Endorsements On An Insurance Policy

Dallas insurance law attorneys need to know the significance of endorsements on an insurance policy. A recent United States District Court case in the Northern District of Texas is worth knowing about. The case is styled, Bituminous Casualty Corporation v. Travelers Indemnity Company, et al.
Here is some relevant information on the case.
Bituminous Travelers and Frontier seeking a declaratory judgment that Travelers’ insurance policy with Big D Concrete, Inc. covers a tractor and trailer that Big D leased to Frontier, Bituminous’ insured. The tractor and trailer were involved in an accident that gave rise to an underlying state court lawsuit. The Policy provides liability coverage for “[a]ny ‘Auto.’ ” D. At the time of the accident, Big D owned the tractor and trailer at issue, but it had leased them to Frontier. The lease included four other tractors and trailers, and it required that Frontier keep the equipment “insured against all risks of loss or damage from every cause whatsoever,” and to bear the entire risk of loss or damage. After Big D executed the lease, it submitted to Travelers through an agent a policy change request asking that Travelers delete these five tractors and five trailers from the Policy. In response, Travelers issued a change endorsement that amended the Policy to delete the five tractors and five trailers from commercial automobile coverage. The Endorsement also specified that “LIABILITY COVERAGE IS DELETED” for all ten vehicles.
Two weeks after the Endorsement was issued, a Frontier employee, Lawrence McAdams, was operating a Big D tractor and trailer in the course and scope of his employment and was involved in an accident with an automobile occupied by Bobby Hillin, Kandi Hillin, Ashlea Hillin, and Brendin Juarez. Frontier’s insurer–Bituminous–retained counsel to defend Frontier and McAdams. The Hillins sent a settlement demand letter to Bituminous for claims arising from the accident. Bituminous, in turn, sent the letter to Travelers, demanding that Travelers defend and indemnify Frontier and McAdams under the terms of the Policy with Big D. Travelers denied coverage. A few months later, the Hillins sent Bituminous another settlement demand letter, which it also forwarded to Travelers with a demand to defend and indemnify. Travelers again denied coverage. Bituminous then settled the claim with the Hillins on behalf of Frontier and McAdams. The Hillins filed a friendly suit against Frontier and McAdams to obtain court approval of the settlement.
Bituminous now seeks a declaratory judgment that the tractor and trailer operated by McAdams are covered under the Policy, and that the Policy provides primary insurance coverage for the accident. Bituminous and Travelers agree that, because Frontier is not a named insured under the Policy, Travelers is only liable if the tractor and trailer were covered “autos” and their use at the time of the accident was permissible.
Bituminous moves for summary judgment, maintaining that the Policy provides primary coverage for the tractor and trailer, and that Frontier and McAdams were permissive users of the tractor and trailer at the time of the accident. Travelers moves for summary judgment alleging the tractor and trailer are not covered “autos” because the Endorsement eliminated them from coverage.
The court’s primary concern is to ascertain the parties intent as expressed in the language of the policy. Courts must read all parts of the contract together, giving effect to each word, clause, and sentence, and avoid making any provision within the policy inoperative. When a contract is worded so that it can be given a definite meaning, it is unambiguous and a judge must construe it as a matter of law. But if a contract is susceptible to more than one reasonable interpretation it is ambiguous and the court will resolve any ambiguity in favor of coverage.
Where,as here,there is an endorsement to the policy,the insurance policy and its endorsements should be construed together unless they are so much in conflict they cannot be reconciled. In that case, endorsements to a policy generally supersede and control over conflicting printed terms within the main policy.
The Policy identifies autos that are covered by liability insurance by using the “COVERED AUTO SYMBOL” “1.” The Policy’s “BUSINESS AUTO COVERAGE FORM” defines Symbol “1” as “Any ‘Auto.’ ”
Big D leased five tractors and five trailers to Frontier pursuant to an equipment lease that required Frontier to insure the vehicles and bear all risk of damage or loss. Big D then requested that Travelers delete these five tractors and five trailers from the Policy. Travelers issued the Endorsement, which provides, in pertinent part:
THIS INSURANCE IS AMENDED AS FOLLOWS:
THE COMMERCIAL AUTOMOBILE COVERAGE PART IS AMENDED AS FOLLOWS:
DELETE VEHICLE NUMBER(S) [list of the five tractors and trailers subject to the equipment lease with Frontier]
LIABILITY COVERAGE IS DELETED AS PER ATTACHED SCHEDULE FOR VEHICLE NUMBER(S): [list of same five tractors and trailers]
D. 12/31/12 App. 144 (bracketed material added); see id. at 13-14 (Big D lease to Frontier) (listing leased tractors and trailers).
The court held that the Endorsement unambiguously deleted liability coverage for the listed tractors and trailers, and thus the tractor and trailer involved in the accident were not covered autos. The Endorsement expressly provides that “LIABILITY COVERAGE IS DELETED AS PER ATTACHEDSCHEDULE”for the listed tractors and trailers. D. And it specifies that it is amending the “COMMERCIAL AUTOMOBILE COVERAGE PART,” which consists of the declarations page that states that liability coverage applies to Symbol “1” vehicles, and of the Business Auto Coverage Form that defines Symbol “1,” Construing the Policy and the Endorsement together, as it must, the court holds that they can be reconciled to mean that liability coverage applies to any Symbol “1” auto except the ones for which liability coverage was specifically deleted by the Endorsement.
Bituminous failed to demonstrate that the tractor and trailer operated by McAdams on the occasion in question were covered under the Policy between Travelers and Big D. The tractor and trailer had been deleted from liability coverage and therefore were not “covered autos” at the time of the accident.
For the reasons set out, the court granted Travelers’ motion for summary judgment, denied Bituminous’ motion for summary judgment, and dismissed the lawsuit.