Question: Does Erie's Commercial Auto Policy provide coverage for traffic control response and/or pollution cleanup after a covered accident?
Details of the loss: On 8/28/23 a contractor's employee lost control of a dump truck that was towing a chipper trailer. The truck rolled and came to rest on its side along the berm on interstate 80 in western PA. The piece of equipment in tow came to rest in the left lane of traffic. Emergency services were contacted, and part of the response included traffic control until the truck and equipment could be towed/removed. Additionally, some minor clean up of the truck's fluids that were released in the accident was performed at the scene. Both the traffic control response and the cleanup services were provided by a volunteer fire department near the scene of the accident. There is no question whether the vehicle was insured – this was definitely a covered accident.
Details of the claim response: Erie paid the physical damage loss to the IV. Since this was a single vehicle accident, originally, there was not any liability element to the claim. The insured was sent an invoice by PA Fire Recovery – who contracts with the responding VFD to collect fees related to accident response. We submitted that invoice to Erie and were told that it would have to go to a liability adjuster and not the collision adjuster. Erie then denied coverage. Initially, we did not push back on the denial, as we weren't sure if PA Fire Recovery Service would continue to pursue the invoice with the insured directly. The insured received nothing further for nearly 12 months but was recently sent another invoice directly. We followed up with Erie and challenged their denial, as we believe that:
1.The pollution cleanup costs are specifically addressed, and covered, through an exception to a broader pollution exclusion. 2.The remaining costs should reasonably be deemed as actions "necessary to protect covered autos from further loss"… since abandoning the vehicle on its side on the berm of interstate 80 would expose the truck to the possibility of further auto collisions – and since getting the vehicle upright and towing it would not have been possible or safe without the traffic control services provided by the VFD. It is our opinion that Erie's policy language in the "what to do after an accident" section constitute a very broad promise to pay for such reasonable costs – that stands on it's own and does not require any BI or PD "trigger".
Attached are: Erie's initial denial letter. E-mail communication with Erie's claims department challenging the denial and explaining our position on the relevant policy language. Copies of the invoices for the emergency response services. Copies of the relevant commercial auto policy, with the most relevant policy language highlighted.
Pennsylvania Subscriber
After review of the policy and the claim described, we are in agreement with the agency's position on this loss and that there should be coverage for the entirety of costs associated with the covered accident, the cleanup costs under the pollution exception, and third party legal liability for steps taken to prevent further damages.
Under the policy, cleanup costs are covered only if they are incurred as a result of an accident that also causes bodily injury or property damage covered by the policy. Leaks or spills from a vehicle accident of a substance requiring cleanup, along with a loss of use of the roadway until such cleanup could be performed, constitutes property damage as described under the policy, meaning damage to or loss of use of tangible property.
The property damage liability protection under the policy promises that the insurer will pay all sums anyone we protect legally must pay as damages caused by an accident covered by the policy. The steps taken by the third party following the accident are charges for which the insured is legally obligated to pay as part of the damages from the accident and in preventing further damage.
Summarizing, the first pollution exception applies to substances needed for the normal operation of a vehicle or its parts, which are described in the policy. When such substances are released from an insured vehicle damaged in an auto accident, the costs should be covered if the following conditions are met:
1. the pollutants are released from the part of the auto designed to hold or store them. For example, gasoline is released from the vehicle's gas tank, not from a gallon jug of gasoline stored in the trunk;
2. the damaged vehicle qualifies as an auto (not mobile equipment).
Both of these conditions are met in this accident, so there should be coverage.