Halloran & Sage's Insurance Coverage Group obtained a favorable summary judgment ruling in federal district court that the umbrella coverage part of a policy that was issued by Patriot General Insurance Company did not provide liability coverage in connection with an automobile-motorcycle accident which unfortunately resulted in a fatality.  In Winchester Industries, Inc., et al. v. Sentry Insurance, A Mutual Company, et al., No. 3:06-CV-858 (AHN), Winchester Industries, Inc., and its president, John Devanney, sought coverage under the umbrella in connection with a wrongful death action that had been brought against Winchester Industries and Devanney by the estate of the deceased motorcycle operator.  The umbrella provided $2 million dollars of coverage and the schedule of underlying policies listed a Patriot General commercial automobile policy with limits of $500,000.  Covered autos under that commercial auto policy were designated as symbols 08 and 09, or hired and nonowned, respectively.  The vehicle operated by Devanney at the time of the accident, however, was a vehicle that was owned by Winchester Industries which Devanney had insured under a personal auto policy issued to him by United Services Automobile Association ("USAA").  Prior to the accident, Winchester Industries never disclosed to Patriot General that the corporation owned any vehicles.

The Patriot General policy contained an exclusion which provided that the umbrella coverage did not apply if underlying insurance at the limits shown in the declarations — $500,000 — was not available to the insured.  Here, because the accident occurred when Devanney was operating a vehicle owned by Winchester Industries, the underlying Patriot General policy did not provide any coverage.  Consequently, the only underlying insurance available to the insured was the USAA policy which provided $100,000 in limits.

After removing the case to federal court, Patriot General moved for summary judgment based on the exclusion referenced above.  United States District Court Judge Alan Nevas found that the policy language was clear and unambiguous, and he granted summary judgment in favor of Patriot General.  In ruling in favor of Patriot General, Judge Nevas rejected the insureds' "reasonable expectations" argument, holding that while a court may consider the reasonable expectations of an insured where the court finds the policy ambiguous, the Patriot General policy was not ambiguous.  Moreover, citing Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 122-23 (2d Cir. 1990), the court stated that insureds are expected to know the terms and conditions of their own policies, and if these insureds had reviewed their policy, they would have known that the vehicle owned by the corporation was not insured. As such, Judge Nevas rendered judgment in favor of Patriot General on the insureds' breach of contract cause of action.