Supreme Court of Virginia Holds an All-Terrain Vehicle is Not a “Farm-Type Vehicle” for Purposes of Homeowner’s Insurance Policy Provision

The Supreme Court of Virginia issued an April 14, 2022, opinion reversing the lower court’s ruling that Erie Insurance Exchange owed coverage under a homeowner’s insurance policy for injuries suffered in connection with an accident that occurred on an all-terrain vehicle (“ATV”) operated by the insured. In reversing the decision of the Circuit Court of Pittsylvania County in Erie Insurance Exchange v. Diamond Danelle Jones, an Infant, by her Mother and Next Friend, Tracy Hardison, the Supreme Court of Virginia entered final judgment in favor of Erie.

The case arose out of injuries suffered by minor, Diamond Jones (“Jones”), when a tree branch struck her while a passenger of an ATV driven by the daughter of Jennifer and Richard Rekowski. The accident did not occur on the Rekowskis’ property. A lawsuit was brought against the Rekowskis on behalf of Jones for negligence. The Rekowskis were insured by a homeowner’s policy issued by Erie Insurance Exchange (“Erie”) at the time of the accident and sought coverage from Erie pursuant to that policy. Erie denied coverage invoking the policy’s exclusion from coverage injuries arising from use of “any land motor vehicle.” The Rekowskis argued an exception for “lawn or farm type vehicle[s]” contained in the policy applied to the ATV accident, affording them coverage under the policy. An action for declaratory relief was filed on behalf of Jones. Both Jones and Erie filed motions for summary judgment.

In considering both motions, the Circuit Court looked at testimony of the Rekowskis’ expert witness who opined the ATV involved in the accident could be used for “whatever kind of use that the owner has in mind”, including attaching a tow hitch and various farming implements, such as rototillers or seeder spreaders. The Rekowskis testified the ATV had limited power, could barely pull their daughter, and admitted they had never had farming equipment attached to it. Still, the Circuit Court concluded the Erie policy’s exception did apply in this instance, noting “lawn or farm type vehicle” was ambiguous language which should, therefore, be construed against the drafter (Erie), and found in favor of Jones. Erie then appealed.

The Virginia Supreme Court did not dispute that, generally, ambiguous insurance policy language should indeed be construed in favor of coverage and against the insurer. However, the Court did not find “farm type vehicle” to be ambiguous, but rather to unambiguously refer to vehicles whose primary purpose was use on a farm, such as a combine or a tractor. The Court reasoned that to hold otherwise, construing “farm type vehicle” in the much broader sense to include an ATV would be to hold out the possibility that pickup trucks and sport utility vehicles could be considered “farm type vehicles” simply because one could hitch an implement to them and potentially use them on a farm. The Court held that such an expansive definition of “farm type vehicle” would be so broad as to render the associated limit on coverage in the Erie policy meaningless.

Accordingly, the Virginia Supreme Court held that, as a matter of law, the language “lawn or farm type vehicle” does not include a multi-use vehicle such as an ATV and, therefore, the Circuit Court erred in denying Erie’s motion for summary judgment.

This decision is important to consider when assessing the bounds of definitions of certain types of vehicles and other terms in an insurance policy.  Companies facing a legal challenge involving this issue should contact MacDonald Law Group, LLC, to protect their rights and interests.