Definition of “Motor Vehicle” Contrary to Plain Meaning Does Not Extend to Entire Policy

Does the definition of a term in an insurance policy endorsement apply to the same term, this time undefined, in a separate endorsement of the same policy?  This was the question the U.S. District Court of Minnesota confronted in Employers Mutual v. Richards.

Charles Richards sustained injuries from a motor-vehicle accident while operating a motorcycle. Since the accident resulted in medical bills exceeding the at-fault driver’s insurance coverage and Richards did not have Under Insured Motorist (“UIM”) coverage under his motorcycle policy, he sought UIM coverage through a separate policy from Employers Mutual covering his cars.  Richards’ Employers Mutual policy contained an exclusion in the UIM endorsement for injuries sustained while occupying a “motor vehicle” not insured through the Employers Mutual policy. Richards argued that his motorcycle was not a “motor vehicle,” as a separate endorsement in the policy defined “motor vehicle” to exclude motorcycles but the term wasn’t defined in the UIM provision.  Granting summary judgment for Employers Mutual, the court’s analysis demonstrated an unwillingness to apply the definition of a term from one endorsement to the UIM endorsement where no writing in the policy called for such an application, the application would create ambiguity, and a reasonable person would not read the endorsement’s definition to apply to the entire policy.

This is another case demonstrating the importance of meticulous contract drafting.  Had Employers Mutual defined “motor vehicle” in the UIM endorsement to exclude motorcycles, this matter would likely not have been pursued.

Please click here to download a copy of the court’s decision.

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