7th Circuit: Insurer Must Defend Horse Farm From Lawsuit Over Golf Cart Accident

By Jim Sams | June 29, 2021

An insurer must defend an Illinois equestrian business from a lawsuit filed by a man who was injured when he was run over by a golf cart operated by an employee who was chasing a loose horse, a federal appellate court ruled Monday.

A three-judge panel of the 7th Circuit Court of Appeals reversed a district court judge’s order granting summary judgment in favor of American Bankers Insurance Co. of Florida. The opinion says the “farmowner policy” issued to St. Charles Farms contained ambiguous language that the owners could have construed as providing commercial general liability coverage.

“The risks undertaken and purchased were ‘[a]ll known exposures’ of the business: stables, boarding, riding clubs and academies, commercial saddle animals, and coverage for instructors liability,” the opinion states. “Without a link to the insured premises at that juncture, it would have been reasonable for SFC to anticipate coverage at an off‐site riding event where an SFC instructor was in charge of observing riders; an accident in this context was an ordinary business risk.”

On Nov. 11, 2016, SFC employee Ashley Ratay transported horses, equipment and a golf cart from the business’ property in St. Charles, Illinois to the Barrington Hills Riding Center, about 15 miles away. Ratay was in charge of supervising the people riding SFC’s horses, which she did while riding the golf cart.

Robert Shockley Jr. was riding as a passenger in the golf cart when Ratay sped across a grassy field to chase a horse. Shockley flew out of the cart when it passed over uneven ground and Ratay ran over his leg.

After Shockley filed a lawsuit seeking compensation from Ratay and SFC for his injuries, American Banker filed a lawsuit at the U.S. District Court for Northern Illinois seeking a declaratory judgment that no coverage was owed under its policy.

The carrier argued that SFC’s insurance “farmowner policy” excluded coverage for any damages caused by accidents off the premises of SFC’s property in St. Charles. The district court agreed and granted summary judgment in the insurer’s favor.

The 7th Circuit panel said the insurance contract between SFC and American Banker was not a typical farmowner’s policy. For one thing, an endorsement attached to the policy provided commercial liability coverage for any bodily injury or property damage at the Kane County Fairgrounds, where SFC occasionally participated in events. What’s more, the endorsement included “motorized vehicles” under a list of supplemental commercial general liability coverage, but specified that the vehicle must be designed for use off of public roads and used to service the “insured premises.”

The appellate court’s opinion says that farmowner’s policies typically work like homeowners policies and provide coverage only for a specific property. By issuing a policy that added commercial general liability coverages for SFC’s operations while off premises, American Banker created an ambiguity, the panel said. Under Illinois law, ambiguities are decided in favor of the policyholder.

“SFC is not a typical farm,” the opinion says. “It is a horse farm and equestrian center, conducting activities on and off its premises. American knew, or should have known, that fact, considering it extended an additional insured endorsement relating to SFC’s operations to the Kane County Fairgrounds; assessed business risks including activities that could occur off‐premises without linking coverage for those activities to the insured premises; and included commercial liability coverage for SFC’s operations in the contract.”

The opinion says that a jury may also find that coverage is owed because the endorsement specifically covers “motorized vehicles” as long as they are designed for off-road use.

“The complaint does allege the golf cart was being used for business purposes,” the opinion says. “This allegation is sufficient to trigger the supplemental motorized vehicle coverage.”

The 7th Circuit vacated the district court’s decision to grant summary judgment in favor of American Banker.

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