/Narrowly Interpreted Exclusion Leads to Coverage

Narrowly Interpreted Exclusion Leads to Coverage

Insurance policies are to be interpreted in the light most favorable to the insured. Narrowly interpreting policy language can help find coverage for an insured, as was the case in Tuscarora Wayne Insurance Company v. Hebron.1

In Tuscarora, a Pennsylvania appellate court reversed a trial court’s decision and found that an insurance policy exclusion for “ongoing business operations” did not bar coverage for a fire loss. Hebron, a vehicle dismantling facility, suffered a loss when a fire occurred when one of Hebron’s truck drivers was pumping gas into a truck on the loading dock outside the facility. The fire damaged the facility, and Hebron filed a claim under its commercial liability policy issued by Tuscarora Wayne Insurance Company (“Tuscarora”).

Tuscarora denied coverage for the fire loss, citing the policy exclusion that included, “property damage arising out of [vehicle dismantling], regardless of whether such operations are conducted by you or on your behalf or whether the operations are conducted for yourself or for others.” However, vehicle dismantling was not defined by the policy.

Tuscarora sought a declaration from the court that it was not liable for the damages resulting from the fire because of the policy exclusion. The trial court granted summary judgment for Tuscarora. The trial court reasoned that refueling the truck used to transport vehicles to Hebron’s facility to be dismantled was “incidental to the vehicle dismantling business.” Therefore, the claim was subject to the “ongoing business operations” exclusion.

Hebron appealed, and the appellate court reversed the trial court’s ruling. The appellate court found that the trial court confused the facts of the case; the fuel from the dismantled vehicles was pumped into holding tanks on the loading dock and was then pumped into another holding tank or Hebron vehicles. The appellate court also found that the trial court’s ruling did not interpret the policy in favor of the insured. Since the fire did not occur during vehicle dismantling as stated in the exclusion, the appellate court ruled that Tuscarora was required to defend and indemnify Hebron for the loss under the terms of the policy.
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1Tuscarora Wayne Ins. Co. v. Hebron, Inc., No. 1591 MDA 2017, 2018 PA Super 270 (Pa. Super. Ct. Oct. 3, 2018).