Carrying Goods for a Fee Exclusion Precludes Coverage for Injured Pedestrians
The liability insurer for a pizza restaurant chain brought an action against two of the chain's delivery drivers' personal auto insurers, seeking recovery for attorney fees and litigation expenses incurred in defending the chain in two cases where drivers struck pedestrians while delivering pizzas in their personal vehicles. This case is Discover Property & Casualty Company v. Progressive Casualty, 2011 WL 3366367 (Ct. App. Ohio ). (Note that this is a slip copy.)
Papa Johns' drivers struck pedestrians while delivering pizzas. Geico and Progressive were the personal auto insurers for the drivers who were using their own autos to deliver the pizzas. Discover, the insurer for the pizza restaurant, defended its insured in the lawsuit filed against Papa Johns and then sought recovery for attorney fees and litigation expenses from Geico and Progressive. The common pleas court ruled against Discover and this appeal followed.
Discover argued that the trial court erred by granting summary judgment in favor of Progressive and Geico. Discover argued that the exclusion clauses for transportation of food or property in the Progressive and Geico insurance policies were ambiguous and unenforceable because Ohio law requires that such policies only apply when the driver is paid a specific sum for delivering the product.
The appeals court said that the policies are unambiguous and the exclusions from coverage apply to the set of facts in this case. The court found that there is no dispute that the pizza delivery drivers were working within their scope of employment when the accidents occurred. The policy exclusion in the Geico policy clearly states that coverage does not apply for injury or damage “arising out of the use of a vehicle for carrying passengers or goods for hire”. The exclusion in the Progressive policy clearly states that coverage does not apply for injury or damage “arising out of the use of the vehicle for carrying persons or property for compensation or a fee”. The court found that, given that both drivers were paid to deliver pizza, the exclusions applied. Furthermore, the language used in the exclusions was also broad so as to not require a specific sum to be paid for each delivery; payment in any form triggered the exclusions.
Discover used previous case law to bolster its argument for ambiguity, but the appeals court decided that in this instance, the words “compensation” and “for hire” indicate that the exclusions apply to payment to drivers in any form for the deliveries. The ruling of the trial court was affirmed.
Editor's Note: The standard personal auto policy use to have the phrase “carrying persons or property for a fee” in its exclusion. That phrase was replaced by the “public or livery conveyance” language. This latter language has a specific definition in the law dictionary; it means “conveying the public, without limitation to certain persons or particular occasions or without being governed by special terms”. So, it is the clear intention of this exclusionary language to deny coverage in those situations where it is obvious that the insured is holding the vehicle out for hire to the general public.
If the Geico and Progressive policies had used the current exclusionary language, this dispute most probably would not have happened since the public or livery conveyance language is definitely not meant to apply to delivering pizzas.