Judge Terrence Nealon of Lackawanna County Addresses Duty to Defend/Indemnify in Context of "Non-Owned Autos" Provision of Automobile Insurance Policy

Judge Terrence R. Nealon of the Lackawanna County Court of Common Pleas issued an April 25, 2011 decision in the case of Nationwide Mut. Ins. Co. v. Esgro, 2007 Civil 4862 (Lacka. Co., April 25, 2011, Nealon, J.), addressing a coverage question involving a “non-owned autos” provision of an automobile insurance policy.

In this case, the insureds personally owned a vehicle that was involved in a single vehicle accident that was fatal to the one of the occupants of the vehicle.  After having recovered under other policies, including the policy that specifically covered the vehicle involved in the accident and UIM coverage from the decedent's own insurer, the plaintiff pursued a recovery under the business' auto policy with Nationwide that had been separately purchased by the owner of the vehicle involved in the accident.  The plaintiffs [the decedent's estate] asserted that, at the time of the accident, an insured’s defendant's personal vehicle was being used in furtherance of the insured's business and therefore implicated the Nationwide policy.


Nationwide’s policy obligated it to “pay all sums an ‘insured’ must legally pay as damages” for injuries “caused by an accident and resulting from the ownership, maintenance or use of a covered ‘auto’.”

An “insured” includes the named insured as well as “[a]nyone else while using with your permission a covered auto you own, hire or borrow.”

“Covered autos” are comprised of three categories of vehicles: (1) “specifically described autos;” (2) “hired autos;” and (3) “non-owned autos.”

The claimants asserted that coverage should be afforded under the “non-owned autos” provision. According to Judge Nealon’s Opinion, that provision defines “non-owned autos” as:

Only those “autos” you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes “autos” owned by your “employees,” partners (if you are a partnership), members (if you are a limited liability company), or members of their households but only while used in your business or your personal affairs.

Nationwide filed a motion for summary judgment seeking a judicial declaration that it did not owe any duty to defend or indemnify the tortfeasor defendants. The carrier argued that a sole proprietorship business could not be viewed independent of the owner of the business for insurance coverage purposes. Under this argument, since the insured actually owned the vehicle involved in the accident, that vehicle could not be viewed as a "non-owned auto" under the Nationwide policy at issue.


The party seeking coverage asserted that the business at issue was actually a partnership and that the policy provided coverage separately for that type of business. The party seeking coverage also relied upon the “reasonable expectations doctrine.’

After reviewing the parties’ respective positions and analyzing the law on the issue presented, Judge Nealon ruled, as follows:

"A partnership’s automobile insurer has filed a motion for summary judgment seeking a declaration that it owes no duties to defend or indemnify one of the named partners and his relatives in a pending wrongful death action since the vehicle involved does not qualify for liability coverage under the “non-owned autos” provision of the partnership’s policy. A reasonable, alternative interpretation of the relevant policy language supports the conclusion that the policy affords liability coverage for vehicles owned by individual partners or members of their households while the vehicles are being used for partnership business or a partner’s personal affairs. Accepting as true the averments of the amended complaint filed in the underlying tort action, issues of fact exist as to whether the subject vehicle was being used in furtherance of the partnership’s business interests and one partner’s personal affairs at the time of the accident. Therefore, the tort claims filed against that partner and the permissive user of the vehicle may potentially fall within the scope of the policy’s liability coverage, and as such, the insurer’s motion for summary judgment will be denied with respect to those individuals. However, since two other relatives do not qualify as named insureds or permissive users of a “covered auto,” the motion for summary judgment will be granted as to those tort defendants."


Anyone desiring a copy of this decision, which has a nice recitation on the law surrounding the duty to defend and/or indemnify, may contact me at dancummins@comcast.net.