The U.S. Eleventh Circuit Court of Appeals recently held that a CGL policy condition granting coverage only when an insured did not have the “same or similar” coverage elsewhere is ambiguous where both the insured and CGL insurer provided reasonable interpretations of the meaning of the term “similar.” Southern-Owners Ins. Co. v. Wall 2 Walls Const., LLC, 2014 WL 5861602 (11th Cir. Nov. 13, 2014).
A CGL policy issued to a construction company included coverage for “hired auto and non-owned auto liability” so long as the insured did not have the “same or similar” coverage under a different policy. The insured also had an auto liability policy covering three business vehicles. These vehicles were not owned by the insured, but by the insured’s principal agent. The insured’s employee injured the claimant in an auto collision while driving one of these vehicles. The auto insurer tendered its policy limits to the claimant. The CGL insurer denied the claim, citing the “hired auto and non-owned auto liability” condition, because the insured did not own the vehicles and had the “same or similar” coverage under its auto liability policy. The claimant sued the insured for her damages, and the CGL insurer filed a declaratory judgment action seeking a declaration that the policy did not cover and that the CGL insurer had no duty to defend. The district court ruled on summary judgment motion that the “hired auto and non-owned auto liability” condition is ambiguous. The CGL insurer appealed.
The Eleventh Circuit affirmed and found that the “hired auto” condition to be ambiguous with respect to the meaning of the term “similar” in the condition’s bar on coverage where the insured had “similar” coverage elsewhere. The Eleventh Circuit defined the term “similar” as: “like the same.” The CGL insurer argued that the two coverages were “similar” because they both pertained to auto liability coverage. The insured argued that the two coverages were not “similar” because the CGL coverage was much broader, as the auto liability coverage provided coverage for only three vehicles, whereas the CGL coverage potentially applied to all non-owned vehicles. The Eleventh Circuit found both interpretations to be reasonable and interpreted the condition in favor of coverage for the insured.