Utah Supreme Court holds contract provisions requiring one party to buy insurance for the benefit of the other are not subject to strict construction.

Utah Transit Authority v Greyhound Lines, Inc.

Greyhound appealed judgment against it in a breach of contract claim by Authority arguing that the provision in its lease with Authority to provide insurance must be strictly construed. The Court disagreed and affirmed. It held that while Utah precedent requires indemnity clauses to be strictly construed when they reach negligent acts, no precedent requires that insurance provisions be strictly construed and the policy considerations underpinning the strict construction rule for indemnity clauses do not apply in the insurance context because the rule would limit freedom to contract, the burden of liability is shifted to a third party not one of the parties to the contract, insurance provisions limit the scope of liability for the responsible party and the trend in Utah law is to limit strict construction even the indemnity arena. The Court held that the insurance and indemnity provisions in the lease here can be harmonized because the indemnity clause allocates risk for claims beyond the insurance policy coverage, the insurance provision eliminates redundant coverage and eliminates a conflict of interest between Greyhound and Authority and Greyhound has the right to insist on repairs or modifications to meet local law and can even make the repairs and sue for reimbursement. The Court held that the slip and fall injury here arouse out of Greyhound’s use of the facility because the injured party was being transported by greyhound and was only present in the facility because Greyhound was using it. The Court finally affirmed an attorney fee award to Authority as it won on its claim and obtained the full amount of its claim and the affidavits and statement from the law firm were sufficient to prove amount of the fees