Las Vegas Sun

July 30, 2014

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Court: Consumers gets benefit of doubt when insurance policies unclear

CARSON CITY — The Nevada Supreme Court has ruled that consumers should prevail in disputes when insurance policies are ambiguous about coverage.

The court said insurance companies must clearly state what is excluded from coverage.

“We interpret ambiguities in an insurance contract against the drafter, which is typically the insurer,” Justice Michael Douglas wrote Thursday in a unanimous decision.

The disputed case heard by the court was between Century Surety Co. of Michigan and the Casino West Motel in Yerington, where four people died from carbon monoxide poisoning in their room in April 2006, according to court documents.

The U.S. Ninth Circuit Court of Appeals asked the Nevada court to rule on conflicting interpretations of the policy.

Casino West was trying to collect money from the insurance company that it paid in settlements to the families of the poisoning victims, according to court documents. The amount was not disclosed in rulings by the federal and state courts.

Phillip Doll, Juan Chavez, Veronica Chavez and Donna Vega-Robles died from carbon monoxide poisoning from fumes from a pool heater at the motel, accoording to court documents.

The insurance company argued its policy excluded any coverage from pollution, which the motel contested.

Douglas said the wording in policy was ambiguous and there were multiple reasonable interpretations.

“Any exclusion must be narrowly tailored so that it clearly and distinctly communicates to the insured the nature of the limitations, and specifically delineates what is not covered,” Douglas wrote in the ruling.

Where there is ambiguous language, the court said, it “will interpret the policy to effectuate the insured’s reasonable expectations.”

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