New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

Eliot Spitzer
Governor

Eric R. Dinallo
Superintendent

The Office of General Counsel issued the following opinion on September 20, 2007, representing the position of the New York State Insurance Department.

Denial of automobile insurance claim

Question Presented:

Is the insurer of a driver of a motor vehicle escorting a tractor-trailer on a highway obligated under a standard automobile liability insurance policy to defend or pay out claims against its insured in a lawsuit brought by New York State against the insurer of the tractor-trailer, whose driver caused damage to itself and to an overpass structure on the highway, and who sued the owner of the escort vehicle for indemnification, alleging that the escort vehicle’s driver failed to timely communicate with the tractor-trailer’s driver?

Conclusion:

Since the owner of the escort vehicle insured is being sued as to whether its driver caused an accident while operating the escort vehicle, it is the duty of the insurer to defend its insured from any automobile-related suit, pursuant to the policy terms and 11 NYCRR 60-1 (Reg. 35-A).

Facts:

The inquiring law firm represents an escort vehicle’s insurer, Progressive. It is alleged that the driver of the escort vehicle did not timely communicate with a driver of a tractor-trailer following the escort vehicle that the load on the truck would not clear an overpass on a highway.

Although the escort driver knew the height measuring pole hit the overpass and he so notified the truck driver, the truck continued to proceed to strike the overpass. The truck driver claimed that the escort vehicle was negligent by not timely warning him about the overpass and diverting from the agreed upon route. Apparently, the second escort vehicle behind the first tractor-trailer and the second tractor-trailer, all being part of a convoy, were not affected. For whatever reason, the convoy had left the highway and traveled on a service road but got back on the highway before the accident, so it is not clear how such deviation would be a causative factor.

The State of New York sued the tractor-trailer company and truck driver for property damage to the overpass and they, in turn, sued the owner and operator of the escort vehicle for indemnification.

It is stated that the Progressive policy clause reads as follows: “We will pay damages, OTHER THAN PUNITIVE OR EXEMPLARY DAMAGES, for which an insured is legally liable because of an

accident.” The policy defines “accident” as “a sudden, unexpected and unintended event, or a continuous or repeated exposure to the event, that causes bodily injury or property damage and arises out of the ownership, maintenance or use of your insured auto.” Progressive is seeking guidance as to whether it may properly disclaim coverage under the policy on the grounds that, even if the escort vehicle’s driver had timely communicated with the tractor driver, the accident did not arise out of the ownership, maintenance, or use of the escort vehicle, and therefore is not covered under the policy.

Analysis:

Pursuant to Section 60-1.1 of Regulation 35-A, the standard automobile liability insurance policy requires the insurer to defend and indemnify the insured in lawsuits that allege the negligent use or operation of the automobile as an automobile. In particular, Section 60-1.1(b) provides that “the insurer, subject to the policy terms, shall: defend any suit…”

In Empire Ins. Co. v. Schliessman, 306 A.D. 2d 512, 763 N.Y.S. 2d 65 (2d Dept. 2003), the court held that the insurer of a parked truck did not have a duty to defend because there was no allegation that the truck was being used or operated as a truck in a negligent manner. Rather, the truck “was merely the location of, and incidental to, the accident.” See 306 A.D. 2d at 514, 763 N.Y.S. 2d at 67.

Here, by contrast, there is an allegation that the trailer was being used or operated in a negligent manner. Indeed, the tractor-trailer operator alleged that the escort vehicle drove on the wrong road, instead of the agreed upon route, and that in the course of returning to the correct route, the escort vehicle led the tractor-trailer to an overpass that was too low. If the escort vehicle failed to stay a proper distance ahead of the tractor-trailer and so failed to provide sufficient warning about the overpass for the tractor-trailer to react, such acts relate to the use or operation of the escort vehicle as an automobile on the road.

Accordingly, it appears that the claim alleges tortious conduct that falls within the coverage of the policy, and the insurer thus should defend its insured in this suit.

For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.