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Court resolves dispute over accident coverage

Although a driver involved in a motor-vehicle accident was simultaneously covered by insurance policies issued by separate carriers, because one policy provided primary liability coverage and the other policy provided excess coverage, the carriers did not have an equal pro rata duty regarding the accident.

Background

MMG Insurance Company brought this declaratory judgment action against Progressive Northern Insurance Company to determine each company’s coverage obligation for a motor-vehicle accident involving a driver who was simultaneously covered by policies issued by both parties. The parties have filed cross motions for summary judgment.

Analysis

Although MMG contends that both policies are primary liability policies, the plain language of both policies indicates that, regarding the accident, MMG’s coverage is primary, while Progressive’s is secondary. The MMG Policy specifically lists VanPelt as a named insured, and his Nissan Titan — the car VanPelt was driving when he hit Haslacker — as an insured auto. The MMG Policy also provides that “[w]e will pay damages for bodily injury … for which any insured becomes legally responsible because of an auto accident.” VanPelt is unambiguously an insured under the policy; he was driving his insured vehicle during the accident and he may be legally responsible for hitting Haslacker. MMG must provide primary liability coverage for Haslacker’s claims arising out of the accident.

The Progressive policy, on the other hand, does not provide primary liability coverage to VanPelt or his Titan. On the contrary, it extends primary liability coverage only to the four specific vehicles owned by Heritage and listed on the declarations — none of which were driven by VanPelt at the time of the accident.

But MMG reasons that the Progressive policy still provides primary liability coverage to VanPelt because Heritage was “borrowing” VanPelt’s Titan when VanPelt struck Haslacker. But the Progressive policy expressly defines an insured as, in relevant part, “[a]ny person while using with [Heritage’s] permission, and within the scope of that permission, an insured auto [Heritage] own[s], hire[s], or borrow[s] except … [t]he owner or anyone else from whom the insured auto is leased, hired or borrowed.” Because VanPelt owned the Titan he was driving on Jan. 4, 2021, the exception applies to bar coverage even if Heritage was borrowing VanPelt’s Titan at the time.

Instead, contrary to MMG’s contention, Progressive provides liability coverage to VanPelt’s Titan by way of the non-owned auto endorsement in its policy. As such, the court will consider MMG’s other insurance clause in tandem with the other insurance clause contained in Progressive’s non-owned auto endorsement to determine priority of coverage over Haslacker’s future claims.

Progressive’s other insurance clause in the controlling non-owned auto endorsement provides that “[t]he insurance provided by this endorsement is excess over any other valid and collectible insurance.” Conversely, MMG’s other insurance clause does not contemplate the existence of a different primary insurer. Instead, it declares that, in the case where a loss is covered by an additional insurer, MMG’s pro rata clause is triggered to apportion coverage.

In disputes between pro rata and excess clauses, courts applying the majority rule in reconciling the two policies have generally held that the excess clause provided secondary coverage while the pro rata clause provided primary coverage. Consequently, according to the majority rule and Virginia law, MMG provides primary liability coverage in claims stemming from the accident, while Progressive provides excess coverage.

Progressive is therefore bound by its insurance contract with Heritage to provide coverage — with respect to VanPelt’s liability — only after any other available insurance to Heritage has been exhausted. Conversely, MMG is bound to furnish primary liability coverage to VanPelt, a direct insured, until it exhausts its limit of liability

Plaintiff’s motion for summary judgment denied. Defendant’s motion for summary judgment granted.

MMG Insurance Company v. Progressive Northern Insurance Company, Case No. 5:21-cv-00075, Nov. 2, 2022. WDVA at Harrisonburg (Cullen). VLW 022-3-486. 18 pp.