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Court Finds Insurance Contract Ambiguous, Putting Insurance Company on the Hook for Accident

Although contract interpretation may not seem relevant in personal injury claims, contracts often come into play, particularly in Georgia car accident cases. In a recent case, a court considered the language of an insurance contract in determining whether a car crash was covered under the policy.

Side Impact CrashIn that case, an auction company was conducting an automobile auction when one of its employees struck audience members with a car. The employee said that the car’s accelerator stuck, which caused him to lose control of the car. The car was owned by a charitable organization, and the auction company argued that the claims against it were covered by the defendant’s insurance policy as the charitable organization’s insurer. The defendant claimed the incident was not covered, and the auction company brought a claim against the insurer.

The court looked at the insurance company’s contract to determine whether the auction company was insured under the policy. The policy listed the named insured as the charitable organization and its business as “used auto dealer.” The car was covered for the purposes of the policy. The policy stated that for covered vehicles, the insurer would pay all sums the “insured” was legally required to pay because of bodily injury or property damage, caused by an accident resulting from “garage operations.” The policy defined “insured” as:  the organization for any covered vehicle, and anyone else using a covered vehicle the organization owned, hired, or borrowed, with the organization’s permission, except if someone was selling, servicing, repairing, parking, or storing vehicles, unless it was part of the organization’s “garage operations.”

Here, the auction company was using the car with the organization’s permission. The issue was whether selling the car was part of the organization’s “garage operations.” The policy stated generally that garage operations were those related to the organization’s garage business. The court determined that since the phrase “garage business” was not defined in the policy, it was ambiguous. The organization was listed on the policy as a “used auto dealer,” and thus, the court found it was reasonable to conclude the parties intended to include the sale of donated vehicles as part of its business. In addition, the contract had to be construed against the insurer. Therefore, the court found the incident was covered under the policy.

Contract Interpretation in Personal Injury Claims

Although contract interpretation may not seem relevant in personal injury claims, contracts often come into play, particularly in car accidents. As the court explained in this case, when construing a contract in Georgia, a court has to first decide if the language is clear and unambiguous. If a contract is clear and unambiguous, the court will apply the plain meaning of the terms in the contract and enforce the terms regardless of how those terms affect the parties.

However, if a contract is ambiguous (that is, it is susceptible to more than one meaning), the rules of contract construction apply. First, the ambiguities in the contract are construed against the insurer because the insurer wrote the contract. Second, the exclusions the insurer seeks to invoke are strictly construed. Third, the contract must be read with the reasonable expectations of the insured, if possible.

Consult an Experienced Personal Injury Lawyer

At the McAleer Law Firm, our attorneys are ready to fight for the rights of Georgia car accident victims in the Atlanta metro area and other Georgia communities, including Alpharetta, Conyers, Decatur, Gainesville, Lawrenceville, Macon, Norcross, Roswell, Sandy Springs, and Stone Mountain. Our attorneys can help you explore your full range of options and advocate vigorously throughout the legal process. We have a proven track record of successful results, and each year we recover millions of dollars for our clients. Call us at 404-622-5337 or contact us through our online form.

See More Posts:

Georgia Supreme Court Dismisses Defendant’s Summary Judgment Challenge in Recent Premises Liability Opinion, Georgia Injury Attorney Blog, October 18, 2017.

Georgia Court Refuses to Enforce Clause in Insurance Contract against the Insured, Georgia Injury Attorney Blog, November 7, 2017.