Cabana Can Be Insured Premises

In Raner v. Security Mutual Insurance Company, the First Department found an insurance policy exclusion for “liability…resulting from premises owned, rented or controlled by an insured other than the insured premises” ambiguous because the policy provided that the “insured premises” includes “that part of any premises occasionally rented to an insured for other than business purposes.”  Of significance, the policy did not define the term “occasionally rented.”

In this case, the premises at issue was a beach club cabana rented by the insured for 20 successive summers, albeit under separate yearly membership agreements. The First Department found that since the term “occasionally rented” could apply in this context,  the exclusion was ambiguous and must be construed against the insurer.

In Raner, the First Department cautions that policy terms must be clearly defined or subject to only one reasonable interpretation or else it will have no effect.  If the terms can be open to more than one reasonable interpretation, proceed with caution.

Thanks for Alison Weintraub for her contribution to this post.  If you have any questions, please email Paul at pclark@wcmlaw.com