9.1 Who Is an Insured?

• Jurisdiction: Arizona

The typical homeowner's liability policy sets forth two major categories of "insureds." The first category consists of the "named insureds." The second consists of residents of the named insureds' household who fall into one of three classifications: spouses, relatives, and minor children in the care of the named insured.

The "named insured" is the person specifically listed on the policy by name. A person becomes a "named insured" only by being designated as such by the insurance company and cannot acquire this status by conduct.^[1]

The term "spouse" has been defined as a legal husband or wife.^[2] A mere engagement to marry does not provide marital rights; prior to a marriage ceremony, the status of husband and wife does not exist.^[3] Whether an individual is a "spouse" is determined as of the date of the subject incident and is not affected by a subsequent marriage.^[4]

Courts have defined the term "relative" in a number of ways, depending on the circumstances and the context in which the term is used. Usually, the term "relative" is defined as persons connected by blood (consanguinity) or marriage (affinity).^[5] In insurance cases, a person who is not related by blood or marriage is not covered as a relative.^[6]

As stated above, minor children "in the care of" the named insured are covered while residing in the household. There are no Arizona appellate decisions interpreting this phrase; however, decisions from other jurisdictions can provide some guidance. For example, the phrase "under the care of another" has been interpreted to mean persons who are "under the guidance, supervision, control, and management of another."^[7] The phrase "in the care of an insured" has been construed to encompass much more than control or supervision-the term extends to the realities of providing life's basic necessities.^[8] At least some courts have refused to limit the "in the care of" phrase to mean only legal care or responsibility.^[9]

In Nationwide Mutual Insurance Co. v. Anderson,^[10] for example, Brenda Knight and her son, Wayne Enich, lived with John Gwen in Gwen's home. One day, Enich visited with Kim Wiley and her cousin, Kevin Anderson, at Mr. Wiley's home. While visiting, Enich retrieved Wiley's shotgun to show Anderson how it worked. As Enich turned to leave the room, the shotgun discharged and Anderson was killed. Anderson's estate filed a wrongful death action against both Enich and Wiley. Nationwide denied liability, contending that Enich was not an insured under Gwen's homeowner's policy. Although Nationwide conceded that Enich was a resident of Gwen's household and under the age of 21, Nationwide denied he was "in the care of" Gwen.

Nationwide filed a declaratory judgment action in the Anderson, case, seeking a determination whether Enich was an insured under the policy. The court found that he was an insured. In determining that Enich was in the care of Gwen, the court noted that Enich and his mother moved in with Gwen when Enich was very young and, although Gwen did not "function" as a father, he talked to him like a father and participated in raising him. Gwen provided a home for Enich and his mother. Moreover, Gwen bought Enich clothes and fed him. Gwen and Enich's mother never married, but Enich repeatedly referred to Gwen as his stepdad. At the time of the accident, Enich, who had dropped out of school after tenth grade, worked full time, paid $20 rent every two weeks, paid the electric bill, maintained his own car insurance, and performed some household chores, such as mowing the lawn. Gwen and Enich's mother paid for all other expenses, including food and clothing. Nevertheless, the court concluded that while Gwen never married Enich's mother, they, along with Enich's young half-brother by Gwen, operated as a family. Enich was 18 at the time of the incident, and, while he did provide for his own support in some ways, he was still dependent on Gwen and his mother for basic necessities of food, clothing, and shelter. The court in Anderson held, therefore, that the trial court erred in granting summary judgment for Nationwide and in determining that Enich was not an insured under the policy.

In State Farm Fire & Casualty Co. v. Odom,^[11] the insured, Darrell Odom, had bought a house and moved into it with Cheryl Odom, Cheryl's daughter, Erica, and Cheryl's mother. Darrell and Cheryl were engaged but not married at the time (they were married in February, 1982). Erica was not Darrell's daughter, and he had no legal responsibility for her. Darrell and Cheryl pooled living expenses for the four, and had a joint checking account.

On January 6, 1982, Darrell was draining the furnace boiler in the home, and the water from the boiler drained onto the floor of the basement. Erica, who was alone with Darrell, slipped and fell into a bucket of scalding water. Erica suffered second degree burns and died of her injuries. Cheryl brought a wrongful death action against Darrell. State Farm refused to defend on the grounds that the homeowner's policy it provided to Darrell excluded liability coverage for injuries suffered by an "insured," which was defined by the policy in a manner similar to Metropolitan's policy. State Farm argued that Erica was a "resident" "in the care of" Darrell and, therefore, was an excluded "insured." The Sixth Circuit Court of Appeals agreed. In doing so, the court rejected the Odoms' argument that the phrase "in the care of" could be construed to mean only legal care or responsibility. The court held that the phrase could not be reasonably understood to mean only legal care and, therefore, was unambiguous. The court held that there was no genuine issue of fact whether Darrell provided significant physical care to Erica. Darrell, Cheryl, and Erica lived and functioned together as a family, which they soon afterwards became. In addition, the court observed that Darrell and Cheryl provided housing, clothing, and food, and shared in Erica's care. Accordingly, Erica was a "resident" "in the care of" Darrell as those terms were used in the State Farm policy.^[12]

In Nationwide Mutual Insurance Co. v. Granillo,^[13] the Arizona Court of Appeals held that living together under one roof as a family is neither the sole nor the controlling test in determining whether a person is a member of a household. The Arizona courts have held that the term "resident of the same household" is not ambiguous, and this term must be interpreted according to its ordinary meaning. In Mid-Century Insurance Co. v. Duzykowski,^[14] the court held that the following factors should be considered in determining whether an individual is a "resident of the same household":

1. The individual's presence in or absence from the named insured's home on the date of the occurrence;

2. The reasons or circumstances relating to the absence or presence;

3. The relationship of the individual to the named insured;

4. The living arrangements of the individual in earlier time periods;

5. The individual subjective or declared intent with respect to the place of...