The South Dakota Supreme Court unanimously agreed last week that vague policy language means an insurance company must pay the family of a Rapid City student killed in an April 2015 moped crash.
Nehemiah Larimer, an 18-year-old about to graduate from Stevens High School, died after he was hit by a car driven by a 15-year-old.
The Larimer family hopes the ruling will encourage courts or the Legislature to further clarify insurance and moped rules "so that others won't have to go through this," said their lawyer, Rex Hagg. Dealing with complicated insurance issues is a "very trying matter after you've been through the grievance of the death. We hope (the ruling is) going to help people in the future."
The Larimer family did initially receive $100,000 from American Family Insurance, or the maximum allowed under the policy purchased by the 15-year-old's family. The Larimers also filed a claim under a policy that they had purchased from American Family that provided protection in accidents involving under-insured motorists — meant to cover the gap between how much the responsible party's insurance covers and how much the victim needs, Hagg said.
American Family argued it didn't need to pay out the under-insured policy because the moped didn't have insurance and therefore the incident falls under an "owned but not insured" exclusion to the policy.
The issue hung on whether a moped fell within the definition of a motor vehicle. Larimer's family argued that the definition of "motor vehicle" in the exclusion was too vague.
Judge Heidi Linngren of the state court in Rapid City and the Supreme Court agreed, citing previous court rulings that said when contract language is ambiguous, courts should side with the insured, not the insurance company.
"Because the language of the policy was ambiguous, we adopt the interpretation most favorable to the insured," the court wrote.
Justices David Gilbertson, Steven Jensen and Mark Salter agreed with that narrow ruling and said the court didn't need to address whether all "owned but not insured" exclusions violate public policy. Retired Justice Glen Severson said a broader ruling was necessary that says all such exclusions violate what lawmakers meant when they wrote insurance laws.
While the court ruling was an important victory, Hagg said, the family now needs to go through the difficult task of putting a price on Nehemiah's life. That can be achieved through a settlement with American Family or through a jury, he said.