In July of 1996, the Ledyard's home suffered a severe fire. They submitted a claim to their insurer, Auto-Owners Mutual Insurance Company and came to an agreement on several issues. The Ledyards and Auto-Owners agreed on the cash value to be paid to cover the damage to the home and for the loss to their personal property. The problem involved the Ledyard's request for coverage under Additional Living Expenses.

The fire made their home uninhabitable, so the Ledyards incurred nearly $1,200 in expenses to store a '79 Corvette and over $3,000 for the boarding and care of their two horses. Normally the horses resided on the Ledyard's property. Auto-Owners denied the request for ALE coverage, stating that the homeowners policy does not operate to the benefit of a bailee. The insurer said that they did not owe payment to the custodians for either the car or the horses and they filed a motion for a summary judgment on this issue. The trial court granted the insurer's motion and the Ledyards appealed.

The appeals court reviewed the pertinent parts of the policy, specifically the following areas:

• Section I, "Property Protection Coverage D - Additional Living Expenses,"
• the definition of "residence premises,"
• the definitions of "you" and "your," and
• Section I "property protection," Conditions, paragraph 8. No Benefit To Bailee

After reviewing the language, the court felt that the section concerning bailees was confusing. In its opinion, the policy was unclear on whether the policy intended to exclude property which was in the care or possession of an insured or intended to exclude coverage for an insured's property that was in the care of others. Further, the court believed that the policy could allow the term "bailee" to be interpreted so broadly that the policy could exclude coverage for nearly any loss situation. The higher court construed the policy in favor of the insureds who, in the loss situation, were bailors, entitled to coverage under the homeowners policy. The trial court decision was reversed and remanded to the lower court for a new trial. The insureds were also allowed to recover their legal costs from the insurer.

Robert Ledyard et al., Plaintiffs-Appellants, v. Auto-Owners Mutual Insurance Company, Defendant-Appellee. OhioCtApp. No. 75703 Filed March 30, 2000. Reversed and Remanded. CCH 2000 Fire and Casualty Cases, Paragraph 6681.