The motor vehicle exclusion in personal liability coverage under a homeowners policy, in pertinent part, excluded bodily injury arising out of ownership or use of a motor vehicle operated by an insured, entrustment by any insured of a motor vehicle to any person, or vicarious parental liability imposed by statute for a child's use of such vehicle.

The insurer denied defense and indemnity for a lawsuit brought against the named insureds based on their alleged failure to properly supervise and control their minor daughter. The child had taken a car without her parents' permission, driven to a party where she drank excessively, and caused an accident while driving home in which another motorist was injured.

The injured woman secured a judgment in excess of $200,000 against the parents for their alleged failure to supervise and control their daughter. The insurer again asserted "no coverage," whereupon motions for summary judgment were filed on the application of the exclusion. The trial court determined that the insurer had a defense and indemnification duty to the extent of the $100,000 limit of liability provided under its policy.

The claimants argued on appeal that their negligent supervision claim was unrelated to the use of the motor vehicle. They said that, therefore, the pertinent exclusion did not apply.

The appeal court said that courts in some states had found coverage for negligent supervision despite a motor vehicle being the instrument of injury and the presence of a motor vehicle exclusion in a homeowners policy. Negligent supervision claims were determined to be separate from vehicle operation.

However, the court said that the majority of jurisdictions hold otherwise, reasoning that negligent supervision and vehicle use are "so inextricably intertwined" that the former is not a distinct and separate claim. Accordingly, it was concluded in a long list of cases in point that "negligent supervision claims are excluded from coverage where the acts complained of could not have resulted in injury but for the use of the automobile." The appeal court adopted this rationale.

The trial court grant of summary judgment for the claimants and against the insurer was reversed. The case was remanded for entry of summary judgment in favor of the insurance company. (TAYLOR ET AL., Plaintiffs-Appellees v. AMERICAN FIRE AND CASUALTY COMPANY, Defendant-Appellant. Utah Court of Appeals. No. 960086-CA. October 18, 1996. CCH 1996 Fire and Casualty Cases, Paragraph 5867.)