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Ohio Supreme Court Clarifies Premises-Based Liability Insurance Exclusion

This year the Ohio Supreme Court decided for the first time to what degree a negligence claim must be connected to a premises in order to trigger a premises liability exclusion. A premises liability exclusion bars claims that occur on premises not listed in the policy.

The Court held that the exclusion bars claims "arising out of" the property that are not identified in the policy as an insured location. Furthermore, it held that such an exclusion does not cover claims based only upon the policyholder's ownership of the property where the injury occurred. However, if the injury arose from the insured's negligence, and it was unrelated to the premises, then liability coverage is not barred.

Background

The case came about when grandparents allowed their minor grandchild and another minor relative to use all-terrain vehicles while on their farm. The children were in an accident, and the parents of the injured child sued, claiming the grandparents were negligent in allowing the children to use the ATVs without close supervision.

The grandparents had liability insurance included in their primary homeowner insurance, which was not the farm. This policy excluded claims "arising out of" property not named in the insurance policy. The policy did not include the farm. The grandparents instead had liability insurance for the farm in a different policy. The insurance companies eventually sued to determine whether the insurer of the grandparents' home would have to pay a pro rata share, or if the insurer of the farm would bear all of the cost.

What it Means

The Ohio Supreme Court sent the case back down to the trial court, holding that there was not enough information to determine whether the claims were related to the quality or condition of the farm, or whether the claims were based on a different theory of negligence, and to apply the new ruling when deciding the case.

As for the ruling, it is clear that in Ohio, an insurer's premises-liability exclusion is a valid means of barring claims arising from other property. However, the Court did make a narrower ruling than some other states. For example, an 8th Circuit case held that there only needs to be a causal link to the property for an exclusion to be valid, which would essentially bar any claim for injuries on premises owned by the policyholder that was not named in the homeowner's insurance policy. The Ohio Supreme Court's narrower holding is to allow a bar for claims specifically "arising out of" the unnamed premises.

An Experience Insurance Defense Firm Can Help

In complex insurance defense litigation cases such as this, it is imperative to obtain experienced legal help with firms who keep abreast of the latest information in insurance defense law. Contact a firm in your area for consultation.