On February 6, 2002, in a case of first impression, the Superior Court of Pennsylvania affirmed a McKean County Court of Common Pleas decision that the "user" of a vehicle, for insurance purposes, is the individual who is physically operating the vehicle and not any other party who is guiding or directing the user in the vehicle's operation.
In Belser, et al. v. Rockwood Causality Insurance Company, et al., 791 A.2d 1216 (2002), a contractor, Belser-Hale Excavating ("Belser"), hired Mark Hervatin ("Hervatin") to haul and remove dirt. While operating his truck with the guidance of a Belser employee, Hervatin's vehicle struck power-lines, which caused Hervatin's death by electrocution. Hervatin's estate sued Belser based on the Belser employee's negligent direction and guidance of Hervatin's vehicle at the time of death.
Rockwood Casualty Insurance Company ("Rockwood") insured Hervatin under a commercial automobile policy, which provided that Rockwood would pay all sums an "insured" must legally pay as damages because of "bodily injury" or "property damage" caused by an "accident" and resulting from the ownership, maintenance, or use of a covered "auto".
The Rockwood policy defined Hervatin as an insured for any covered "auto." Rockwood's policy also covered anyone using a covered "auto" with Hervatin's permission or anyone liable for the conduct of an "insured."
On March 21, 2000, Belser and its insurer, Bituminous Casualty Corporation, filed a Declaratory Judgment action against Rockwood seeking a declaration that Rockwood was obligated to provide primary coverage for the loss and defend and indemnify Belser. Because a Belser employee was guiding Hervatin's vehicle, Belser claimed to be a "user" of the truck, and therefore, "insured" under Rockwood's policy. Alternatively, Belser claimed to be liable for Hervatin's conduct, which also categorized it as an insured under the Rockwood policy. Rockwood filed Preliminary Objections and denied any duty to defend or indemnify Belser. Rockwood reasoned that Belser was not a "user" and therefore, not an "insured." The Trial Court sustained Rockwood's Preliminary Objections and dismissed the action with prejudice. A subsequent appeal was taken that raised the following issues:
- Is a contractor an "insured" when its employee supervised, controlled and directed the movement of a covered auto?;
- Is a contractor an "insured" under a subcontractor's commercial automobile policy that insures anyone liable for the insured's conduct, if the contractor was liable for the subcontractor and the loss?; and
- Does a subcontractor's commercial automobile policy provide primary coverage for a loss involving the covered auto?
An insurer's duty to defend is broader than its duty to indemnify and is determined by the nature of the allegations in the underlying Complaint. Wilson v. Maryland Casualty Company, 377 Pa. 588, 594, 105 A.2d 304, 307 (1954). An insurer that refuses to defend does so at its own risk and must prove that policy exclusions apply to exonerate it from defending an insured. American States Insurance Company v. Maryland Casualty Company, 427 Pa. Super. 170, 628 A.2d 880, 886(1993). The Court interprets an insurance contract to ascertain the intent of the parties manifested by the policy language. Id. quoting Standard Venetian Blind Company v. American Empire Insurance Company, 503 Pa. 300, 305, 469 A.2d 563, 566 (1983). When possible, the Court gives effect to the clear policy language and construes ambiguities against the drafter. Id.
On appeal, the primary issue was whether Belser qualified as an "insured" under the Rockwood policy. Belser argued that it qualified as an "insured" because a Belser employee directed Hervatin's operation of the truck. Rockwood asserted that the connection between Hervatin and the Belser employee was too remote to categorize the employee as a "user" and Belser as an "insured".
In some jurisdictions, whether an individual who guides a vehicle's operation qualified as a "user" depends on the amount of autonomy relinquished by the driver. If the driver relinquishes a significant degree of autonomy such that he must rely on the directions of another person, some jurisdictions consider the person guiding the operator to be a "user".[1] However, here, Judge Lally-Green held that the "user" was the physical operator of the vehicle, and therefore, Belser did not qualify as a "user," or an "insured" under the Rockwood policy.
Secondary to this issue was Belser's allegation that because Belser was liable for Hervatin's conduct, Belser qualified as an "insured." The language in the Rockwood policy set forth that Belser would have to be responsible for Hervatin's injury to a third party to be considered an "insured." Here, Judge Lally-Green applied the clear policy language and held that because Hervatin did not injure a third party, Belser was not an "insured" under its alternative theory of coverage.
The third issue on appeal, whether Rockwood would provide primary coverage, was rendered moot by the Court's decisions regarding the primary and secondary issues; therefore, Rockwood was not obligated to provide any coverage, primary or otherwise, for the loss.
