POLICY CONSTRUCTION 101: NORTHERN DISTRICT OF TEXAS HOLDS ENDORSEMENTS MEAN WHAT THEY SAY

Last Monday, Chief Judge Sydney Fitzwater of the Northern District of Texas granted summary judgment in a carrier-on-carrier dispute over the meaning of an endorsement deleting a vehicle from a Business Auto Policy.  The court held the express deletion of liability coverage for the described vehicle in a change endorsement trumped any alleged ambiguity created by coverage symbols used elsewhere in the policy.  In Bituminous Cas. Co. v. The Travelers Indemnity Co.,  2013 WL 1722447 (N. D. Tex. April 22, 2013), Travelers’ insured, Big D, leased five tractor-trailers to Bituminous’ insured, Frontier.  After the lease was executed, Big D requested the five tractor-trailers be deleted from the Travelers policy, and Travelers issued an endorsement identifying the five vehicles and expressly stating, “LIABILITY COVERAGE IS DELETED.”  Two weeks after the endorsement was issued, a Frontier employee was involved in an accident while driving one of the vehicles. 

After Travelers repeatedly refused Bituminous’ demands that it defend the employee and settle the suit, Bituminous settled the suit and brought this action against Travelers.  Bituminous argued that because the Business Auto Policy used the coverage symbol “1,” which was defined as “Any Auto,” to designate the scope of coverage, the only way to remove a vehicle from coverage was to either change the definition of the symbol “1” or replace the broad symbol “1” with a more limited coverage symbol as defined in the policy form.  The court rejected this overly technical reading, holding that the endorsement on its face unambiguously showed clear intent to remove the identified vehicles from liability coverage, and under Texas law, when an endorsement conflicts with the main coverage form, the endorsement controls. Therefore, Travelers’ rejection of Bituminous’ demands was vindicated.