Vargas v. Insurance Company of North America
United States Court of Appeals for the Second Circuit
651 F.2d 838 (2d Cir. 1981)
Joseph Khurey held an aviation insurance policy from Insurance Company of North America (INA) (defendant) covering losses occurring within the United States, its territories, Canada, or Mexico, with an endorsement extending coverage to the Bahama Islands. Khurey and his family died in a plane crash 25 miles west of Puerto Rico while flying the last leg of a trip from New York to Puerto Rico via Haiti; INA denied coverage, arguing the policy covered only the defined locations and the three miles of adjacent coastal waters, not the airspace in between destinations. Daniel Vargas (plaintiff), representing one of the Khureys, brought a declaratory-judgment action arguing coverage extended to travel between two covered locations; the district court granted INA summary judgment, and Vargas appealed.
Whether an ambiguous provision in an insurance policy should be construed in favor of the insurer if the insurer can establish that its interpretation is the only reasonable and fair construction of the provision.