Eveready Insurance Company v. Schwartz, 54 N.Y.2d 862 (1981)

When the language of an insurance policy is clear and unambiguous, it must be given its plain and ordinary meaning, and courts should refrain from rewriting the agreement.

Summary

This case concerns the interpretation of an automobile insurance policy to determine if coverage extends to an accident involving a vehicle owned by the insured’s spouse. The Court of Appeals held that because the policy’s definition of “named insured” included the spouse, the vehicle owned by the spouse did not qualify as either a “temporary substitute automobile” or a “non-owned” vehicle, and therefore was excluded from coverage. The court emphasized that clear and unambiguous policy terms must be given their plain meaning.

Facts

An accident occurred involving a vehicle owned by the wife of the insured, Schwartz. The Eveready Insurance Company had issued an automobile liability policy to Schwartz. The policy provided coverage for accidents involving the vehicle designated in the policy, a “temporary substitute automobile,” or a “non-owned” vehicle.

Procedural History

The lower courts likely ruled in favor of the insured, finding coverage. The Court of Appeals reversed the lower court’s decision and granted a declaratory judgment in favor of Eveready Insurance Company, finding no coverage under the policy.

Issue(s)

Whether the vehicle owned by the insured’s wife qualifies as a “temporary substitute automobile” or a “non-owned” vehicle under the terms of the insurance policy, thereby triggering coverage for the accident.

Holding

No, because the insurance policy defines the “named insured” as including the spouse of the party who executed the agreement, and therefore the wife’s vehicle does not qualify as either a “temporary substitute automobile” or a “non-owned” vehicle, thus coverage is excluded.

Court’s Reasoning

The Court of Appeals relied on the principle that clear and unambiguous terms in an insurance policy must be given their plain and ordinary meaning. The policy defined the “named insured” to include the party who executed the agreement and his spouse. A “temporary substitute automobile” was defined as any automobile not owned by the named insured. A “non-owned” vehicle meant any automobile, other than a temporary substitute automobile, not owned by the named insured.

Because the wife was considered a “named insured” under the policy’s definition, the vehicle she owned could not be classified as either a “temporary substitute automobile” or a “non-owned” vehicle. The court stated, “While it is true that policies of insurance are to be construed liberally in favor of the insured and strictly against the insurer, where the provisions of the policy are clear and unambiguous, they must be given their plain and ordinary meaning, and courts should refrain from rewriting the agreement.” The court emphasized that its role was to interpret the policy as written, not to create coverage where none existed based on the policy’s plain language. The absence of dissenting or concurring opinions suggests a unanimous agreement on the proper application of contract interpretation principles.