Home Owners Policy Defininitions

Parker County insurance attorneys have to know how courts interpret definitions contained within policies. A recent Houston Court of Appeals [1st Dist.] case helps as it relates to the definition of “you” in a homeowners policy. The case is styled, Hodges v. Safeco. Here is some of the relevant information.
On August 17, 2009, Darrell Lee Hodges, Sr. was assaulted in his home. His son, Darrell Lee Hodges, Jr. [“DJ”], lived at the home with his father. DJ knew the assailants, knew they were looking for his father and that they posed a risk to his safety, but nonetheless failed to warn his father of the men’s presence outside the home and failed to call the police to have the men removed from the premises.
SAFECO had a homeowner’s condominium policy in place at the time of the offense. Mr. Hodges is the named policy holder and DJ is also covered because he lived at the condominium with his father. Mr. Hodges made a claim under the policy for insurance benefits to cover his injuries. SAFECO denied coverage, citing the “homeowner’s exclusion” in the policy, which precludes coverage for “bodily injury to [the named insured] or an insured.”
Mr. Hodges sued DJ in district court alleging that DJ’s negligence in failing to warn him about the presence of the assailants and their intentions was the proximate cause of his bodily injuries. SAFECO initially provided a defense for DJ under a reservation of rights, but subsequently had its attorney withdraw from DJ’s representation. Mr. Hodges obtained a judgment against DJ in the amount of $99,599.96. Evidence showed that Mr. Hodges needed stitches and staples to close a cut on his head caused when he was hit in the head with a beer mug by the assailants, and that he would require plastic surgery to conceal the remaining scars.
DJ then sued SAFECO, alleging that it had breached the insurance contract by refusing to indemnify him for the judgment Mr. Hodges obtained against him, and that SAFECO acted in bad faith denying coverage and failing to pay his claim promptly. DJ and SAFECO filed cross-motions for summary judgment asserting their respective positions regarding the coverage provided by the policy. The trial court granted SAFECO’s motion, denied DJ’s, and this appeal followed.
The definition of “You”
The policy lists Darrell Hodges [Senior] as the named insured and states that the terms “‘you’ and ‘your’ refer to the ‘named insured’ shown on the declarations and the spouse if a resident of the same household.”
The definition of “Insured”
Under section 4a of the policy’s definitions, the term “‘Insured’ means you and residents of your household who are your relatives.”
The “household” exclusion
The exclusions section of the policy provides that “Coverage C (Personal Liability) does not apply to bodily injury to you or an insured within the meaning of part a, or part b, of insured as defined.”
The “severability” clause
The severability of insurance clause provides that “[t]his insurance applies separately to each insured. This condition will not increase our limit of liability for any one occurrence.”
DJ argued in his motion for summary judgment and on appeal that “[t]he bodily injury exclusion, when read in conjunction with the policy’s severability of insurance clause, applies only if the insured claiming liability coverage seeks compensation for his or her own bodily injuries.” Specifically, DJ contends that “[t]he correct reading of [the exclusion] is that the policy will not provide ‘you,’ (as “the ‘named insured’ shown on the declarations) liability coverage for bodily injuries suffered by ‘you’ in a claim made by ‘you[,]” and that similarly “the separate policy of ‘an insured’ will not provide it coverage for bodily injuries suffered by it in a claim made by it.” Essentially, DJ argues that because the claims are for his father’s bodily injuries and not his own, he should be covered by the policy.
The court did an analysis of each of the definitions.
The court then found DJ’s argument unpersuasive is that it completely overlooks the fact that the policy excludes coverage for bodily injury to “you,” and that “you” is contractually defined as Mr. Hodges.