When the use of an auto is involved in an accident, normally a professional liability insurer whose policy excludes claims arising out of the use of an auto will have no obligation to share with the auto insurer in the defense of the policyholder. However, that is exactly what occurred in Knightbrook Ins. Co. v. Northfield Ins. Co., 2016 U.S. Dist. LEXIS 9265 (E.D. Pa. Jan. 26, 2016).
In Knightbrook, an underlying plaintiff brought suit against the policyholder, an ambulance company. The underlying plaintiff, who was wheelchair-bound, was in the back of the policyholder’s transport van waiting to be assisted out of the vehicle. While the underlying plaintiff was waiting for the wheelchair lift to be raised so that he could exit the vehicle, his wheelchair began moving towards the end of the van. It tipped over the rear of the vehicle and the underlying plaintiff fell from the vehicle and allegedly sustained serious injury.
The plaintiff insurer issued the policyholder an auto policy and the defendant insurer issued the policyholder a professional liability policy. The auto policy provided coverage for damages resulting from the use of a covered auto, whereas the professional liability policy excluded coverage for damages arising out of the ownership, maintenance, or use of an auto, which included loading and unloading. However, the professional liability policy indicated that loading and unloading did not include moving any person by means of a mechanical device that is not attached to the auto.
The District Court held that the accident arose out of the use of an auto because the underlying plaintiff was injured in the process of being removed from the vehicle. The District Court then stated that even though it held that the auto policy provided coverage, it still had to consider whether the professional liability insurer owed the policyholder a defense up to the date of its coverage determination. The District Court found that the underlying plaintiff alleged professional negligence, and therefore, held that both insurers had to share in the defense of the policyholder up to the time of the court’s ruling. However, the District Court then summarily indicated that the professional liability insurer had no duty to indemnify the policyholder.
The aspect of the District Court’s decision requiring both insurers to share in the cost of defense appears uncharacteristic as auto liability policies and professional liability policies are generally designed to provide coverage that is mutually exclusive. Due to the auto exclusion in the professional liability policy, a finding that the auto policy applies would seem to result in the conclusion that the professional liability policy does not apply and thus, would owe no defense. The District Court avoided this finding by indicating that an insurer has a defense obligation if there is any chance that a complaint alleges a covered claim, even if an exclusion may apply, until there has been a judicial determination that the exclusion applies. This decision confirms that courts continue to resolve any doubt as to whether a claim is excluded in favor of coverage, even where it appears likely that the exclusion will apply.