Farm Bureau Cas. Co. v. Powell is not your typical Top 10 coverage case.  The issue before the Supreme Court of Mississippi is so unique that the decision is highly unlikely – probably never - to influence any other court nationally.  Despite that, I couldn’t help but include it here.   

I do a lot of policy drafting in my practice.  And when I read coverage cases, I always take note of instances where the insurer lost because of a flaw in its policy language.  I don’t mean that the insurer lost because the court did not apply its intended meaning of the language.  Sure, getting that right is one aspect of drafting policy language.  Rather, I’m talking about situations where it was the manner in which the language was drafted that was the cause of the insurer’s downfall. 

Having looked for lessons in policy drafting from so many decisions, my cardinal rule for insurers, when putting pen to paper on new policy language, is this: keep it simple.  Less is more.  This makes sense when you consider that, in a coverage dispute, the policyholder can often succeed by establishing that the relevant policy language has more than one reasonable meaning.  In other words, establish ambiguity.  So, if their objective is to prove that words can mean more than one thing, putting more words on the paper simply creates more opportunities for policyholders to make their ambiguity argument.

The Mississippi Supreme Court’s decision in Farm Bureau Cas. Co. v. Powell is a superb example of an insurer that didn’t follow the less is more rule. The insurer added two unnecessary words to its policy -- and they were the cause of its downfall.  Given how dramatic this example is, of such an important lesson for insurers, I decided to list Powell as a Top 10 case, despite it failing the traditional test for inclusion, namely, having the ability to influence other courts nationally. 
   
The facts are remarkable. Talk about the proverbial accident waiting to happen.  Anthony Powell owned a pickup truck. He also owned a trailer that was hitched to the pickup truck. A scaffolding was installed on top of the trailer to be used in the installation of trusses for a pole barn.

Trent Craft was on the scaffolding to do the installation work. When he was finished at one spot, Powell would drive the truck to the next installation. While doing so, Craft remained on the scaffolding. You can see where this is going. Another employee, also working on the scaffolding, jumped off the scaffolding onto the bed of the trailer. He was seemingly climbing down. This caused the pickup truck to rock. Craft fell from the scaffolding and suffered a serious injury to an eye socket.

According to Craft, the fall would not have occurred if Powell had choked the tires of the truck and trailer. Craft sued Powell. Powell was insured under an automobile policy issued by Farm Bureau. The insurer filed suit, seeking a determination that it had no duty to defend or indemnify Powell.
 
Putting aside how it got there, at issue before the Mississippi high court was whether an “auto accident” had occurred. The policy provided coverage, in relevant part, for “bodily injury” for which the insured becomes legally obligated to pay because of an auto accident and arising out of the ownership, maintenance, or use of any ‘covered auto’ including loading and unloading thereof.”  (italics added).

Farm Bureau argued that no coverage was owed because the “bodily injury” was not because of an auto accident, a term not defined in the policy.

The court disagreed:
 
“Farm Bureau tells us the policy provisions at issue, which require an injury ‘because of an auto accident’ . . . require a direct causal connection to an automobile accident. In other words, the policy requires an auto accident. We agree. Farm Bureau asks this Court to modify the contract to define ‘auto accident’ as ‘a situation in which an automobile, being used as a means of transportation, is involved in some type of collision or near collision with another vehicle, object, or person.’ The language ‘being used as a means of transportation’ is not found in the policy. Farm Bureau asks the court to give birth to a undefined phrase after choosing not to define the same words and phrases in the policy. In the case sub judice, we politely decline their invitation to modify or alter the contract. Creating definitions to terms not specifically found in the contract is not the solution to resolving the dispute.”
 
Thus, we reject the plea to define ‘auto accident’ for the following reasons: (1) Farm Bureau chose not to define the phrase ‘auto accident’ in the policy, (2) other courts have determined that the phrase ‘auto accident’ is an ambiguous term, and (3) to interpret the contract in a manner Farm Bureau requests is equivalent to rewriting the contract. Ultimately, the answer to today’s case of whether Powell and Craft have insurance coverage lies within the insuring agreement.” 

Here’s where the insurer’s policy language did it no favor.  The insuring agreement of the auto policy provided as follows: “We will pay damages for bodily injury or property damage for which any insured becomes legally responsible because of an auto accident and arising out of the ownership, maintenance, or use of any covered auto including loading and unloading thereof.”  (emphasis added).

Most auto policies provide coverage for bodily injury or property damage arising out of the ownership, maintenance or use of a covered auto.  If this had been the applicable language, the insurer still may have lost.  There is a substantial body of case law that addresses what is ownership, maintenance or use of an auto – both for purposes of an auto policy’s insuring agreement and a commercial general liability policy’s auto exclusion.  The issue would have been whether that requirement had been satisfied.

But Farm Bureau added “auto accident” – importantly, an undefined term -- to its insuring agreement.  This was intended to narrow the scope of coverage.  But, in fact, it broadened it.  The court defined “accident” as “a sudden event that is not planned or intended and that causes damage or injury.”  It then noted that the word “auto” was clearly defined in the policy.  So, its next conclusion was not surprising: “When combining the policy definitions of ‘auto’ and ‘covered auto’ with the ordinary meaning of accident with the facts presented here, an accident occurred involving a covered auto.   This sudden, unintended event caused serious injury on a trailer connected to a covered auto.” 

As a concurring justice put it: “Let's be honest, this is not what ordinary people would call an auto accident.”  Nonetheless, he agreed with the decision.