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Coverage for theft from unattended vehicles.

Your insured, a jeweler, decided to stop by the local rib festival, and take a quick look at the activities. He parked his vehicle and hopped out. Although he did not lock his vehicle, he was only out of it for a few minutes, was never more than 300 feet away, and could see it at all times.

When the insured arrived back at his shop, he discovered that the jewelry that was in his vehicle was missing. The insured has submitted a claim for the theft of the jewelry from his vehicle. He has a jewelers block policy (ISO Commercial Inland Marine Policy CM 00 59 00), which excludes "[t]heft from any vehicle unless you ... are actually in or upon such vehicle at the time of theft." This type of exclusion is often referred to as an "unattended vehicle" exclusion

Issue If the insured had been within 300 feet of the vehicle at the time of the theft, was the insured "in or upon the vehicle" for purposes of the unattended vehicle exclusion?

Analysis Even though the Insured was within 300 feet of the vehicle at the time of the theft, the insured was not "in or upon the vehicle," for purposes of the unattended vehicle exclusion. Consequently, the loss is most likely excluded. Note that the language of jewelers block coverage forms may differ from commercial and business owners forms. As such, jewelers block case law may not apply to claims involving commercial or business owners policies.

The unattended vehicle exclusion generally has been enforced by the courts. The exclusion is a common provision of jewelers block and some other inland marine policies. The underlying rationale for the exclusion is that thieves are deterred by the presence of a custodian in a vehicle containing valuable items.

The unattended vehicle exclusion has been almost universally held to be unambiguous and enforceable. The largest body of case law discussing the validity of this exclusion has arisen under jewelers block policies, such as Sphere Drake Ins. PLC v. Trisko, 24 F. Supp. 2d 985 (D. Minn. 1998), in which the unattended vehicle exclusion in jewelers block policy was found to be clear and unambiguous. In Nissel v. Subscribing Underwriters at Lloyd's of London, 73 Cal. Rptr. 2d 174 (Cal. Ct. App. 1998), the court held that the unattended vehicle exclusion in the jewelers block policy applied to preclude coverage.

This same principle, that the unattended vehicle exclusion is clear, unambiguous, and enforceable, has been applied to other commercial types of policies besides jewelers block coverage. See, for example, Thomas Noe, Inc. v. Homestead Ins. Co., 173 F.3d 581 (6th Cir. Ohio 1999), in which the unattended vehicle exclusion in a property policy was found to be not ambiguous, and Royce Furs, Inc. v. Home Ins. Co., 291 N.Y.S.2d 529 (N.Y. App. Div. 1968), in which the unattended vehicle exclusion in furriers block policy was held to be clear and unambiguous.

Although the insured could argue that he was in close proximity to the vehicle, that is not enough to avoid the unattended vehicle exclusion. Based upon the unattended vehicle exclusion, courts have denied coverage to insureds who were not literally "in or upon" their vehicles at the time of the losses. This is so even though the insureds may have been only a short distance away from the vehicles, watching the vehicles, or absent from the vehicles for only short periods of time (Thomas Noe, Inc. v. Homestead Ins. Co., 173 F.3d 581 [6th Cir. Ohio 1999], in which the unattended vehicle exclusion applied when the insured was inside his house and the car was in the driveway, and Sphere Drake Ins. PLC v. Trisko, 24 F. Supp. 2d 985 [D. Minn. 1998], in which the unattended vehicle exclusion applied when insureds were between eight and 16 feet away from the car).

Accordingly, the fact that the insured remained within 300 feet of the vehicle does not change the fact that he was not "in or upon" the vehicle at the time of the loss. However, as discussed below, the exclusion might be avoided if an insured were immediately adjacent to the vehicle or the wording of the exclusion was held to be ambiguous, as applied to the facts.

An insured can only avoid the unattended vehicle exclusion by remaining in or immediately next to the vehicle. As discussed above, an insured will not avoid the effect of the unattended vehicle exclusion simply by keeping the vehicle in sight at the time of loss. Instead, he must be in the vehicle (or immediately next to it) or have a trusted person stay with the vehicle. As such, an insured can avoid the exclusion if he is immediately next to the vehicle at the time of loss (Star Diamond, Inc. v. Underwriters at Lloyd's, London, 965 F. Supp. 763 [E.D. Va. 1997], in which the unattended vehicle exclusion was inapplicable when the insured was nine inches away, pumping gas at the time of loss; Lackow v. Insurance Co. of N. Am., 382 N.Y.S.2d 529 [N.Y. App. Div. 1976], in which the unattended vehicle exclusion was inapplicable when the insured was at the rear of the vehicle, opening the trunk at the time of loss).

Although the unattended vehicle exclusion has, on occasion, been held to be "ambiguous," there likely is no viable "ambiguity" argument in the case of the jeweler. A few courts have held that the unattended vehicle exclusion may be "ambiguous," depending on the facts or the wording of the exclusion In FMP Assocs., Inc. v. St. Paul Fire & Marine Ins. Co., 693 A.2d 832 (Md. 1997), the insured was inside a gas station and the vehicle was in the insured's sight at the time of loss, but the unattended vehicle exclusion was held to be ambiguous because the policy, provided that it would not cover loss to property vehicle unless one of the insured's employees or sales personnel was "in or on the vehicle at the time of loss." The term "on" was held to be ambiguous. In Gottlieb & Sons, Inc. v. Hanover Ins. Co., No. 64559, 1994 WL 144539 (Ohio Ct. App. Apr. 21, 1994), the insured was inside a hotel lobby and the vehicle was in sight at all times, but the court held that the unattended vehicle exclusion was ambiguous, as applied to the facts. In such cases, courts will try to resolve any ambiguity by resorting to extrinsic evidence of the parties' intent.

In the case presented, however, there is no viable "ambiguity" argument. At the time of the loss, the insured was admittedly up to 300 feet away from the vehicle. while he could still see the vehicle from 300 feet away, he was not close enough to see a potential theft (i.e., if the thief entered the vehicle from the passenger-side door, while the insured was standing 300 feet away and facing the driver-side door). In these circumstances, the insured cannot make a credible argument that he was "in or upon the vehicle" at the time of loss.

Moreover, despite any "ambiguity" argument from the insured, there is no question that the insured easily could have avoided the exclusion, simply by staying in (or immediately next to) the vehicle.

Jeffrey E. Margulis is research counsel with PLRB.
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Title Annotation:Coverage Analysis
Author:Margulis, Jeffrey E.
Publication:Claims
Date:Oct 1, 2003
Words:1228
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