WHEN THE SHOE IS ON THE OTHER FOOT

Excerpted from 01/19 ed., RN Magazine

This court decision hinges on the term “advertising idea.” The Bikila family sued Vibram, a shoe manufacturer, because it used the name Bikila to advertise its minimalist shoes. Abebe Bikila was an Olympic runner well known for running barefoot. Vibram insurer Holyoke Mutual Insurance Company denied coverage for two reasons. First, the alleged offense was not part of the policy’s personal and advertising injury definition, and second, the action was excluded because of the Infringement of the Copyright, Patent, Trademark or Trade Secret exclusion.

Vibram disagreed and argued that its use of the name Bikila was not infringement, but rather was the result of Vibram’s using another’s advertising idea, which was a covered offense.

Definitions

To resolve the coverage issue, the appellate court turned not to the exclusions but instead to the definitions section. This is not unusual. The definitions sections of ISO forms continue to grow because courts can find coverage when a term used to describe a coverage or an exclusion is considered vague. When a court determines that a term could be construed in more than one way because insurance is subject to the law of adhesion, the definition that is most advantageous to the policyholder is the one that must be used.

“Advertising idea” was not a defined term, so the appellate court considered what would be the “plain meaning” of the term. It then ruled that Vibram’s argument for coverage was reasonable.

Clarification vs. limitation

The two fastest growing sections of insurance policies are the exclusions and the definitions. Both are fueled by court interpretations that have granted coverage in situations that insurance companies had not anticipated when the policy was written. Many times, the insurance company will state that such changes are clarifications of coverage and not restrictions because the writers of the language had never anticipated the court interpretations. However, from the policyholder’s standpoint, such clarifications must be considered as restrictions because the court interpretation in favor of coverage cannot be carried forward as precedent in similar situations when the new wording is used.

When providing coverage reviews for customers, it is important to consider the edition dates of coverage forms. Some insurance companies are using current edition date forms that include changes in definitions and exclusions amended for “clarification,” while others use older and possibly more ambiguous forms.

For the benefit of the policyholder, the same principle that applies to wine and whiskey applies to coverage forms and policies: older is often better.