Southeast Airmotive Corp. v. US Fire Ins. Co.

337 S.E.2d 167 (1985)

SOUTHEAST AIRMOTIVE CORPORATION v. UNITED STATES FIRE INSURANCE COMPANY.

No. 8526SC544.

Court of Appeals of North Carolina.

December 17, 1985.

*169 Parker, Poe, Thompson, Bernstein, Gage & Preston by Gaston H. Gage and Debra L. Foster, Charlotte, for plaintiff-appellee.

Golding, Crews, Meekins, Gordon & Gray by Rodney Dean and Ned A. Stiles, Charlotte, for defendant-appellant.

HEDRICK, Chief Judge.

Defendant's only assignments of error concern the trial court's granting summary judgment for plaintiff, rather than for defendant. Defendant contends that the exclusionary language in the insurance policy purchased by plaintiff clearly excludes the negotiable instruments damaged in the crash from coverage and therefore that defendant, rather than plaintiff, is entitled to judgment as a matter of law. We disagree.

When language used in an insurance policy is ambiguous and is reasonably susceptible of differing constructions, it must be given the construction most favorable to the insured, since the insurance company prepared the policy and chose the language. Grant v. Insurance Co., 295 N.C. 39, 243 S.E.2d 894 (1978). The test in deciding whether the language is plain or ambiguous is what a reasonable person in the position of the insured would have understood it to mean, and not what the insured intended. Joyner v. Insurance, 46 N.C.App. 807, 266 S.E.2d 30, disc. rev. denied, 301 N.C. 91 (1980).

Exclusions from liability are not favored, and are to be strictly construed against the insurer. Holcomb v. Insurance Co., 52 N.C.App. 474, 279 S.E.2d 50 (1981); Trust Co. v. Insurance Co., 276 N.C. 348, 172 S.E.2d 518 (1970). When the coverage provisions of a policy include a particular activity, but that activity is later excluded, the policy is ambiguous, and the apparent conflict between coverage and exclusion must be resolved in favor of the insured. Holcomb, 52 N.C.App. 474, 279 S.E.2d 50.

In the present case, the damage to the negotiable instruments appears to be covered by the policy under Coverage D as "damages because of injury to or destruction of property." Defendant argues, however, that the damaged property is excepted from coverage by exclusion (e), as "[l]oss of or damage to property ... in the care, custody or control of the Named Insured, or carried in or on any aircraft with respect to which the insurance afforded by this Policy applies...." Since exclusion (e) is prefaced by the phrase "[u]nless otherwise provided by the Policy of insurance," these provisions create an ambiguity between coverage and exclusion under the policy which must be resolved in favor of the insured. A reasonable person in the position of plaintiff, as a purchaser of insurance for an aircraft to be used to transport cargo, would have understood Coverage D to be such a provision otherwise. We hold, therefore, that the trial court was correct in concluding that the policy issued by defendant provides plaintiff with liability coverage for claims asserted by Wachovia for damage to its negotiable instruments carried in plaintiff's aircraft at the time of the crash.

Affirmed.

JOHNSON and PHILLIPS, JJ., concur.