Insurance Policies, Including Exclusions, Need to Be Clear and Unambiguous, According to Delaware Court

A Delaware gun dealer, which also operates a shooting range for which it rents firearms, sued its insurer and its insurance broker in a matter arising from the insurer’s refusal to provide defense or indemnification in an underlying lawsuit brought by the estate of man who rented a firearm in order to terminate his own life. 

The insurer declined coverage because the policy excluded coverage for injuries caused by the rental of “sporting equipment.” Noble Eagle argued the exclusion did not clearly define “sporting equipment,” rendering the exclusion ambiguous and that, under Delaware law, ambiguities in an insurance policy are to be interpreted against the insurer that drafted the language. Noble Eagle further argued, if the policy does not provide for defense and indemnification for the estate’s lawsuit, its insurance broker should be held liable for negligently procuring a policy that did not satisfy Noble Eagle’s insurance needs. 

The Delaware Superior Court held that Noble Eagle’s insurance policy was ambiguous as to whether a firearm falls under “sporting equipment.” The court stated, it “cannot conclude all firearms are unequivocally and definitionally ‘sporting equipment.’ Nor can the Court conclude all activities that occur at a shooting range are sports.” 

Accordingly, the court granted Noble Eagle’s motion for summary judgment, holding Noble Eagle is entitled to coverage, defense and indemnity in the underlying lawsuit. As a result, Noble Eagle agreed to dismiss the negligent procurement claim it asserted against its insurance broker. 

_{Case Law Alerts, 1st Quarter, January 2025 is prepared by Marshall Dennehey to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2024 Marshall Dennehey, all rights reserved. This article may not be reprinted without the express written permission of our firm.}