Minnesota Court Finds Specific Provisions In Policy Exclusion Govern Over More General Follow Form Provisions

This insurance coverage action stemmed from an underlying motor vehicle accident where Arnold Paster’s vehicle (driven by Paster and owned by Paster Enterprises) collided with Jerome G. Wind’s motorcycle. Wind sought coverage for his injuries from Paster Enterprises’  commercial automobile carrier, Phoenix Insurance Co.’s  (Phoenix) its umbrella carrier Great American Insurance Co. (Great American), and Paster’s personal automobile carrier Commerce & Industry Insurance Co.  (Commerce) and his personal excess liability carrier, Chartis  Property Casualty Co. (Chartis).

In analyzing cross-motions for summary judgment by plaintiffs Commerce and Chartis and defendant Great American, the U.S. District of Minnesota noted that the motions turned on whether the Great American Policy obligated Great American to provide coverage for the accident in which Wind was injured.

The court concluded that the plain language of the Non-Business Activities Exclusion of the Great American Policy excluded any liability arising from the non-business activities of an “insured”.  Furthermore, the terms of the Exclusion were not preempted by the more general “follow-form” terms in the Auto Liability Endorsement because specific provisions in a contract govern over more general provisions. Thus, the court concluded that coverage for non-business activities is precluded under the terms of the Non-Business Activities Exclusion.

The court concluded that there was no question that Paster was never employed by or affiliated with Paster Enterprises. Thus, the record showed that Paster was not using the vehicle for business activities. For these reasons, the Court concluded that the Non-Business Activities Exclusion applied and summary judgment was granted in favor of the defendant and against the plaintiffs on the plaintiffs’ coverage claims.