U.S. District Court Upholds Insurer’s Right to Deny Coverage Based on Aerial Equipment Exclusion
Case Study

U.S. District Court Upholds Insurer’s Right to Deny Coverage Based on Aerial Equipment Exclusion

A New York federal judge has upheld an aerial equipment exclusion in an insurance policy at the heart of coverage litigation between Philadelphia Indemnity Insurance Company (PIIC) and performing arts company, Streb Inc., ruling that PIIC does not have to defend the insured in an underlying catastrophic personal injury suit.

In December 2018, the plaintiff in the underlying suit alleged that she was gravely injured during an acrobatics class at Streb’s facility. She claimed that Streb Inc. was negligent in “failing to provide proper equipment” but did not mention that her injury happened following her use of a trampoline. PIIC had previously issued a commercial general liability policy with a limit of $1 million and an umbrella liability policy that provided up to $4 million per occurrence to Streb. Inc. The PIIC policies contained a noteworthy exclusion barring coverage for claims “arising out of the use of any aerial equipment including but not limited to the use of a trapeze or trampoline.” Streb Inc. filed suit against PIIC after the insurer denied coverage.

In January 2019, Goldberg Segalla partner Michael T. Glascott and associate Adam R. Durst, members of the firm’s Global Insurance Services group, argued the PIIC policy bars coverage for injuries from the use of equipment like a trampoline, and sought a declaration that the insurer had no duty to defend Streb Inc. in the underlying suit.

The U.S. District Court for the Southern District of New York agreed, ruling that the policy’s aerial equipment exclusion bars coverage and that it is “undisputed” that the injury in the underlying lawsuit resulted from use of a trampoline.

Judge Katherine Polk Failla wrote that Streb was attempting to “inject ambiguity” into the clear exclusion terms by redefining “trampoline” through the definition of “aerial equipment.” She added that Streb’s gymnastic expert opinion would not help in defining an insurance contract.

“Evidence of custom in the gymnastics field is not persuasive in defining equipment for the purposes of interpreting an insurance contract,” she said. “Nor is there any reason to believe that the use of the phrase ‘aerial equipment’ in the Exclusion was imported from the gymnastics field.”

“Defendant would have the court flip the plain meaning of the exclusion on its head. The exclusion explicitly defines aerial equipment to include trampolines,” the judge said. “Drafters of the exclusion provided the words ‘trampoline’ and ‘trapeze’ precisely to address the ambiguity that the defendant attempts to create here.”

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