August 01, 2014
Reversing a previous published opinion by the Michigan Court of Appeals, the Supreme Court has held that the “Business Use” Exclusion on a trucking auto policy did not serve to exclude coverage under a Non-Trucking Use or “bobtail” policy where the semi-tractor was being driven to the trucking company’s yard without a trailer or cargo.
In Hunt v Drielick, Empire Fire and Marine Insurance Company issued a Non-Trucking Use, or Bobtail, insurance policy to Drielick Trucking. The policy contained a Business Use Exclusion which stated that Empire was not liable for “bodily injury or property damage while a covered auto is used to carry property in any business or while a covered auto is used in the business of anyone to whom the auto is leased or rented.”
On the day of the accident, the truck was being driven by Corey Drielick when he was involved in a fatal accident with another vehicle. Drielick was on his way to the trucking company’s yard, but he was not transporting any property at the time. He had not yet picked up a trailer, was not under orders to be at the yard at any particular time, was free to complete personal business before arriving at the yard, and there was an oral agreement that Drielick would not be paid until after the tractor was coupled with the trailer.
The Court of Appeals concluded that the first part of the “Business Use” Exclusion applied to precluded coverage under Empire’s policy. That portion stated that coverage did not apply when bodily injury or property damage occurred “while a covered auto is used to carry property in any business.” The Court of Appeals found that, the mere fact that the truck was not yet hauling cargo did not mean that it was not being used in the trucking company’s business.
The Michigan Supreme Court disagreed, holding that coverage under the first clause is precluded only during the time that a semi-tractor is physically attached to property and the property is carried in a business. Where it was undisputed that, at the time of the accident the semi-tractor was driven without attached property, and where the Supreme Court had concluded that the Exclusion’s first clause precludes coverage as long as the covered vehicle is carrying attached property in any business, the Supreme Court held that the first clause does not preclude coverage in this case.
The Michigan Supreme Court then went further, addressing the second half of the “Business Use” Exclusion, which excluded coverage, “while a covered auto is used in the business of anyone to whom the auto is leased or rented.” The Supreme Court noted that this portion of the Exclusion would preclude coverage if the vehicle was being “used in the business” of a party to whom the vehicle was being “leased or rented”. However, the Court remanded the case to the trial court finding the record was unclear regarding whether the parties had entered into a leasing agreement. The Court noted that, while there may have been an oral arrangement between the trucking company and Drielick, whether this agreement constituted a “lease” for purposes of the policy exclusion was a factual determination which needed to be addressed further by the trial court.
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