Broad Language of Policy Covers Insured's Liability for Students Kidnapped off Insured's School Bus


Case Name: Indiana Ins. Co. v. Auto Owners Ins. Co.

Issues: Whether a No Fault Insurer (Auto Owners) or a general liability insurer (Indiana) was responsible for insuring injuries resulting from criminal acts that happen to involve a school bus? Was Auto Owners contractually responsible for half of the settlement and legal costs paid on behalf of its insured for injuries sustained by two students kidnapped while being discharged from the insured's school bus?

Court: Michigan Court of Appeals. Published.

Holding: Two elementary school-aged girls, ages nine and six, took the bus to and from school. The school had two bus routes (gray and red). The girls were assigned to the gray bus route. On March 21, 1997, three men executed a plan to kidnap the girls off of the bus. The three of them drove to the school's bus garage where one of them gave a note to Lewis, the director of transportation for the school district and the driver of the gray bus. The note requested that the girls be transferred to the red bus so they could be dropped off at their babysitter's house. Without any contact with the school office, Lewis took the girls to the red bus and instructed Earl, the red bus driver, to drop the girls off with a babysitter at the location stated in the note.

When the girls refused to exit the bus at that location because it was not their normal bus stop, Earl decided to return with the girls to the bus garage. After the girls were not dropped off as requested by the note, one of the kidnappers called the bus garage and, falsely claiming to be the girls' father, wanted to know why the girls had not been dropped off per the note, and asked that the girls be dropped off at the next bus stop, a trailer park. This oral request for a second drop off location was conveyed by the school transportation department to Earl.

The three men met the bus at the trailer part. Earl allowed the first man onto the bus, and allowed the second man to stand on one of the stairs of the bus. The girls (now protesting and crying) were taken by their arms by one of the men and escorted off the bus. Earl did not ask either man for identification, did not contact the school about the situation, did not ask the girls if these men were their babysitters, nor did Earl ask anything else of the girls despite their obvious despair of being removed from the bus. At the criminal trial, one of the girls described the situation as the man "dragged me and my sister off the bus."...

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