The Nevada Supreme Court has ruled against the insurer that language in a personal umbrella insurance policy that precluded coverage for damages that are "payable to any insured" did not contravene state law. The case is Sciarratta v. Foremost Ins. Co. Grand Rapids Mich., No. 79604, 2021 Nev. LEXIS 31 (July 8, 2021).
Appellant Filippo Sciarratta and his then-wife Cynthia owned a Kawasaki motorcycle. In 2015 Sciarratta let his brother-in-law Jonas Stoss drive the motorcycle while he was the passenger. Stoss lost control of the motorcycle and Sciarratta was seriously injured. Stoss was found to be negligent. Cynthia was named insured on a personal umbrella policy underwritten by Farmers Insurance Exchange (Farmers). The couple also had a motorcycle liability policy underwritten by Foremost Insurance Company and an automobile policy underwritten by Mid-Century Insurance Company.
Sciarratta sought coverage under all three policies. Foremost and Mid-Century paid out over $500,000 under the auto and motorcycle policies, but Farmers denied the coverage. Farmers argued that Stoss was not an insured under the Umbrella policy, and thus it was not responsible for damages he caused, and because Sciarratta was an insured under the Umbrella policy, he was not entitled to payment. The policy expressly excluded coverage for damages that were "payable to any insured."
Sciarratta sued Foremost and Mid-Century for breach of contract, misrepresentation and bad faith concerning all of the policies, and argued that the Umbrella policy was part of the auto policy. He argued, generally, that his claims were covered under the policies and alleged that those insurers had misrepresented pertinent facts related to coverage, but he failed to state what those facts were. He also argued that the exclusion did not comply with a statute applying to "a policy of motor vehicle insurance covering a passenger car" requiring disclosure of any exclusion of the liability of one insured to another insured "on a form approved by the Commissioner." Next, he argued that Farmers never sent a copy of the policy to him or his wife.
The Nevada Supreme Court found that the exclusion did not conflict with the auto insurance requirements in NRS 687B.147, as an umbrella liability policy is not "motor vehicle insurance" under Nevada law. The court refused to adopt the insured's argument that the exclusion was unenforceable because he had not received notice of its inclusion in the policy because Sciarratta failed to show any evidence of a lack of notice. The court ruled that evidence Sciarratta presented was insufficient to carry the burden of proof, because he could not show that he was never sent any earlier policy containing the language.
The court declared that "[w]hile we agree that an insurer's complete failure to disclose a policy exclusion might make the exclusion unenforceable, we hold that an insured who alleges that an exclusion was not disclosed must make that allegation in an affidavit rather than rely solely on the arguments of counsel."
Editor's Note: The court found that the umbrella insurance policy was consistent with the third-party nature of liability insurance in excluding coverage for damages that are "payable to any insured." the court found that that exclusion did not apply because the statute only applies to a "policy of motor vehicle insurance" and not to umbrella policies.