April 24, 2014 – The Wisconsin Supreme Court recently decided who will pay liability damages from a multi-vehicle accident involving a semi-tractor insured by two insurers. The nonbusiness insurer will cover it, even though the truck was en route for repairs.
John Zeverino owned the semi-tractor and leased it to Taylor Truck Line. The commercial truckers’ policy covered liability losses while the truck was operating for commercial purposes. The other policy covered liability during non-commercial use.
Zeverino was not driving it for commercial purposes when he was involved in a multi-car accident, but was en route to have the truck fixed. Thus, the non-commercial insurer argued that Zeverino was using the truck for a purpose excluded from coverage.
Not so, the unanimous court ruled in Casey v. Smith, 2014 WI 20 (April 18, 2014). The court determined that the non-business insurer, Acceptance Casualty Insurance Company, must provide coverage because their policy’s exclusions don’t apply.
One exclusion said the truck was not covered for liabilities incurred while used “in the business of” a lessee, here Taylor Truck Line. The other excluded coverage for accidents that occurred while the semi-truck was “en route” for a “business purpose.”
However, the court noted that Zeverino, at the time of the accident, was not driving the semi “in the business of” Taylor Truck Line. The lease did not require Zeverino to repair the semi-truck, the court noted, and Taylor Truck Line did not order the repairs.
The court also adopted the interpretation of what it means to be “in the business of” as espoused by the Seventh Circuit Court of Appeals in a similar 1990 case, Hartford Ins. Co. v. Occidental Fire & Casualty Co., 908 F.2d 235 (7th Cir. 1990).
The language refers to “occasions when the truck is being used to further the commercial interests of the lessee,” the court noted.
“Hartford demonstrates that repairs are in furtherance of a lessee’s commercial interests when they are necessary to allow the semi-tractor to continue to accept and complete hauls for the lessee,” wrote Justice Ann Walsh Bradley for the unanimous court.
Zeverino was on his way to have the front grille replaced and the oil filler lube replaced, the court noted, and the truck could still carry loads without those repairs.