Kelty v. State Farm Mut. Auto. Ins. Co., 2014 WL 3057887 (Del. Super. Ct. May 28, 2014)

Superior Court Holds That Insurance Policy Exclusion Violates Delaware Public Policy.

This suit arises out of injuries sustained by the Plaintiff when he fell out of a tree. Plaintiff was assisting friends in trimming tree branches from the top of a tree. Plaintiff climbed the tree and was using a chainsaw to cut tree branches from the tree. Because the tree was near power lines, the Plaintiff and his friends wanted to ensure that the falling branches did not land on the nearby power lines. Therefore, the Plaintiff and his friends tied one end of a rope to the branch they were cutting and the other end to a truck. An individual was in the truck pressing the accelerator to keep the rope taut. Unfortunately, the truck unexpectedly accelerated and the rope snapped. The tree branch then recoiled, broke free from the tree, hit the power line, and caused the Plaintiff to fall from the tree. The Plaintiff suffered multiple injuries as a result of the fall. Plaintiff sought PIP coverage from the Defendant. Although the Superior Court originally found that Plaintiff was not eligible for PIP benefits, the Supreme Court reversed the ruling and found that Plaintiff was eligible for benefits.

On remand, the only issue that remained is whether or not Plaintiff was entitled to the full policy limits of $100,000 or the statutory minimum, $15,000. The applicable insurance policy contained language that would pay up to the no-fault policy limits for the named insured, the named insured’s spouse, and relatives of the named insured involved in a motor vehicle accident as a pedestrian but only the statutory minimum PIP coverage for all other persons. Defendant took the position that this policy language preclude Plaintiff, who was not a relative, from accessing the fully policy limits. Plaintiff argued that this exclusion was void as against public policy.

The Court agreed with the Plaintiff that the exclusion was void against public policy and ruled that the Plaintiff was entitled access the full policy limits. The Court went on to say that any policy provision that restricts coverage based on the affiliation of the injured to the insured will be ruled invalid as against public policy. The Court also noted that this should be considered a bright-line test to be used for any policy provision that restricts coverage based on the affiliation of the injured to the insured in the future.