endorsement did not supersede a policy exclusion and therefore that the insurer had no duty to provide coverage for the underlying injuries. Kath v. Farmers Union Mutual Ins. Co., No. 2024 ND 190 (N.D. Oct. 10, 2024).
Background
The coverage dispute arose out a personal injury suit filed by Torrey Kath against Michael Prochnow. Kath was injured when Prochnow moved a truck while Kath was working underneath a trailer attached to the truck. The parties reached a settlement by which Kath agreed to collect solely from Prochnow’s insurers. Thereafter, Kath sued Farmers Union, seeking a declaration of coverage.
The lower court granted Kath’s summary judgment motion, ruling that his injuries were covered by a farm employer liability endorsement, which applied to injuries sustained by an employee in the course of employment. In so holding, the court rejected Farmers Union’s assertion that a motor vehicle exclusion, which applied to any injury arising out of the use of a motor vehicle, precluded coverage. The North Dakota Supreme Court reversed.
Decision
The North Dakota Supreme Court ruled that the endorsement did not supersede the exclusion contained in the body of the policy. The court explained that there was no conflict between the endorsement and the exclusion and that “there is no language in the endorsement expressing an intent to override or replace” the exclusion. Further, the court noted that the endorsement also expressly stated that: “All other provisions of this policy apply.”
The court rejected Kath’s assertion that application of the motor vehicle exclusion would render the endorsement superfluous because the endorsement contained its own subsection of “Additional Exclusions.” As the court noted, courts in other jurisdictions have similarly ruled that, unless otherwise stated, exclusions in an endorsement operate to supplement existing exclusions in a policy.
Comments
The decision leaves intact the general principle of contract interpretation that when a conflict exists between an endorsement and other policy provisions, the endorsement prevails. The court deemed this rule of construction inapplicable, however, based on the absence of a conflict between the endorsement and the exclusion at issue.