Coelsch v. State Farm Fire and Casualty Co.

“We are mindful that, in construing an insurance policy, we are to interpret terms according to what we perceive to be the understanding of the ordinary purchaser of insurance.” Hunters Ridge Condo. Assn. v. Sherwood Crossing, 285 Or App 416, 422, 395 P3d 892 (2017).

Plaintiffs appealed a judgment dismissing their insurance claim on the finding that the loss they suffered was excluded under their insurance policy by Defendant. Plaintiffs assigned error to the trial court’s finding that Plaintiffs’ damage to their combine was subject to the “mechanical breakdown” exclusion of their insurance policy. On appeal, Plaintiffs argued that the loss on the combine was not a “mechanical breakdown” as defined in their policy. In response, Defendant argued that the combine broke during its regular operation as it was “operating,” when it slid down the hill, and at that point was unable to operate properly so that it was within the definition of “mechanical breakdown.” “We are mindful that, in construing an insurance policy, we are to interpret terms according to what we perceive to be the understanding of the ordinary purchaser of insurance.” Hunters Ridge Condo. Assn. v. Sherwood Crossing, 285 Or App 416, 422, 395 P3d 892 (2017). The Court held the term “mechanical breakdown” and the term “operating,” as it would have been understood by Plaintiffs or other ordinary purchasers, is that the loss of operation would have needed to occur during its regular course of operation and not a breakdown that occurs as a result of other, unexpected movement. Reversed and Remanded.