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Vol. 3, Iss. 10
June 25, 2014

Court Looks For Fair Way To Interpret Golf Cart Coverage
Insurer Gets It Rough And Insured Gets The Green

Lots of courts have addressed whether golf carts are “autos” for purposes of liability and automobile policies. I’ve confronted the issue a couple of times and it’s an interesting one. The Court of Appeals of Georgia just had a golf cart coverage case before it. But the issue in American Strategic Ins. Corp. v. Helm, No. A14A0466 (Ga. Ct. App. June 9, 2014) is not your typical one.

In 2012, William Helm struck and injured Tracy Self while Helm was driving his four-seat motorized golf cart around a master-planned community. Self filed suit against Helm for negligence in the operation of the golf cart. Helm was insured under a homeowner’s policy issued by American Strategic Insurance Corp. ASI filed a declaratory judgment action seeking a determination whether Helm’s policy provided coverage for the accident.

The ASI policy provided liability coverage but also contained specific exclusions pertaining to ‘Motor Vehicle Liability,’ in particular, “no coverage for ‘motor vehicle liability’ unless the ‘motor vehicle’ is: A motorized golf cart that is owned by an ‘insured,’ designed to carry up to 4 persons.” However, Helm’s policy also included a Georgia Special Provision Endorsement, which superseded and replaced the policy language involving golf cart coverage. The Special Endorsement modified coverage to read, “A motorized golf cart: (1) Owned by the ‘insured’; (2) Designed to carry up to 2 persons.”

So to be clear – the ASI policy excluded coverage for motor vehicle liability -- but provided coverage for a motorized golf cart “designed to carry up to 2 persons.” The golf cart at issue was a four-seater.

Self argued that coverage was owed because the phrase “designed to carry up to 2 persons” set a minimum requirement, such that a one-person golf cart would not be covered under the policy, but any golf cart with two seats or more would be covered. ASI in turn claimed the phrase set a maximum and acted as an exclusion for golf carts with any more than two seats.

The Georgia appeals court was confronted with a classic case of competing interpretations of a policy provision. The court held that the policy was susceptible to two reasonable interpretations, and, therefore, ambiguous. Because of this conclusion, the court construed the ambiguity against the insurer and found that the exclusion did not apply.

While the court did not say exactly what drove its decision, it appears to have been influenced by a couple of things. The deposition testimony of ASI’s director of underwriting supported the conclusion that the policy could reasonably be interpreted two different ways. Second, the court noted that Self pointed out “other instances in which the phrase ‘up to’ can be used to set a minimum, noting for example that if a job posting stated that applicants must be capable of lifting up to 40 pounds or typing up to 90 words per minutes, those applicants who are capable of lifting more or typing faster would not be excluded.”

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