CONFUSION OVER "AN INSURED" OR "THE INSURED"

Homeowner	Subrogation
Insured	Ambiguity

James Hutchinson, his wife and stepson, Michael Rockefeller, lived in an apartment that was part of rental property that was also owned by Hutchinson. The building was insured by Fulmont Mutual Ins. Co. (Hutchinson was named insured) and the individual apartment was covered by a Homeowner's policy from New York Central Mutual Fire Insurance Company (NYCM). The apartment suffered a fire loss that Fulmont paid. Fulmont's subrogation claim was denied by NYCM. Both parties filed motions for summary judgment and the lower court ruled in favor of NYCM.

The fire loss was caused by Michael Rockefeller who failed to make sure that he put out a cigarette. NYCM had successfully argued in the original motion that Rockefeller was an "insured" under its Homeowner policy and was ineligible for protection under the form's liability section. Fulmont, which paid Hutchinson for the loss, appealed in order to be reimbursed by subrogating against Rockefeller.

In the appeal, the higher court reviewed Rockefeller's status under the Hutchinson Homeowners policy. The court's examination was an object lesson that contract wording controls contract performance. The court noted that, in general terms, Rockefeller (Hutchinson's stepson) was an insured. However, his status was not clear when considering the liability section. Under that coverage part, protection was excluded for loss/damage to property belonging to "the insured." However, reading the exclusion does not make it clear whether the exclusion refers to the property owner or any person generally identified as an insured. Because of this ambiguity, the lower court decision was reversed with a finding that Rockefeller was owed a duty to defend and, if applicable, respond to any damages under the NYCM policy.

Fulmont Mutual Insurance Company, as Subrogee of James S. Hutchinson, Appellant, v. New York Central Mutual Fire Insurance Company Respondent. New York Supreme Court Appellate Division, Third Department. NYSlipOp 01302 February 26, 2004. Denied. 2004 CCH Personal and Commercial Liability Cases. Paragraph 8019.