Social Host and Motor Vehicle Exposures Arising Under Homeowners Liability Coverage – Claims Magazine

ISSUE

A claimant was injured while riding as a passenger in a car owned by Mr. Insured and operated by Mr. Insured's social guest, who had allegedly become intoxicated at Mr. Insured's home before operating the vehicle. The claimant sued Mr. Insured, alleging that he was negligent as a social host and that he negligently supervised his guests. Is there a potential for coverage under Mr. Insured's Homeowners Policy?

ANALYSIS

Ownership of the Motor Vehicle One of the earliest cases addressing motor vehicle-related social host liability was Worcester Mut. Ins. Co. v. Marnell, 496 N.E.2d 158 (Mass. 1986), which allowed coverage for allegations of negligent supervision by parents who hosted a party at their home. The insureds' son became inebriated at the party and caused injury in a car accident. The son, an insured under his parents' Homeowners policy, owned and operated the motor vehicle involved in the accident. The Worcester court found coverage for the parents, who neither owned nor operated the vehicle, recognizing that the policy's severability clause provided separate coverage for each insured.

Slightly different facts produced a different result in Merrimack Mut. Fire Ins. Co v. Samson, 550 N.E.2d 901 (Mass. App. 1990). Here, a claimant was injured while a passenger in a motor vehicle owned by the insureds and operated by their social guest, who had allegedly become intoxicated at their home before operating the vehicle. The claimant alleged that the insureds were negligent associal hosts and that they negligently supervised their guests. The insureds' Homeowners policy excluded coverage for bodily injury arising out of the ownership, maintenance, and use of all motorized land conveyances. The policy also excluded coverage for the entrustment by an insured of a motor vehicle to any person. In finding no coverage for the insureds, the court rejected the argument that the theories of negligent supervision and negligence as a social host were nonvehicle-related and independent of the insureds' vehicle-related activities.

The Merrimack court distinguished Worcester because in that case the insureds did not own the vehicle involved in the accident. The court reasoned that the Homeowners policy's motor vehicle exclusion was intended to preclude coverage which would be obtainable under an auto policy.

Concurrent Causation

One court found coverage under a theory of concurrent causation where the insured owned the vehicle. In Salem Group v. Oliver, 607 A.2d 138 (N.J. 1992), a duty to defend arose where a social host claim was brought against the insured, even though a separate excluded risk, the operation of the insured's ATV, was an additional cause of the claimant's injury. This court relied upon State Farm Mut. Ins. Co. v. Partridge, 514 P.2d 123 (Cal. 1973), which held that an insurer remains liable so long as one of the concurrent causes of a loss is covered.

In Salem, the insured allegedly served alcohol to his minor nephew, who was subsequently injured while operating the insured's ATV off the insured's property. The nephew claimed that he drove "harder, faster, and recklessly" because of having consumed the alcohol. The insured's Homeowners policy excluded coverage for bodily injury arising out of the operation, ownership, or use of motor vehicles owned by an insured.

The Salem court held that the policy did not unambiguously exclude coverage for accidents caused concurrently by the operation of a motor vehicle and the provision of alcoholic beverages. Where it was unclear whether the motor vehicle exclusion applied when the insured provided liquor to the victim, who then drove the insured's ATV, the policy was interpreted to favor the insured. The Salem court found another concurrent causation case, Vanguard Ins. Co. v. Clarke, 475 N.W.2d 48 (Mich. 1991), factually distinguishable. In Vanguard, where three family members died when the insured left his car running after automatically closing the garage door, the motor vehicle exclusion applied because fumes from the car, not the garage door, were the cause of death. However, in Salem, both the alcohol and the use of the ATV concurrently caused the accident. The Vanguard result also avoided the possibility of double recovery under the Homeowners policy and an auto policy. No possibility of double recovery existed in Salem since there was no separate ATV policy applicable. Intentional Injury/Criminal Act Exclusion Another twist has arisen in a Michigan case where a Homeowners policy contained an intentional injury/criminal act exclusion. In Allstate Ins. Co. v. Keillor, 511 N.W.2d 702 (Mich. App. 1993), the "intentional or criminal acts" and "motor vehicle" exclusions barred coverage for a social host claim. Here, the named insured's son provided alcohol to a minor who drank all night, drove his car, and was involved in an accident.

The "intentional or criminal acts" exclusion, which excluded coverage for bodily injury or property damage "which may reasonably be expected to result from the intentional or criminal acts of an insured person or which is in fact intended by an insured person," applied because furnishing alcohol to a minor was prohibited by a Michigan penal/criminal statute. The exclusion also applied because injury resulting from the operation of an auto by an intoxicated minor was a foreseeable, expected, anticipated, and natural consequence of knowingly giving the minor alcohol.

The "motor vehicle" exclusion, which excluded coverage for "bodily injury or property damage arising out of the ownership, maintenance, use, loading or unloading of any motorized land vehicle or trailer[,]" also applied. The court rejected the claimant's argument that this exclusion applied only where the insured owns or uses the vehicle. The unusual language of this exclusion addressed the use of any auto by any person, not just an auto used by the insured.

CONCLUSION

The theory of concurrent causation may or may not be applied to vehicle-related social host liability claims. As we have seen, courts will make diverse rulings based upon factual distinctions such as vehicle ownership and cause of the injury. At present, at least one state, Michigan, has held that injury may be expected to result from furnishing alcohol to a minor.