By Joe Forward, Legal Writer, State Bar of Wisconsin

Dec. 10, 2010 – Interpretation of an insurance policy provision is a question of law for the court to decide, “not an academic exercise in sentence construction.” That’s what deputy chief Judge Gregory Peterson of the District III Wisconsin appeals court declared in a recent case involving a homeowner’s insurance policy dispute.

The plaintiffs, Trevor Olson and his mother, Kathleen Olson, offered an affidavit of a U.W.-Eau Claire English professor to argue that an exclusion provision of William Olson’s homeowner’s insurance policy was ambiguous.

Trevor sustained injuries while riding an all terrain vehicle (ATV) on his father William’s property. Kathleen and William are divorced, with joint custody of Trevor. Kathleen has primary physical placement, but William has physical placement every other weekend and on Thursday nights.

Trevor and Kathleen (the Olsons) sued William and his insurer, Barron Mutual Insurance Co., for the damages resulting from the accident. The Olsons argued that William “negligently instructed and permitted Trevor to operate the ATV, failed to provide a helmet, and failed to supervise Trevor.”

Baron Mutual argued that the policy did not cover bodily injury to any insured person and Trevor was an insured person under the policy.

The policy definition of insured included residents of “your” household and “persons under the age of 21 in ‘your’ care or in the care of ‘your’ resident relatives.”

The circuit court granted Barron Mutual’s summary judgment motion, agreeing with the insurer’s argument that Trevor was a resident of the household and was in William’s care at the time of the ATV accident.

On appeal, the Olsons argued that the exclusion provision was ambiguous and thus the circuit court should have construed it in favor of coverage. But the appeals court disagreed in Olson v. Barron Mutual Ins. Co., 2010AP663 (Dec. 7, 2010).

“The only reasonable interpretation of the exclusionary language is that it excludes liability coverage for bodily injury to two distinct groups: (1) insureds; and (2) persons other than insureds who reside on the insured premises,” Judge Peterson wrote.

The Olsons conceded that Trevor was an insured under the policy definition, but argued that residence was necessary for the exclusion to apply.

Examining the exclusion provision’s sentence structure, the professor concluded that “an ‘insured’ is excluded from liability coverage only if the insured resides on the insured premises.”

The court rejected the professor’s interpretation and held that Barron Mutual’s policy excluded coverage of Trevor’s injuries because he was considered an insured under the policy definition, regardless of whether he was considered a resident or not.